Amazon, Netflix land more exclusive streaming deals

The rights just keep on comin': Amazon (NASDAQ: AMZN) announced that it has landed exclusive streaming rights to hit series Mr. Robot, while Netflix (NASDAQ: NFLX) -- despite increased focus on original content -- nabbed global streaming rights to three more hit series, locking in Colony, Zoo, and Jane the Virgin.

Amazon landing Mr. Robot may be a nice coup for its Prime Instant Video streaming service. The first season of the hit series, produced by NBCUniversal and airing on USA Network, will premiere in the spring on the Prime service in the U.S. and in the UK, Germany, Austria and Japan -- its newest international outlet -- at an unspecified date.

The deals illustrated the increasing complexity of content rights negotiations in the OTT video segment, a Wall Street Journal article said. Netflix's commitment to global rights for its content "changes the calculation for studios, which need to evaluate whether they will make more money by striking a global deal with Netflix or making individual deals market by market with the streaming services that are proliferating across the globe," said the article.

In the same vein, the record-setting subscriber losses posted by pay-TV providers last quarter mean networks need to make up for the dip in per-sub retransmission fees. That has partially played out in often-acrimonious retrans negotiations with pay-TV operators, but networks are continuing to look for more favorable streaming terms as well. Exclusivity deals work well for them -- Epix, for example, shifted its library from Netflix to Hulu this month when Netflix decided to let its rights deal with the network lapse rather than negotiate new terms. And Hulu paid a reported $700,000 per episode for exclusive rights to Seinfeld.

Analyst firm MoffettNathanson reports that 21st Century Fox CEO James Murdoch also likes Hulu at the moment, telling attendees at the recent Goldman Sachs Communacopia Conference that while the company has had "a long partnership with Netflix that is good for both sides," it is doing more business with Hulu.

Cable networks need to put much more thought into a long-term view for their content, Michael Nathanson wrote. "Over the last five years, there have been a handful of companies that we would argue took a short-term view in selling their content to SVOD players, double dipping in both the traditional and digital ecosystems, while taking potential risks in doing so," he said.

Likewise, the major streaming services are taking a long-term view to counter rising content costs and more complex rights deals.

Both Netflix and Amazon have committed to developing more original content: Amazon recently announced the lineup for its fall pilot season featuring new shows from noted creators Shane Black, Diablo Cody, Steven Conrad, Sacha Baron Cohen and Louis CK, among others.

But finding a mix of content, both licensed and original, that will keep viewers coming back (and paying subscription fees) is increasingly important to the top two U.S. streaming services. Like their traditional broadcaster and distributor counterparts, both will likely have to find the right balance to maintain profit margins while building their owned content libraries.

For more:
- see the Amazon release
- see this WSJ article (sub. req.)
- see this MoffettNathanson report (sub. req.)

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