Netflix signs licensing agreement with Disney(engadget.com)
engadget.com
Netflix signs licensing agreement with Disney
http://www.engadget.com/2012/12/04/netflix-strikes-licensing-agreement-with-disney-will-be-exclusi/
18 comments
I would've thought the same as you, but what we witnessed in the UK with sports licensing to Sky is that exclusivity deals of the major sports (Football) strengthened Sky's hand in negotiating with other content owners.
"Wouldn't you want your content to be on the platform with the biggest and best content, with the people most likely to pay for it, and being marketed by us?"
In effect Sky knew that Football acts much like an anchor investor in bringing the sheep with them.
I suspect Netflix is betting on a similar thing, if they overpay to ensure Disney exclusivity not only do they get the content, but they get a stronger hand in negotiations with other content owners.
Netflix will be looking to Disney to become the anchor in their negotiations with other content owners, and a very powerful and big anchor they are.
It lends enormous cachet to Netflix to have secured a deal with one of the most shrewd and largest content owners there is.
"Wouldn't you want your content to be on the platform with the biggest and best content, with the people most likely to pay for it, and being marketed by us?"
In effect Sky knew that Football acts much like an anchor investor in bringing the sheep with them.
I suspect Netflix is betting on a similar thing, if they overpay to ensure Disney exclusivity not only do they get the content, but they get a stronger hand in negotiations with other content owners.
Netflix will be looking to Disney to become the anchor in their negotiations with other content owners, and a very powerful and big anchor they are.
It lends enormous cachet to Netflix to have secured a deal with one of the most shrewd and largest content owners there is.
> As a Netflix subscriber, I'd rather see them signing more non-exclusive deals than fewer exclusive deals.
It seems like a deal like this would be more intended to attract customers of competing services than appease current subscribers (many of whom are overwhelmingly likely to resubscribe by default month after month). I could easily imagine people switching from <Amazon/Hulu/some 2016 subscription service> to Netflix because the former no longer has Disney content and the latter does.
I agree with you on Disney though - I don't really see the logic in it on their part, unless they foresee Netflix being enough of a monopoly in 2016 (possibly due in significant part to this deal itself - maybe they even expect other media titans to join in) that the sales from all competing services combined over whatever time period the deal covers would be less than the lump sum Netflix offered.
It seems like a deal like this would be more intended to attract customers of competing services than appease current subscribers (many of whom are overwhelmingly likely to resubscribe by default month after month). I could easily imagine people switching from <Amazon/Hulu/some 2016 subscription service> to Netflix because the former no longer has Disney content and the latter does.
I agree with you on Disney though - I don't really see the logic in it on their part, unless they foresee Netflix being enough of a monopoly in 2016 (possibly due in significant part to this deal itself - maybe they even expect other media titans to join in) that the sales from all competing services combined over whatever time period the deal covers would be less than the lump sum Netflix offered.
Disney likes exclusive, always have from discontinuing the VHS tapes old school. I think it is silly to play supply games with digital distribution but it does make some bank.
But Netflix really got Disney content back... They had Starz which previously owned the rights. But stars raised their rates and no longer are on the service. Now a big piece of what Starz brought Netflix just took.
http://www.reuters.com/article/2012/12/04/entertainment-us-n...
But Netflix really got Disney content back... They had Starz which previously owned the rights. But stars raised their rates and no longer are on the service. Now a big piece of what Starz brought Netflix just took.
http://www.reuters.com/article/2012/12/04/entertainment-us-n...
Disney own ABC and are BFFs with Apple. They already have a bunch of places to go through, and it's probably in their interest to shut out their competitors in the respective space anyway.
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A non-exclusive deal would make Netflix a dumb pipe for commodity content. They would rather have a monopoly on Disney's popular content.
This may be great news for Netflix and I really do hope some of the Disney stuff makes it over the pond to the UK.
