|Netflix reached a deal to stream Paramount, Lionsgate, and MGM movies.|
Netflix strikes deal with 3 film studios
Accord to expand movie streaming
LOS ANGELES —
The agreement disclosed yesterday marks another breakthrough in Netflix’s bid to stock its online streaming library with more compelling material, so it can keep its subscription service relevant as on-demand video systems supplant its core business of renting DVDs through the mail. The online streaming push also helps the company reduce its postage bill for mailing DVDs.
The deal also makes the three studios’ joint pay TV venture, Epix, immediately profitable.
Streaming movies provide more instant gratification than renting DVDs through the mail or from a store because the video can be delivered within 30 seconds over a high-speed connection. The video isn’t stored on the computer hard drives owned by subscribers; it’s just shown on a connected device, such as a video game console.
Analysts believe the influx of newer movies available for Internet streaming will enable Netflix to maintain its rapid growth of the past two years, lifting its earnings even higher despite the hefty licensing fees. That expectation helped lift Netflix shares $8.11, or nearly 7 percent, to close at $125.01.
Netflix’s stock price has quadrupled during the last two years as the number of the company’s subscribers has nearly doubled to 15 million. Meanwhile, traditional video stores have been closing, a trend reflected by the collapse of
Epix, a pay TV channel launched last October by Viacom Inc.’s Paramount, Metro-Goldwyn-Mayer Inc., and
The pay TV rights typically start about a year after a movie’s theatrical release.
Netflix is getting the rights to stream movies 90 days after they appear on Epix, which is offered through subscription TV providers such as Dish Network Corp. and Cox Communications Inc.
The first crop of movies to be released in Netflix’s streaming library on Sept. 1 include “G.I. Joe: The Rise of Cobra,’’ “The Pink Panther 2,’’ “The Curious Case of Benjamin Button,’’ and all of “The Godfather’’ movies. Over the next few months, “Iron Man 2’’ and “Star Trek’’ will also be available for streaming.