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Netflix Getting Sony Pictures Animation Content

27 May, 2014 By: Erik Gruenwedel

Streaming pioneer gets ‘Cloudy With a Chance of Meatballs 2' and 'The Smurfs 2' in 2014

Netflix's recent offering of Cloudy With a Chance of Meatballs 2, and the Sony Pictures Animation title’s non-appearance on Starz, indicates the pay-TV content aggregator is indeed moving ahead with a new strategy focused on original content.

In a note, Tony Wible, analyst with Janney Capital in New York, says the sequel’s omission from Starz’s lineup and offering on Netflix represents another plus for the SVOD leader, while enabling Starz to redirect content spend (about $35 million) toward its Starz Originals platform.

"Our conversation with the head of Sony's studio last year revealed that Sony Animation content was not included as part of the recent Sony/Starz renewal, but we assumed that term would not commence until the start of its new contract in 2016,” Wible wrote.

In a May 27 statement from Netflix spokesperson Joris Evers, the SVOD service said it and Sony Pictures Television reached a multiyear agreement to bring Sony Pictures Animation feature films in the first pay-TV window to Netflix members in the United States, beginning with Cloudy With a Chance of Meatballs 2  and The Smurfs 2 in 2014. 

"Sony and Starz continue their long-term partnership, and Starz remains the exclusive pay-TV home of Sony Pictures Entertainment feature titles through 2021," Evers said.

In recent analyst calls, Starz CEO Chris Albrecht has advocated allocation of resources toward original programing instead of third-party movies. Albrecht said original content helps Starz differentiate itself in an increasingly fragmented world of TV programming.

At an investor event in January, Albrecht said third-party movies rebroadcast via Starz’s 17 premium content channels have largely become time fillers around original programming.

“Movies are more and more becoming a commodity, even first-run theatricals in the premium space,” Albrecht told attendees at the Citi Internet, Media & Telecommunications confab in Las Vegas. “They provide great bulk. They provide a lot choice for the viewers. What they don’t provide is great marketing opportunities. And that’s what originals do.”

Wible believes Starz spends $3 million an hour producing original content — an amount that would justify curtailing licensing studio movies.

“The loss of Sony Animation would also suggest that Starz's proclaimed savings on the deal renewal was not tied to better rates but rather a reduction of content. In fact, we still suspect the rate will move higher when the new deal terms start,” he wrote.

Regardless, Netflix's apparent access to Sony Animation titles, coupled with exclusive access to Pixar, Disney Animation and DreamWorks Animation titles gives the service a significant platform to consumers of the genre.

“We believe the younger demographic is an important element of Netflix's long term strategy as they condition future generations to use the platform as they mature,” Wible wrote.

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