by Marcy Magiera
As networks and studios take advantage of myriad new ways to distribute content, they face greater challenges in managing windows to extract maximum profit from each transaction, said executives speaking at Variety’s Entertainment and Technology Summit at the Ritz-Carlton Hotel in Marina del Rey, Calif. on Monday.
Speaking on a “Trendsetters in Entertainment Distribution” panel, David Spiegelman, president of domestic television and digital distribution for Relativity Media, discussed the studio’s decision to give its movies to Netflix for streaming in the pay TV window, bypassing cable programmers HBO, Showtime, Starz, and others. “There’s a huge benefit for us to be on Netflix,” said Spiegelman, noting that while Netflix has a big audience – more than 20 million people subscribe to Netflix’s streaming service – the films will get less consumer exposure than they would in HBO rotation, for instance, preserving value for buyers in the downstream windows including basic cable.
“You can never have enough buyers,” said panelist Scott Koondel, president of distribution for CBS. “Right now it’s about getting paid the most for every transaction.”
For programmers like Showtime and Starz, that is driving a move to replace theatricals with original content so that they can control both the exposure and revenue of the properties in multiple windows, said Koondel and John Penney, executive vice president of strategy and business development for Starz.
Because of growing international markets and new distribution platforms, “you can produce shows for network and make money right out of the gate,” instead of waiting for syndication, said Koondel.
“Pricing is critical,” said Penney. “Whoever is setting the price has to get it right to generate enough revenue to finance new content.” He used as an example Netflix’s acquisition of the first-run series “House of Cards,” which according to Penney’s estimate, will cost one month’s revenue from all 25 million Netflix subscribers to finance.
For content owners, that means developing new distribution outlets, such as Facebook, even though it isn’t clear whether consumers want to watch movies over social networks, said Spiegelman. “If you can tap into a very small percentage of that huge platform, you could be generating so much revenue,” he said. “We want to train behavior now.”
Conference keynoter Kevin Mayer, executive vice president of corporate strategy and business development for The Walt Disney Co., also addressed windows management. As an example, he said the studio now views its ABC network as simply the first window of distribution for its TV content. “Network used to be the business,” he said. “Now content is the business.”
Dish Network plans to launch a Blockbuster-branded movie streaming service next month, in a move timed to coincide with Netflix’s price increases, Bloomberg reports.
Dish, which acquired nearly all of Blockbuster’s assets in April, could ratchet up dealmaking between streaming video service providers and content distributors for top movies and television series. Netflix, for itself, says that it is looking to spend money that it had previously earmarked for renewal of a streaming agreement with pay-TV channel Starz. That deal, which had brought Disney and Sony films to Netflix subscribers, is now set to expire in February, 2012.
While it implements its price increases in the U.S., Netflix is rolling out its streaming service to countries in Latin America, beginning with Brazil (more at paidContent).
With Starz deciding not to renew its licensing deal with Netflix next year, the online video company faces more pressure to secure streaming rights to top-shelf movies and television series. Under the current agreement with Starz, which runs through February, 2012, Netflix streaming subscribers receive access to movies from Walt Disney Co., such as “Toy Story 3” (via The Wall Street Journal). Subscribers also enjoyed streams of Sony Corp. films under the deal until the studio pulled its programming from the Starz service in June.
Analysts are divided over how significant the loss of the Starz deal will be to Netflix’s streaming service (more at Reuters). A Netflix spokesman told Bloomberg, “We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.”
In related news, the company’s much-talked-about price increases took effect Thursday.
Liberty Media’s Starz, a key supplier of streaming video content to Netflix, says that it will institute a 90-day window on episodes of its original series beginning April 1.
The Starz announcement (via The Hollywood Reporter) comes two days after Showtime said it plans to pull its original series from Netflix’s streaming service, and one week after Netflix touted its exclusive licensing of a TV drama series for release in late 2012.
By then, Starz may have instituted delays on the movies from Walt Disney Pictures and Sony Pictures that it supplies to Netflix as well. The companies’ current “windowless” movie streaming agreement reportedly runs through early next year.
Renegotiation of the Starz-Netflix streaming deal has been the subject of much speculation. Starz is increasingly promoting its own library of online programming as a value-add for its pay-TV subscribers.
The timing of Starz’s announcement is notable in more ways than one: the network is in the midst of promoting its newest original TV series, “Camelot,” which premieres next Friday.
Film production company Relativity Media asserts its options in the emergent age of digital distribution, and Netflix asserts itself as a potential pay-TV contender, in an exclusive deal that will bring Relativity films to Netflix’s streaming audience “just months after their DVD release.”
Netflix chief content officer Ted Sarandos explains the context in the company’s PR: “Historically, the rights to distribute these films are pre-sold to pay TV for as long as nine years after their theatrical release.” The movies-via-pay- TV business is currently dominated by the likes of Starz Entertainment — which Netflix has partnered with to stream first-run films since late 2008.
Among the first wave of films covered by the Netflix-Relativity deal are “The Fighter,” starring Christian Bale, Mark Wahlberg and Amy Adams (distributed by Paramount Pictures), slated for release later this year. Current Relativity releases include “Salt” (distributed by Sony’s Columbia Pictures) and “Get Him to the Greek” (distributed by Universal).
The Wrap made hay of its exclusive on the news yesterday, noting that pay TV deals can net a major studio $100 million a year in revenue. The Netflix-Relativity pact “is believed to be on a par with or better than” major-studio terms, The Wrap reported.
Deadline Hollywood, meanwhile, throws water on the idea of deal being a game changer: “It’s hilarious to think [it] will make HBO or Showtime or Starz or Epix shudder, especially as they continue to move away from showing movies and more towards original programming.”
Walt Disney Co. is in talks with Liberty Media Corp.’s Starz that may limit the movie channel’s ability to provide films online via Netflix’s streaming service, according to a Bloomberg report. By Bloomberg