Netflix Takes a Leap Forward in Video Streaming Movies

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All the Netflix fans who have been hanging on by their fingernails watching French films and obscure documentaries finally have something to celebrate. Your $8.99 a month will now get you first run video streaming movies from Disney. This includes all live-action and animated films from Disney and its subsidiaries Pixar, Marvel and the newly acquired Lucasfilm. Netflix will also offer the entire Disney library of streaming videos online. This output deal begins once the current deal with pay-tv channel Starz expires. Unfortunately for those whose fingernails have worn thin, the deal does not start until 2016.

OTT on demand movie streaming is now making inroads into the sacred ground of pay-tv on cable channels. Now instead of watching pay-tv you can go directly online and stream your favorite first run movie from Disney as the first available broadcast window. The “cutting the chord” crowd is rejoicing as more content makes it’s way online, liberating them from the high monthly costs of premium cable subscription. This will encourage more people to take the plunge, thereby increasing demand for OTT content, and then attracting more folks to make the switch. You see the trend here right?

This is considered by many to be a big shot in the arm for Netflix and its dwindling subscriber growth and falling stock price. The higher costs of content distribution is good news for content creators as OTT Streamers fork over huge fees for first run product, with Netflix paying an estimated $350 million a year for Disney movies and HBO paying an estimate $200 million for a similar deal with 20th Century Fox. Ironically, this trend is causing cable companies to watch their pennies and reevaluate channel deals with second tier cable channels. This then puts financial pressure on the second tier channels to migrate to an OTT offering like Roku, Boxee, etc for distribution of their original programming for a bigger share of the ad sales profits. Start your new Boxee channel now folks … cable TV’s bloated ad rates are moving online!

The stock market rewarded Netflix with a 14% increase in share price while Starz fell by 5%, even though it is expected that Netflix may have to raise mucho-mucho capital to fulfill the Disney agreement moving forward. Ted Sarandos, Netflix’s Chief Content Officer offered, “This deal brings our subscribers some of the highest quality, most imaginative family films being made today. It’s a leap forward for Internet television.” Debt does not beat growth as the leap forward for internet television is a sign of the times. Starz is the loser in this deal for now. But don’t be surprised if a Netflix competitor like Amazon makes an offer for Starz. The rumors are growing that Starz remaining output deals with studios, lower stock price and pay-cable window revenue stream make them a very attractive acquisition for the deep pockets of Jeff Bezos and the gang. Oh yeah, by the way as a matter of record, I’m starting the rumor right here.

Amazon Assaults Netflix Streaming Dominance

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Netflix started streaming its library in 2007 as a perk to its popular mailing service and five years later it’s streaming subs outnumber mail subscribers by 11 million. This incredible growth of popularity led to higher revenues and much higher fees as they were clearly on the radar of the industry for paying well, essentially competing with their own output deals as they came up for renewal. Speaking if renewal problems, this dilemna left Amazon without the guant catalog of movies from Starz, which helped build the popularity of the channel. Amazon took notice and launched their own premium service and expanded it’s titles from 5,000 to 20,000 in a little over a year. Today they announced that they signed 3,000 new titles from Epix, which were once exclusive to Netflix. Is Jeff Bezos laughing all the way to the bank?

Netflix’s streaming dominance is wavering and as the battle for titles continues, both Netflix and Amazon are moving into original content as well. The streaming pie is getting carved up with other players as well who have their own exclusive arrangement to content. Hulu Plus has 1.5 million subscribers, Redbox and Verizon are partnering to offer a DVD+streaming package later this year and rumors persist that Apple will eventually enter the space. Streaming is here in a big way and dominates a significant portion of the internet traffic. As live streaming is set to explode in the next five years, how will the internet handle all of this traffic. How will smaller content producers compete online for the streaming revenues as movie titles exhaust and new ones cannot support the monthly fees? Stay tuned or should we now say, keep on streaming?