LOS ANGELES â€" Walt Disney Studios on Tuesday said it had completed a deal to show films from its Disney, Pixar, Marvel and Lucasfilm banners on Netflix, replacing a less lucrative pact with Starz.
The agreement marks the first time that one of Hollywood's Big Six studios has chosen Web streaming over pay television. Netflix has made similar “output†deals with smaller movie suppliers like DreamWorks Animation and the Weinstein Company, but all of the majors â€" Disney, Paramount, Universal, Warner Brothers, Sony and 20th Century Fox â€" have stuck with Starz, HBO or Showtime until now.
Library titles like “Dumbo,†“Alice in Wonderland†and “Pocahontas†will become immediately available on Netflix, Disney said. Netflix will begin streaming new-release Disney films starting in 2016, which is when the existing accord with Starz expires. The deal announced on Tuesday includes direct-to-DVD titles.
Financial terms were not disclosed. The deal does not include films from DreamWorks Studios, which has a theatrical distribution arrangement with Disney but separately relies on Showtime as a pay-TV partner.
Ted Sarandos, Netflix's chief content officer, called the deal “a bold leap forward for Internet television.†Janice Marinelli, president of Disney-ABC Domestic Television, said in a statement, “Netflix continues to meet the demands of its subscribers in today's rapidly evolving digital landscape.â€
The so-called pay TV window is one of the entertainment industry's most important business tools.
In the past, Starz, HBO and Showtime have paid steep licensing fees of about $20 million per picture for exclusive rights a few months after films arrive on DVD. But Netflix - capitalizing on a consumer shift to streaming content on computers, tablets and Internet-connected televisions - has been aggressively going after the business by offering more lucrative te rms.
With the Disney deal, Netflix will be able to offer customers exclusive access to a pipeline of films that are reliably some of the year's biggest box office successes. Netflix has also made it a priority to beef up its children's and family offerings.
What does the loss of Disney mean for Starz? Anything that increases the marketplace clout of Netflix is damaging. Moreover, the premium cable service does not have the original programming strength of HBO or Showtime to fall back on.
Starz will continue to have films from Sony, but the absence of Disney movies will be a hole in its offerings. In a statement on Tuesday, however, Starz said that it decided to part ways 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 ou r distributors and subscribers,†the company said in the statement.