One thing i've noticed though (especially in the UK) is that it's becoming a three way licensing battle. I think eventually we'll have each major VOD provider (Sky, LoveFilm and Netflix) have exclusive licensing arrangements with 1/3rd of the content providers each so to enjoy a full range of content you'd need subscriptions to all three. I wish they'd compete on other factors other than exclusive licensing arrangements.
One thing i've noticed though (especially in the UK) is that it's becoming a three way licensing battle. I think eventually we'll have each major VOD provider (Sky, LoveFilm and Netflix) have exclusive licensing arrangements with 1/3rd of the content providers each so to enjoy a full range of content you'd need subscriptions to all three. I wish they'd compete on other factors other than exclusive licensing arrangements.
I don't know about UK pricing, but here in the US subscribing to Hulu Plus, Netflix, and specific shows on Amazon and iTunes (e.g. Mythbusters) is still much cheaper than a monthly cable subscription.
UK pricing is very reasonable, the problem we have is things don't make it here until years after release, even with iTunes purchasing. I don't mind it much because I've got used to it and I'll just watch a show once it's available, but it does mean I can't partake in online discussions.
A good example is Breaking Bad, we got Season 4 on Netflix the same day that Season 5 was airing in the US. I won't be able to see Season 5 until Season 6- okay I just checked netflix and they have Breaking Bad season 5!! I love you for inspiring me to check. Hah... see you in 8 hours when I come back to finish this comment and the now invalid complaint.
A good example is Breaking Bad, we got Season 4 on Netflix the same day that Season 5 was airing in the US. I won't be able to see Season 5 until Season 6- okay I just checked netflix and they have Breaking Bad season 5!! I love you for inspiring me to check. Hah... see you in 8 hours when I come back to finish this comment and the now invalid complaint.
That's not behind. Nearly all TV shows are at least a season behind on Netflix in the US too.
"I won't be able to see Season 5 until Season 6"
I'm sorry to have to tell you this, but there will be no season 6. Season 5 is the final one – the first half aired this summer, the last 8 episodes will air next summer.
http://www.deadline.com/2011/08/done-amc-sony-tv-reach-deal-...
I'm sorry to have to tell you this, but there will be no season 6. Season 5 is the final one – the first half aired this summer, the last 8 episodes will air next summer.
http://www.deadline.com/2011/08/done-amc-sony-tv-reach-deal-...
Interesting. You're ahead of US Netflix on that - just checked and I do NOT have access to Breaking Bad Season 5.
Probably because Season 5 hasn't finished yet.
Stupid half-seasons.
Stupid half-seasons.
I believe that Netflix premiered Season 5 in the UK. In other words, Netflix was the first place for Brits to legitimately watch the latest episodes of Breaking Bad.
Just wait until we start getting the Doctor before you do.
Additionally, ~1/3 of a show's duration on cable is taken up by advertisements. Netflix doesn't have ads.
FYI, unblock-us.com is a handy service that lets you easily switch between the different Netflix libraries (US, Canada and UK). It costs $5 per month and is well worth it!
(You only require one Netflix account).
(You only require one Netflix account).
I've seen unblock-us.com being recommended a lot. I signed up for it a couple days back to get my Burn Notice fix and it's definitely awesome. I went through the trial a month ago and found the streaming to be real crap (maybe I just went through it at a bad time) but after signing up for a month it's now great.
The US Netflix has so much great content (but we have all the cool BBC stuff here too).
The US Netflix has so much great content (but we have all the cool BBC stuff here too).
You should try http://playmo.tv
I understand that Netflix blocks some content from non-US customers, but what CA and UK content is blocked from US customers?
It's not that content is blocked, each region has a distinct catalog based on what Netflix has licensed for that region. There is strong overlap, but all regions are unique.
Netflix's business model is based on a relatively fixed number of hours of streaming per account, and basing licensing fees off of that number of hours.
> "Is Netflix really unlimited?"
> Yes, you can watch as often as you want, any time you want.
https://signup.netflix.com/HowItWorks
https://signup.netflix.com/HowItWorks
There are only so many hours in a month, and like any service they probably make money on a large percentage of their users and lose money on a small percentage.
