In its second-largest acquisition, Amazon buys the company for $970 million.
Under a new agreement, Netflix will have the first rights to Warner Bros. streaming movie content. In return, Netflix will wait 28 days after the release of a new Warner Brothers DVD or Blu-ray disk before making it available to its subscribers.
Netflix is giving a little to gain a lot in digital movie streaming with its new deal with Warner Bros. Home Entertainment Group.
Under the new agreement announced yesterday, Netflix, No. 18 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name) will have the first rights to Warner Bros.’ streaming movie and other entertainment content as it becomes available.
In return, Netflix, which has done business with Warner Bros. for about 10 years, will wait 28 days after the release of a new DVD or Blu-ray disk from Warner Bros. before making it available to its more than 11 million subscribers. The new deal gives Warner Bros. a better chance to maximize the sale of new releases, says Ron Sanders, president, Warner Home Video. “These new agreements build upon the strong relationship we have had with Netflix,” says Sanders. “The 28-day window allows us to continue making our most popular films available to Netflix subscribers while supporting our sell-through product
For Netflix the new deal continues the relationship with a key content provider and secures another source of streaming entertainment content. The two companies didn’t release specifics on movie streaming, but currently about 42% of Netflix subscribers watch video instantly by streaming content from Netflix.com at least once a quarter, up from 22% a year ago, Netflix says.
“We’re able to help an important business partner meet its objectives while improving service levels for our members by acquiring substantially more units than in the past after a relatively short sell-through window,” says Netflix chief content officer Ted Sarandos. “At the same time, we’re able to extend the range of choices available to be streamed to our members.”
Netflix also continues to work with more consumer electronics manufacturing companies to equip Blu-ray disc players or digital televisions with streaming technology. Yesterday Netflix announced new arrangements with Funai Electric Co. Ltd, which distributes the Philips, Magnavox, Sylvania and Emerson brands in the U.S.; Panasonic Corp.; Sanyo Electric Co.; Sharp Electronics Corp. and Toshiba Corp. "We look forward to adding even more partners this year, and we expect instant streaming of movies from Netflix to be available on more than one hundred different partner products in 2010," says Netflix CEO Reed Hastings.