Netflix Inc. will pay nearly $1 billion during the next five years for the online streaming rights to movies from Paramount, Lionsgate and MGM in a deal that could help Netflix attract even more subscribers.
The agreement announced Tuesday marks another breakthrough in Netflix’s bid to stock its online streaming library with more compelling material. The online streaming push also helps the company reduce its postage bill for mailing DVDs to its 15 million subscribers.
The deal also makes the three studios’ joint pay TV venture, Epix, immediately profitable.
Viacom Inc.’s Paramount, Metro-Goldwyn-Mayer Inc. and Lions Gate Entertainment Corp. are selling Netflix the right to stream movies 90 days after they appear on the Epix pay channel offered through subscription TV providers such as Dish Network Corp. and Cox Communications Inc.
The first crop of movies to be released in Netflix’s streaming library on Sept. 1 include “G.I. Joe: The Rise of Cobra,” “The Pink Panther 2″ “The Curious Case of Benjamin Button” and all of “The Godfather” movies. Over the next few months, “Iron Man 2″ and “Star Trek” will also be available for streaming.
The movies will be available for streaming on Netflix for 16 or 17 months, after which the rights will shift to basic cable channels.
Netflix now has movie streaming rights that cover about 46 percent of new releases at the U.S. box office, said Ted Sarandos, Netflix’s chief content officer. That’s comparable to what Time Warner Inc.’s HBO gets for its pay TV channel.
“We are giving people more and more reason to stream instead of waiting to get their DVDs through the mail,” Sarandos said.
