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Netflix Gets Starz Streams

1 Oct, 2008 By: Erik Gruenwedel

Netflix’s fledgling movie-streaming service Oct. 1 took a quantum leap in title selections when it inked a license deal with Starz Entertainment LLC.

Financial terms were not disclosed.

Netflix subscribers would have free access to about 2,500 premium movies, TV shows and concerts from Englewood, Colo.-based Starz’ broadband movie subscription service, Starz Play.

Among the initial 1,000 titles available to Netflix’s Watch Instantly streaming service: Spider-Man 3, Ratatouille, Pirates of the Caribbean: At World’s End, Superbad, No Country for Old Men and Hannah Montana/Miley Cyrus: Best of Both Worlds Concert, among others.

Netflix has about 12,000 (largely independent) titles for streaming in addition to more than 100,000 titles for DVD by mail. This is the first time Netflix will offer ‘A’-list titles for streaming.

The Los Gatos, Calif.-based online DVD rental pioneer is also tendering a Starz Play-only subscription for $7.99 a month.

Netflix subscribers Oct. 17 will have access to a sneak peek of the first episode of “Crash,” Starz Play’s original content series based on the eponymous Oscar-winning feature film.

The rental service last month inked similar digital content agreements with CBS Corp. and Walt Disney Co.

“Our deal reflects the creative ways we are working with content partners to expand the profile and the number of choices our subscribers can watch instantly over the Internet, in addition to the 100,000 titles we offer on DVD through the mail,” said Ted Sarandos, chief content officer for Netflix.

In addition to fees, Starz views the deal as a complementary way to expand its distribution pie of licensed content, according to spokesperson Eric Becker.

“We have these broad, robust … exclusive rights, and it’s a way to get a return on the substantial investment on the rights we’ve made with the studios,” Becker said.

Earlier this year Starz inked a similar license deal with Verizon, including its nascent FiOS broadband TV service.

As Netflix continues to upgrade its digital content without charging DVD subscribers a premium to access it, questions emerge how Netflix can continue to absorb the costs.

Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles, believes the license fees aren’t significant.

“Maybe they look at this as a marketing gimmick,” Pachter said. 

Independent media analyst Rob Enderle said each additional content partner elevates Netflix’s streaming service.

“Starz gets a unique window for movies that gives it a slight time advantage over other online content providers,” Enderle said. “Every little bit helps.”

Netflix spokesperson Steve Swasey said content acquisition costs, which he declined to reveal, are factored into the budget of the streaming service.

“This is part of our strategy to evolve to the TV when consumers are ready,” Swasey said. “It will be a long time before it is a fully digital world. But, at the same time, we are investing in creating a digital realm, and this part of it.”


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