Netflix still after first-run films

Netflix was criticized when it agreed to a 28-day delay on DVD sales from some studios. But its CEO is finding ways to acquire content as early as his competition.

New releases were supposed to be dead at Netflix.

Reed Hastings Netflix

Don't tell that to CEO Reed Hastings. He just signed a long-term agreement that will hand the Web's No. 1 video-rental service the ability to stream "first-run films" from independent studio, Nu Image/Millennium Films as soon as the movies are made available for pay TV services, the companies announced Wednesday.

Remember when Netflix was blasted for initiating a 28-day delay on the rentals of new releases from Warner Bros. and some of the other big studios? Oh, how the critics howled. They said Netflix had surrendered. They said Hastings got fleeced and accused him of heaping an unnecessary burden on customers.

What they overlooked is that Hastings agreed to implement the 28-day no-rental window to ensure his digital streaming service received a steady supply of big-studio films. The popularity of the Watch Instantly feature is exploding and the service represents the future for Netflix. Let's not forget that just a year ago there was nothing to guarantee Netflix would be able to build out its streaming library.

The studios have multiple distribution partners, such as cable and broadcast TV, video-on-demand services, and iTunes. Cable companies and some pay TV services have stuck a lot of cash into the studios pockets over the years and many have their own interest in streaming movies via the Web. After speaking to executives from three of the big studios last year and hearing their complaints about how little revenue they once saw from Netflix, I and others didn't think Hastings could turn Watch Instantly into a player.

But he made good on his word . He has continued to acquire more content for Watch Instantly users. Last month, Netflix announced the company had acquired rights to stream movies from such heavyweight studios as Paramount, Lionsgate, and MGM in a deal valued at $1 billion.

The significance of the agreement with Nu Image/Millennium Films is that Netflix isn't solely focused on obtaining films from big Hollywood studios. The company knows good indie films are available and Netflix execs appear to be trying to get them on Watch Instantly as soon as possible.

As for the quality of the films from Nu Image, who knows? Some of them at least appear to be big budget productions featuring marquee actors. Among the studio's first films scheduled to appear on Netflix's streaming service sometime next year will be "Son of No One," a crime drama starring Al Pacino, Katie Holmes, Tracy Morgan, Ray Liotta, and Juliette Binoche.

As an aside, consider what Hastings' to-do list must look like now.

Create a revolutionary video rental system using bleeding-edge technologies: the Internet and, um, the U.S. Postal Service. CHECK.

Render brick-and-mortar video chains Movie Gallery and Blockbuster obsolete. CHECK.

Build a pioneering video-streaming service and then help create set-top boxes that enable subscribers to watch Web video on their living room TVs. CHECK.

Leap past cable companies and pay TV services. IN PROGRESS.

 

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