Parks Associates Blog

Wednesday, October 01, 2008

Netflix and Starz - Yes, They Do Windows!

As of today, the "Watch Instantly" online video lineup through Netflix will grow 20%, as Netflix is now streaming TV shows, films, and other video from Starz Play. STARZ Play offers about 2,500 movies and other titles to Netflix's current library of about 12,000 titles. The first 1,000 titles from Starz Play are available now, with more content added in coming weeks.

Why is this announcement significant? It all comes down to where the content sits in Hollywood's distribution windows (also known as its "sequential distribution" model). To date, none of the online movie services have been able to offer very compelling movie rentals, and part of that has to do with the exclusive nature of the Pay TV window - right where Starz sits today. So, while a CinemaNow or Movielink (Blockbuster) gets shut out of that content during that period, Netflix basically owns the online distribution at the same time as the other pay TV providers. I had explained this phenomenon as the "HBO Hole" in a blog earlier this year. (Thanks, by the way, to Dawn Chmielewski at The Los Angeles Times for a good blog that explains this exclusivity.)

There's another good write-up about the Starz/Netflix announcement and what it means in terms of the content that Netflix can now offer at Broadcasting & Cable.

  • The Pay TV window for content starts about 11-12 months after a movie hits the theaters;
  • The Pay TV window lasts for about seven months;
  • After content is aired in the Pay TV window, it then becomes the exclusive offering of broadcasters and syndicators for a period of up to seven years; and
  • After that exclusive period, the Pay TV players get about another 18 months of exclusive air rights.

The Starz Play feature not only gives viewers access to the on-demand titles, but it also provides live feeds from the Starz TV channel. Like the other Pay TV channels, Starz has original programming (Crash, for example), so that can be a compelling addition to the content lineup. The fact that Netflix now can offer this exclusive content really adds value to what they're able to offer as a complete entertainment service, including the DVD rental business and their online offerings.



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