Netflix's (Nasdaq: NFLX) blockbuster three-year deal with Walt Disney Co. (NYSE: DIS) will probably change the way multichannel video programming distributors (MVPDs) approach their premium content delivery and the over-the-top space. From a content provider perspective, Starz--one of the big three premium channels, along with HBO and Showtime--will certainly feel the heat as it loses its rights to Disney content.
According to a Netflix news release, the deal starts in 2016 and gives the online video company "exclusive U.S. subscription television service" rights to first run live action and animated feature films from Disney studios, including Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios and Disnature titles. It also shuts out the traditional pay TV provider Starz and adds to the competitive element with HBO and Showtime.
"For Starz, losing the Disney movies means the channel will have to create more original content to fill the void," a story in the Los Angeles Times said.
Starz tried to put a positive spin on the news by issuing a statement carried by the newspaper that "Starz will continue to be the exclusive home of all Disney movies, including the Lucasfilm, Marvel and Pixar releases, and their accompanying digital streaming rights, into 2017."
On the other hand, the company's "decision not to extend the agreement for Disney output past that time allows us the opportunity to implement our plan to dramatically ramp up our investment in exclusive, premium-quality original series which will best meet the needs of our distributors and subscribers."
Netflix had no need to put any spin at all on the news, although it couldn't resist a bit of hyperbole in its news release.
"It's a bold leap forward for Internet television and we are incredibly pleased and proud this iconic family brand is teaming with Netflix to make it happen," said Ted Sarandos, chief content officer at Netflix, in the company's news release.
Financial terms of the deal were not released.
With Netflix apparently cementing a spot as a serious player in the premium pay TV space, MVPDs--particularly those with IPTV capabilities and TV Everywhere platforms--will be forced to look more closely at how they incorporate over-the-top video services into their channel offerings.
For more:
- Netflix issued this press release
- the Los Angeles Times had this story
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