> I think eventually we'll have each major VOD provider (Sky, LoveFilm and Netflix) have exclusive licensing arrangements with 1/3rd of the content providers each so to enjoy a full range of content you'd need subscriptions to all three.
I feel like, at least from a business perspective, this is the ideal circumstance for Netflix, Sky, and Lovefilm. If they can get a lock on 1/3 of the content, then everybody wins. If they got rid of exclusive arrangements, then Netflix could certainly take over from the other two, but they could take over from Netflix also. A contractually-enforced stalemate is a pretty good scenario.
I feel like, at least from a business perspective, this is the ideal circumstance for Netflix, Sky, and Lovefilm. If they can get a lock on 1/3 of the content, then everybody wins. If they got rid of exclusive arrangements, then Netflix could certainly take over from the other two, but they could take over from Netflix also. A contractually-enforced stalemate is a pretty good scenario.
I've never known TV to not be split up like this; just now it's actually possible to buy a service like Netflix without being forced into paying for HBO and ESPN to do so (not that it stops ISPs from trying to indirectly anyway)
TV is split up that way, but it's very different in that most of the material is produced/financed in house. So they're essentially licensing the stuff exclusively to themselves.
Netflix and friends don't do that or not in any big way (Netflix is doing it with Arrested Development).
Netflix and friends don't do that or not in any big way (Netflix is doing it with Arrested Development).
It's nice to see that Netflix is getting more content. I like Netflix. But I wonder if this isn't Netflix learning to play the content producer's games. I think it would be better for everyone if content production/distribution was profitable not because of exclusivity but because of ubiquity. Disney could (should) be most profitable when they make access to their product (content) easier.
Note I am speaking prescriptively. When I say "should" I mean "the way the world ought to work according to me..." I'd love to hear what others think about this.
Note I am speaking prescriptively. When I say "should" I mean "the way the world ought to work according to me..." I'd love to hear what others think about this.
> Disney could (should) be most profitable when they make access to their product (content) easier.
Ok I'll bite. Access to content has multiple facets:
First main point is price. Obviously it's not "most profitable" for Disney to make it's stuff free. A subscription service is going to charge a monthly fee and that fee is going to be primarily licensing and overhead. Dividing that over a dozen companies reduces the profit taking of a market leader like Netflix but also multiplies the overhead. Note, the 3 year contracts already control Netflix from taking too much of the profits so it seems like there is little incentive for Disney to want a market of say 10 netflixes over one.
Second main point is that not all access is equal. Disney has strong incentives to associate its content with: (1) a quality service both in delivery and interface; (2) a service that provides useful data back to Disney; (3) a service that will promote Disney. Why should Disney associate itself with your fly by night terribly performing service that streams in 360p, constantly drops and has a 15 step sign up process riddled with malware carrying flash ads? Why should Disney help me launch a foreign film centric service where Disney movies are also rans?
Ok I'll bite. Access to content has multiple facets:
First main point is price. Obviously it's not "most profitable" for Disney to make it's stuff free. A subscription service is going to charge a monthly fee and that fee is going to be primarily licensing and overhead. Dividing that over a dozen companies reduces the profit taking of a market leader like Netflix but also multiplies the overhead. Note, the 3 year contracts already control Netflix from taking too much of the profits so it seems like there is little incentive for Disney to want a market of say 10 netflixes over one.
Second main point is that not all access is equal. Disney has strong incentives to associate its content with: (1) a quality service both in delivery and interface; (2) a service that provides useful data back to Disney; (3) a service that will promote Disney. Why should Disney associate itself with your fly by night terribly performing service that streams in 360p, constantly drops and has a 15 step sign up process riddled with malware carrying flash ads? Why should Disney help me launch a foreign film centric service where Disney movies are also rans?
> Obviously it's not "most profitable" for Disney to make it's stuff free.
Granted. "Easier to access" in this case in analogous to a manufacturer selling their wares in more stores, instead of limiting sale to a handful of select retailers. Of course the literal interpretation of "easier to access" means that everyone finds a copy of the latest Disney content mailed to their doorstep with no expense to the consumer.
