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At this point, premium cable networks like HBO and Showtime should be worried. Netflix announced today an alliance with studio Relativity Media to exclusively stream Relativity films several months after their DVD release — a time period that’s referred to as the “pay TV” window.
The deal effectively turns Netflix into a legitimate pay TV player, competing with the likes of established premium cable networks, reports The Wrap.
It grants Netflix licensing rights to all of the films that Relativity controls distribution for — including upcoming films like “The Fighter” starring Mark Wahlberg and Christian Bale, and the much-hyped documentary “Catfish.”
Traditionally, pay TV deals are big money makers for Hollywood — they bring in over $100 million a year for every major studio. Netflix’s deal appears to be on-par with what studios traditionally see from pay TV networks. For Relativity, it grants them more lucrative and flexible release terms since Netflix’s streaming service is entirely on-demand, and isn’t beholden to a broadcast schedule. The deal also allows Netflix to gain access to films that in the past would have taken years to stream to its subscribers.
Ultimately, Netflix’s agreement with Relativity could permanently shift the landscape between studios and premium TV networks — particularly since those networks are gearing up to renegotiate their deals with studios around 2015. In 2008, Netflix signed a three-year deal with Starz to bring much of its content to streaming service. The Relativity deal is the next logical step for Netflix, and it most likely won’t be the last.
With a subscriber base of 13 million, Netflix is larger than Starz, and on-par with Showtime. By the end of the year, Netflix expects to have 15 million subscribers.