Netflix Inks Miramax Deal; Streaming Movies Still Plenty Important

Netflix is announcing a new multi-year deal with independent film studio Miramax, giving it streaming access to hundreds of films in the U.S., including Best Picture winners "The English Patient" and "Shakespeare in Love" plus others like "Good Will Hunting," "Pulp Fiction," "Kill Bill," "The Piano," etc. In all, the films coming to Netflix have gained 284 Oscar nominations and won 68 times. Miramax was recently spun-off from Disney, and this is the first time the films have become available in any digital subscription service.

The deal is another significant win for Netflix and underscores the point that movies are still plenty important to the company's streaming content strategy, despite the fact that most of its recent content acquisitions have been catalog TV programs. The challenge with acquiring streaming film rights is that "windowing" (i.e. the process by which a film passes through predetermined distribution outlets - theatrical, VOD, DVD, online sell-through, etc.) is still quite strictly enforced by studios, making it challenging for Netflix to accelerate its acquisition efforts.

Ironically, despite the fact that well-funded Netflix - and others - have a serious appetite in the latter part of the process, window compression is actually beginning to occur on the front end of the process, with several studios pushing "Premium VOD" plans. Under Premium VOD consumers are asked to pay $30 for a VOD showing just 60 days after theatrical opening. I've previously criticized Premium VOD as a train wreck, having little consumer appeal in a world flush with relatively inexpensive film rental options. Nonetheless, studios appear to be pressing forward, though they haven't releases any research supporting the validity of the plan.

Meanwhile, last week brought news that wholesale DVD revenue generated by studios dropped by 44% in 2010 to $4.47 billion, further evidence that the critical latter part of the windowing process is crumbling. With online viewership surging, it would seem wiser for studios to put more of their strategic resources into figuring how to better tap into this demand than by potentially harming early window theatrical release with Premium VOD. This would help unlock more films for Netflix and others to stream.

Categories: Aggregators, FIlms, Studios

Topics: Miramax, Netflix