To your second point, assuming the marginal cost of distributing content through 3rd string distributors is negligible, why shouldn't Disney want their content distributed through anybody who will pay? My assumption is that all things being equal the market will abandon those providers. On the other hand, if Disney decides to go exclusively through a provider like Netflix, consumers don't have the option to move their business elsewhere.
(Obviously a site that installs malware would and should be shunned by Disney, just as a retail store that steals credit card numbers might be black listed. These are ethically and legally wrong.)
I agree that Disney has tremendous incentive to do things they way they do. In my personal utopia, they would be incentivized to behave as I described in the parent thread. The question remains: how should the market and industry shift to get us to that point?
Granted. "Easier to access" in this case in analogous to a manufacturer selling their wares in more stores, instead of limiting sale to a handful of select retailers. Of course the literal interpretation of "easier to access" means that everyone finds a copy of the latest Disney content mailed to their doorstep with no expense to the consumer.
To your second point, assuming the marginal cost of distributing content through 3rd string distributors is negligible, why shouldn't Disney want their content distributed through anybody who will pay? My assumption is that all things being equal the market will abandon those providers. On the other hand, if Disney decides to go exclusively through a provider like Netflix, consumers don't have the option to move their business elsewhere.
(Obviously a site that installs malware would and should be shunned by Disney, just as a retail store that steals credit card numbers might be black listed. These are ethically and legally wrong.)
I agree that Disney has tremendous incentive to do things they way they do. In my personal utopia, they would be incentivized to behave as I described in the parent thread. The question remains: how should the market and industry shift to get us to that point?
Disney could (should) be most profitable when they make access to their product (content) easier.
Have you ever heard of the "Disney Vault"[1]?
1: http://en.wikipedia.org/wiki/Disney_Vault
Have you ever heard of the "Disney Vault"[1]?
1: http://en.wikipedia.org/wiki/Disney_Vault
Yes I have, and I'm not a fan. It creates artificial scarcity. I can understand their reasoning though.
I am not a fan either, but I have no room to complain. I saw that Finding Memo was available through iTunes and I bought it immediately for fear of it being vaulted.
This is the third time I have purchased that film.
This is the third time I have purchased that film.
I just pass. There is plenty of other entertainment out there.
It's in the interests of the studios to split their collective content among various streamers. Ideally they keep several major streamers thriving. And perhaps more crucially, able to bid against each other.
What it comes down to is money and how much Netflix is willing to pay for exclusif access to Disney content. Disney tries to maximize the amount of money it can get from its content & distribution partners. If the money made from providing exclusive content on Netflix > Money made from the same content available on Amazon + Hulu Plus + Netflix + Xfinity => then Disney goes with the option of exclusive content on Netflix.
By giving exclusive rights for premium services, Disney and other studios have full control over the content. The worst that could happen is that the content would become commodity like news content on the web.
The more exclusive they make the content appear, more likely people will continue to pay for it (again and again).
The more exclusive they make the content appear, more likely people will continue to pay for it (again and again).
I think there's a funny balance - or maybe it's an inflection point - where you go from being mad at Netflix over a scarce catalogue to being mad at the content providers for keeping their movies and TV shows to themselves.
I don't know whether to think "Geez, get with the times, Netflix" or the same, but for Disney.
I don't know whether to think "Geez, get with the times, Netflix" or the same, but for Disney.
I don’t see Star Wars coming to Netflix anytime soon unfortunately. Disney paid $4 billion for LucasFilm to acquire essentially the rights for the Starwars franchise. And, IMO LucasFilm still makes a lot of money from Star Wars DVD & Blu-ray’s sales (for instance: http://io9.com/5843342/star-wars-blu+rays-break-sales-record...).
Overall, Lucas has made close to $3.8 billion with DVD sales (http://www.statisticbrain.com/star-wars-total-franchise-reve...). This is one of the reasons why Star Wars movies are not available on iTunes and other VOD platforms.
