By Ryan Lawler
Subscription streaming provider Netflix (NASDAQ:NFLX) has entered the big leagues, as it just struck a wide-ranging deal with Disney (NYSE:DIS) that will give it access to a bunch of Disney classics, bolstering its collection of kid-friendly content. And beginning in 2016, it will also be the exclusive distributor of new Disney live-action and animated features as they're rolled out.
The exclusive part of the deal encompasses movies from Disney, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, and Disneynature, and includes distribution on all sorts of platforms, including online, on mobile, and tablet devices, as well as on connected TVs, Blu-ray players, game consoles, and other streaming boxes. It falls in the pay TV window, meaning that Netflix will get access to that content at the same time that cable networks would normally get those titles -- typically six to nine months after theatrical release once DVD sales have cooled, but before interest in the films have dissipated.
In the meantime, Netflix customers will get access to at least some films from the Disney library -- including classics such as "Dumbo," "Pocahontas," and "Alice In Wonderland." Netflix will also get direct-to-video releases that don't hit theaters, beginning in 2013.
The Disney deal comes less than a year after Disney films disappeared from the Netflix service, thanks to a contract dispute with the cable network Starz. In February, Netflix's deal with Starz ended, meaning it lost access to new movies from Disney and Sony.
This is a way for Netflix to not only gain access to highly sought-after content, but also to keep it out of the hands of competitors. In addition to its loss of Starz content earlier this year, Netflix also lost exclusive access to films in the pay TV window that were distributed through the Epix cable network. Not long after, Epix struck a deal with Amazon Prime Video, which made many of the same releases available on both services. That won't happen with the Disney deal, as Netflix has that content pretty much locked up as part of a multiyear deal.
This isn't the first pay TV deal Netflix has struck, but it's by far the biggest. Previous deals like it include one with Relativity Media, which brought critically acclaimed films like "The Fighter" into the Netflix streaming catalog not long after release. But Disney is a huge win for Netflix, and it shows that the subscription streaming video provider will continue to be aggressive in its content acquisition efforts, despite a down stock price and questions about its financial viability.
While giving it highly sought-after exclusive content, the deal with Disney is also a way for Netflix to continue courting parents, providing kid-friendly content that other services might not have. Its Just For Kids user interface has been extremely popular with subscribers, as they use the on-demand streaming video service as a sort of next-gen babysitter, replacing traditional cable TV networks like Nickelodeon. With the addition of Disney characters and titles, Netflix will provide even more reasons for kids to watch and for parents to keep subscribing to the service.