HBO, Showtime and Starz, consider this a warning. Netflix and Relativity have just announced a deal that will see all first-run theatrical releases from the production company available via streaming to Netflix subscribers, just months after their release on DVD. It's a bit of a coup for the mail order 'n' mobile-streaming service, as it will give its 13 million subscribers access to new(ish) films before they're viewed on pay TV.
Under the terms of the agreement, Netflix gets licensing rights to all movies for which Relativity Media controls distribution--that's 14 films over the next 12 months. What all industry insiders are begging to know is this: How much did Netflix pay for the priviledge? Given that the deal basically cuts out TV's first hands-on with the movies, expect it to be around the same amount that HBO and Co. pay the studios each year--estimated to be around $100 million.
The signs have been there for some time--after all, the announcement comes just two months after the FCC ruled that film releases could be released over secure TV, after an application by the Motion Picture Association of America. And Time-Warner is already on the case of way, way future negotiations, as FastCompany reported a couple months back, and bypassing DVD release in favor of straight to TV blockbusters, that will be screened in viewers homes just one month after their cinema release date.
It is no secret that Netflix has long had designs on the pay TV market. Some commentators, such as Deadline's Nikki Finke, are unimpressed by the deal, for several reasons. Relativity is not a major player on the studio front--it has limited distribution rights, and despite the appearance of major-league movie stars such as Nicolas Cage and Christian Bale, most of its movies up until this year were either joint productions or co-finance jobs.
The Netflix-Relativity deal won't change the face of movies or pay TV as we know it, as Relativity is a relatively minor player in Hollywood. The Wrap's Sharon Waxman, however, exhorts media watchers to fast-forward to 2015, when it's time for the pay TV firms to renegotiate their deals with the Hollywood studios. But five years is a long time away--YouTube, don't forget, was only founded in February 2005.