Putting those titles on Netflix would decrease their value. Netflix would have to pay big money for that…
Overall, Lucas has made close to $3.8 billion with DVD sales (http://www.statisticbrain.com/star-wars-total-franchise-reve...). This is one of the reasons why Star Wars movies are not available on iTunes and other VOD platforms.
Putting those titles on Netflix would decrease their value. Netflix would have to pay big money for that…
I disagree. From what the article sounded like, Disney is all in on this.
Disney has been providing Netflix content for their streaming service probably since day 1. I remember when it first launched, I believe Lost was available on the server. All 6 seasons are available and have been since the series finale.
The future for entertainment is not physical media that you can buy. It's much easier and quicker for me to switch my TV to my Roku box, load up Netflix and start a movie than it is to switch to Bluray, and wait for it to load and show previews. I can't remember the last time I purchased a DVD/Bluray that wasn't in the bargin bin for $2, but we watched Netflix just last night.
I don't think Disney is going to lose out on Star Wars sales if they start streaming it, there will always be people that want to buy the package so when the internet is off, and all they have is a portable DVD player, they can watch Star Wars, but by making this deal with Netflix they are only increasing their profits, there is no devaluing going on here.
Disney has been providing Netflix content for their streaming service probably since day 1. I remember when it first launched, I believe Lost was available on the server. All 6 seasons are available and have been since the series finale.
The future for entertainment is not physical media that you can buy. It's much easier and quicker for me to switch my TV to my Roku box, load up Netflix and start a movie than it is to switch to Bluray, and wait for it to load and show previews. I can't remember the last time I purchased a DVD/Bluray that wasn't in the bargin bin for $2, but we watched Netflix just last night.
I don't think Disney is going to lose out on Star Wars sales if they start streaming it, there will always be people that want to buy the package so when the internet is off, and all they have is a portable DVD player, they can watch Star Wars, but by making this deal with Netflix they are only increasing their profits, there is no devaluing going on here.
Is it weird that reading this news actually brought a tear to my eye? No, not because I am such a Disney or Marvel fan that I couldn't live without their content being available to stream at my convenience.
No... I just honestly think it's truly beautiful to see companies bring elements of what I always conceived would be part of "the future" into my actual (non-imaginary) life. I think this deal could perhaps finally solidify the Internet as being the mainstream medium of digital content delivery.
Don't worry, I'm not forgetting about iTunes. But this is DISNEY. Maybe I'm just biased because I was one of those 90s kids (not really so long ago!) with shelves full of Disney VHS's. Perhaps it's a strange trigger; but the breakneck speed of our innovative times has finally hit me.
No... I just honestly think it's truly beautiful to see companies bring elements of what I always conceived would be part of "the future" into my actual (non-imaginary) life. I think this deal could perhaps finally solidify the Internet as being the mainstream medium of digital content delivery.
Don't worry, I'm not forgetting about iTunes. But this is DISNEY. Maybe I'm just biased because I was one of those 90s kids (not really so long ago!) with shelves full of Disney VHS's. Perhaps it's a strange trigger; but the breakneck speed of our innovative times has finally hit me.
This is an interesting upside to studio consolidation. With this deal, Netflix has access to Pixar and LucasFilm titles too.
Since Disney is part owner of Hulu[1], I wonder how the exclusivity of Netflix will play out?
[1]http://en.wikipedia.org/wiki/Hulu
[1]http://en.wikipedia.org/wiki/Hulu
How is this a 'good deal' for Netflix and it's subscribers?
We've got this great feature coming up, IN THREE YEARS!.
yay?
We've got this great feature coming up, IN THREE YEARS!.
yay?
Presumably the reason it isn't happening "right now" is that Disney has current contracts that don't expire until then. The good news is that Disney, a major content provider, has recognized that a streaming company, NetFlix is worth negotiating with like a cable network company, like Stars, Encore, HBO, Etc.
Progress is not quick but that is only because one has to wait for existing contracts to expire (their are usually penalties for breaking them early).
