Disney opens its vault for Netflix

Disney classics will now appear on Netflix. Newer Disney films will get there – in 2016.

Robert Galbraith/Reuters
Netflix headquarters in Los Gatos, California. Walt Disney Co agreed to give Netflix exclusive TV distribution rights to its movies, becoming the first major studio to stream its movies to TV viewers via Netflix instead of distributing them to HBO, Showtime, or other premium TV channels.

Disney fans have been waiting for classics such as “Dumbo,” “Alice in Wonderland,” and “Pocahontas” to appear on Netfix. Now, it’s finally going to happen.

Walt Disney Studios decided not to renew its agreement with Starz, the premium cable channel. Instead, it plans to show its films from Disney, Pixar, Marvel, and Lucasfilm on Netflix. Classic Disney films will be available immediately on Netflix, while new releases will not begin streaming until after the existing deal with Starz expires in 2016.

The deal will allow Netflix to stream Disney new releases seven to nine months after the films appear in theaters, the same deal Disney made with Starz. Movies from Steven Spielberg’s DreamWorks studios are not included in the deal, as it distributes its movies to TV through CBS’ Showtime, Reuters reports.

The deal also gives Netflix first-run rights to Disney’s direct-to-video releases, starting in 2013.

Disney is the first of the Hollywood big six that chose Web streaming over pay television.

Ted Sarandos, Netflix’s chief content officer, called the deal “a bold leap forward for Internet television,” The New York Times reported.

Because of this deal, starting in 2016, Disney’s new releases will be available on Netflix during what’s known as the pay-TV window. This is the time that paid television networks, such as Starz, Showtime, and HBO, offer new releases to their subscribers. However, the licensing fees in order to do this are steep. Netflix is aggressively taking over the pay-tv business by offering more profitable terms through its increasingly popular streaming methods. 

Since the deal was made, Netflix shares have jumped 14.01 percent to $86.65. Disney has increased by 0.02 percent.

According to The New York Times, Starz issued a statement saying they broke the deal with Disney, not the other way around.

“Our 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,” the company said in the statement.

What this means for Starz in unknown. But “anything that increases the marketplace clout of Netflix is damaging [to them],” said Brooks Barnes of The New York Times.

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