So a couple weeks ago I reported that Hulu was working a big deal with Miramax. Well the studio isn’t being stingy with its love, which is great for viewers, and has entered into a deal with Netflix to offer up hundreds of titles at the online video service. Of course, I already knew this was coming as I saw it on the WSJ back at the end of March and dropped it into apiece. Personally, I think they could have bought the studio outright last year and saved money.
The thing about it is, it’s not all that big of a deal to me. While some outlets are reporting that this is the godsend content deal that Netflix needed to survive… I disagree. As I said, Hulu could also get what I am betting is the exact same content, so might Google and Amazon and others. So this is really just Miramax hedging its bets and using as much distribution as it can get which I prognosticated on some time back (90 days ago to be exact). See how in tune I really am?
The Big Wheel and Deal
Let’s face it, this will certainly bolster Netflix as hundreds of new titles is always good news for a content provider, so in that regard, it’s a win for Netflix. But not a major one as Miramax is already doling out their goods to whomever waves a stiff wad of cash at them, like Hulu, I bet. So it’s not a big load of unique or exclusive content most likely. I imagine that if it had been, Netflix would have announced it as such (which they didn’t).
But, more content is good, like I said. However, I still have an itching in my brain that tells me Netflix is far smarter than some think and while they will continue to pursue these secondary distribution deals, they really should and might be working on that project I keep talking about, them buying content right from the creators.
My Vision of Future Perfect Netflix
As I’ve said before, I think the key to their survival is becoming the main distribution channel for new content (are you listening Netflix!?). They have said that they are not interested in becoming a broadcast contender and I don’t envision them as being one. I envision them as being the online video source.
However, in order to do that, they have to have the content. The studios, whether through greed, lack of understanding their audience or just downright resentment are withdrawing from Netflix and taking their content with them (I’m taking my ball and going home!).
Miramax, on the other hand, is trying to monetize its content as much as possible. If you remember, they were on the Disney chopping block for around $700M and purchased by Filmyard Holdings, who are really the driving force behind its monetization now I imagine. In that deal, closed back in December, they paid $663M for some 700 film titles, some books and other stuff.
Miramax Maxes Profit Margin
Say you owned Miramax and had some really hot titles in that list of 700. Now, you paid $663 million for them, or, more simplistically, a million a pop. You then take that content, which you already said you will be focusing on instead of generating new content, and start doling out licenses to the online video providers – Hulu, Netflix, Tom Dick and Harry’s Online Video Emporium or whatever. Voila! Instant profit!
Now you get $200-300 from each of them for rights to access the content and then some % or fee per stream. At that rate you’ve not only recouped the initial cost of your purchase, you’ve built in some continued periodic revenue. Savvy b–ches!
Is this an exclusive deal? I’m sure Netflix was trying to put that on the table but I’m betting that Miramax, already reportedly in talks with the others, either wanted a major boatload of cash or simply said no. Hopefully, they got a fair shake on the price and are still able to wheel and deal the content to other players in the market so that we can all get it from our video streaming favorite.
If they have done like I suggested above, then perhaps they might be a viable partner for that Netflix new world order I have been talking about. You know the one, where Netflix teams with a studio, they buy rights to content, Netflix gets the digital and the other gets the broadcast to use or shop around.
If Miramax isn’t making any new films right now and have already pulled down a profit on their purchase price, they could easily start looking to the future. They’ve got a pretty savvy CEO in Mike Lang, who ironically helped found Hulu (good job!) and buy myspace (oops!). Well, this is his rubber match so to speak, if he bounces back at Miramax he’s two for three and the golden child of online video maybe.
Hey, batting .500 in any industry is decent and in meteorology might even get you a raise.