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Lionsgate, Netflix Sign Streaming Deal in the U.K.

10 Nov, 2011 By: Erik Gruenwedel

Lionsgate Nov. 10 said it has signed a license agreement with Netflix that will give the service’s pending subscribers in the United Kingdom streaming access to its movies in the region’s pay-TV window.

Netflix last month announced it would bow streaming service in the U.K. and Ireland during the first quarter of 2012.

Lionsgate CEO Jon Feltheimer, in an analyst call discussing the minimajor’s quarterly results, confirmed the previous speculation.

“We are officially confirming today a new deal with Netflix for the pay-television window for our feature film slate in the United Kingdom,” Feltheimer said. “This new agreement puts us on equal playing field with all the other major studios and it will generate millions of dollars of incremental [pretax earnings] annually beginning this year.”

The deal is under the control of Lionsgate U.K., a separate unit of Lionsgate and headed by CEO Zygi Kamasa. The division’s movie catalog includes The Hurt Locker, The Mechanic and Coriolanus, a first-time directorial effort from Ralph Fiennes, and next year’s self-financed feature Salmon Fishing in the Yemen, starring Emily Blunt, Ewan McGregor and Kristin Scott Thomas.

Separately, Lionsgate confirmed it is renting 11 new and catalog movies digitally on Facebook, including titles The Lincoln Lawyer, Rambo, Saw and horror franchise “Leprechaun.”

“You might laugh at that last title,” Feltheimer said. “The emergence of niche audiences being served by the digital marketplace will continue to breathe fresh life into content whose commercial appeal would have been considered exhausted just a few years ago.”

Feltheimer said the studio is encouraged by earlier results from the same-day theatrical/VOD release of Margin Call, which he said has grossed $2.5 million in limited box office release, in addition to 250,000 VOD transactions.

"We expect the consumer on demand revenue will at least equal its theatrical box office take," he said. "This will be a very profitable movie for us due to its low marketing expense and multiple day-and-date revenue sources we've created."

Feltheimer said he was pleased with the Labor Day weekend the premium VOD bow of Kevin Smith's Red State 30 days in advance of its theatrical release — a strategy Lionsgate is replicating through a two-week VOD window for Abduction about a month before its DVD and Blu-ray Disc release.

"You can expect us to continue to explore premium VOD windows customed tailored to our films," he said.


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