Progress is not quick but that is only because one has to wait for existing contracts to expire (their are usually penalties for breaking them early).
I bet they gave Netflix a much lower price for this version of the contract rather than much sooner.
…
Read the read of the article.
""" That deal also includes first-run rights to direct-to-video releases, which will begin appearing on Netflix in 2013. What's more, the two companies have also announced a separate multi-year agreement that will see popular Disney catalog titles like Dumbo and Alice in Wonderland be made available on Netflix beginning today. """
Read the read of the article.
""" That deal also includes first-run rights to direct-to-video releases, which will begin appearing on Netflix in 2013. What's more, the two companies have also announced a separate multi-year agreement that will see popular Disney catalog titles like Dumbo and Alice in Wonderland be made available on Netflix beginning today. """
It's not even like this is a long article. It's literally a 140 word paragraph.
The Disney catalog is such a big deal that even without the 2016 new releases, this would be newsworthy.
I was thinking the same thing! Netflix may not even be around by 2016...
I really hope they manage to get more 'hot' content soon, since (in my opinion) Amazon appears to be releasing attractive content at a much faster rate.
I really hope they manage to get more 'hot' content soon, since (in my opinion) Amazon appears to be releasing attractive content at a much faster rate.
The agreement is a huge deal, but I agree three years out is a long time to wait! I find the exclusive part hard to believe. In the next three years something may supersede Netflix and Disney will want to be able to switch.
It's a contract. The reason it's a three year wait is because of the existing contracts. This announcement is about Disney's next contract.
Shareholders are the primary target of this announcement, not users. Judging by the 14%+ pop their stock had today, I'd say it was effective.
I may never buy a DVD again.
Two years ago my DVD player broke. A year ago I replaced by laptop with a macbook air. No CD drive anywhere in site. And I've hardly noticed. I don't even remember what DVD's look like. And as somewhat of an apartment dwelling transient, I don't mind the open shelf space, and lack of another box I have to haul around in life after DVDs/CDs. I think generations will look back at the way we stored information and think, "what a waste of physical material".
As someone who owns many DVDs, I'm sad that the extra features often included on them (interviews, documentaries, behind-the-scenes footage) remain unavailable on streaming services like Netflix. I hope that as competition increases, this extra content is included as a value-add. Some of the features on Pixar DVDs showing the pre-production storyboarding and early animation are particularly interesting.
I haven't bought a DVD/Bluray since I signed up for Netflix streaming.
I like having a blu-ray of my absolute favorite movies handy... the other 95% I agree, meh.
Hopefully this deal will also include more recent films like the Pixar movies, Tangled, etc. There's little that's more frustrating that having your kids scratch up their movies, rendering them unwatchable. Fortunately, I've made iTunes copies of many movies, but they get new movies faster than I can keep up. And my oldest, 5, stepped on the Avengers less than a week after buying it, and cracked the disc. Fortunately, I had already ripped it, so I burned it back to DVD.
More Netflix content we Canadians can't watch. <sigh/>
Pfft, totally moot anyways. By 2016 the average Canadian internet package will be so expensive/low cap, subscribing to Netflix will be completely impractical.
Wow, nice move on Netflix's part. Disney movies/shows will equal cartoons, Marvel, and now Star Wars.
Wonder if this agreement includes Star Wars now that Disney acquired Lucasfilm...
Really excited about the Disney catalog titles. Will be interesting to see how this plays out short term for them, I can imagine a lot of families subscribing over the holidays.
Is this specifically Netflix Instant Watch, or isn't it?
2016! Who (other than investors/competion/etc) the fuck cares? 3+ years out? Like is netflix even going to be in bui
Stuff 3mo out isn't even on my radar, mostly.
Stuff 3mo out isn't even on my radar, mostly.
When will come the era of DRM free Netflix?
For Disney, it seems a ridiculous move -- why not offer multiple channels? It seems very shortsighted to sign these exclusive contracts when the marketplace is so immature. Why not get money for every channel that's willing to pay you?