Netflix Bypasses Studios With Starz Deal

Written by Ryan Lawler

Wednesday, October 1. 2008 at 01:10 PM EDT Post a comment

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Netflix Inc. announced a deal with Starz Entertainment LLC that will give the company access to some valuable first-run video content for its online streaming service.

Netflix announced this morning that it signed a multiyear licensing deal for content from Starz Play, Starz Entertainment's wholesale broadband subscription service. Through the deal, the DVD-rental company added 1,000 titles to its video-streaming service today, with an additional 1,500 expected by the end of the year. 

More importantly, Netflix will get access to some premium, first-run video content for its streaming-video service which was previously unavailable to it. With the addition of Starz Play content, Netflix will be able to offer streaming video of first runs like Spiderman 3, No Country for Old Men, and Ratatouille.

Due to the content-license windows of most mainstream films, Netflix normally wouldn't be able to get access to that content for several years after its theatrical release.

"The earliest [Netflix] would have access to Ratatouille would be nine years after it was released in theaters," says Eric Becker, director of corporate communications for Starz. "Our window starts about 10 or 11 months after a film's release."

Prior to the deal, Netflix's streaming offering included about 12,000 titles, but the vast majority of that content was made up of television programming, independent films, documentaries, and foreign-language titles.

"The only knock on Netflix streaming prior to this has been the content," says Steve Swasey, director of corporate communications for Netflix. But that should no longer be a problem.

While the Starz Play licensing deal will increase the quality of Netflix's streaming offering, it's important to note that only about 200-300 of the titles available would be considered new releases, according to Becker. And those titles won't exist in perpetuity -- Starz will handle programming and title availability, adding new first-run titles and discarding others as it sees fit.

The Starz Play service also includes another 700 or so older movie titles, and an additional 1,500 pieces of content that includes Starz original programming, TV programs, and concert videos.

The deal marks the first licensing deal with a broadband video company for Starz, which moved to a wholesale model for online, on-demand video after receiving tepid demand for its Vongo consumer service. Starz had previously signed on Verizon Communications Inc. (NYSE: VZ) for the service, which is making it available to its customers for a $5.99-per-month fee.