Netflix Opens Streaming Video Distribution Deal With Open Road Films

Netflix Opens Streaming Video Distribution Deal With Open Road Films

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Ring-a-ding-ding! Look who was right, sort of… Yeah, that’s me, stop looking in the mirror. Netflix just signed a deal with a new production company, Open Road Films.

What’s that you say? You’ve read this news already today? Ahh, but you haven’t read my almost embarrassing amount of gloating about how I was right. Well, that and my excellent analysis of what this means for everyone. So, read on!

Netflix Partners With Open Road Films

Netflix has signed a streaming video distribution deal that gives them streaming rights to upcoming productions from Open Road Films, which was created by Regal Entertainment Group (movie theaters) & AMC Entertainment (more movie theaters). It’s like an end-around the major studios who have been making all sorts of business moves that have been cutting into what the cinema owners see as their bottom line. So, when that happens, why not turn the tables on those studios and start pumping out your own competitive content?

Seems, like a massively logical plan to me. Plus, tie up with Netflix who the major studios are bitching about cutting into their bottom lines because of slowing DVD rentals and sales and pretty much just thumb your nose at them . How awesomely cool is that?

Think about it. The only places you’ll be able to see these films are Regal or AMC theaters and Netflix. It’s a whole new spin on exclusivity and licensing. AMC has, and I quote:

…interests in 360 theatres with 5,128 screens in 31 states and the District of Columbia and four countries outside the United States…

One of those four countries is Canada, also a Netflix country.

Meanwhile, Regal’s network includes:

…6,657 screens in 535 theatres in 37 states and the District of Columbia…

So between the two of them they may very well cover all fifty states. I didn’t dig too deeply to find exactly which states.

What the deal does is gives Netflix the right to stream the films after they’ve done their theater runs and in that time when they would normally be out on video-on-demand.

Now a normal release schedule looks something like this:

  • Cinemas
  • DVD – 3-5 months later
  • VOD or PPV – 1-3 months later
  • Premium cable channels (those only available with some type of cable package)
  • standard free-to-air TV channels

What I’m betting is that Netflix will get that third window and perhaps it will overlap with the second or even be tied directly to it for simultaneous launch. No specifics were discussed in regards to DVD/Blu-Ray so right now it seems like a streaming only deal. The inked partnership sees Netflix getting their first release, Killer Elite, an action thriller with Robert DeNiro, Clive Owen & Jason Statham as well as their second feature, The Host, based on Stephenie Meyer’s novel and set for release 29 March 2013.

Tom Ortenberg, CEO of Open Road, commented on how Netflix gives them distribution to consumers in an innovative way. Well it’s not so innovative now, but it certainly was at one point.

Industry Impact

OK here’s the gloating and analysis portion of the show.

BOOM SUCKAHS! I told you that was gonna go down! Didn’t I?! Didn’t I?!

For those who are new readers, I have been saying that Netflix needs to side step those old stodgy movie studios and simply start doing deals right with production companies for streaming rights. While this isn’t exactly how I had envisioned it going down, it is close. The fact that the production firm is owned by movie theaters just added a sort of ironic twist to what I have been saying. Everyone has been finger pointing for some time. Studios point to Netflix and say they’re cutting into our profits and so they speed up DVD release. Movie theater owners point fingers at studios saying the shorter time to DVD is cutting into their profits by slicing a chunk of theater-only time out because of the earlier DVD releases. Netflix, sort of shrugs and says, well if you don’t want us to stream your stuff or rent out your DVDs then we guess we’ll just have to go find people who do.

Voila! Open Road Films and Netflix tie the knot, the two groups who have been shafted by the movie studios turn and thumb their noses while getting to work. Obviously, Open Road Films is serious about what they do as they pulled some big names in both actors and licenses. Netflix certainly will profit from what will most likely be a certain time where the content is exclusive to them.

In fact, this could be the beginning of a big shake up in how films get released. Consumers know that they can buy a digital copy of a film, legally, and have access to it from almost anywhere for slightly less than a DVD. So why buy the DVD? Why not just buy a digital copy, or have a service that gives you access to the films digitally.

A potentially new release schedule might look something like this:

  • Cinemas
  • Streaming
  • Blu-Ray – With all the extra bells and whistles. Screw DVDs, OK fine, throw one in the pack.
  • VOD and PPV via cable
  • Premium cable channels
  • standard free-to-air TV channels

See what I did there? Streaming becomes part of the actual plan for the film’s release. DVDs get dropped to “add-in” status and Blu-Rays come out after streaming. Why? Because they have all the extra goodies and add-ons that you can’t get in the cinema or streaming. Plus, the Blu-Ray still comes out before VOD and PPV meaning they’ll get those people that must absolutely have it in a physical format.

Now I say throw a DVD in the Blu-Ray box. Why not? Sucker Punch just did that, Blu-Ray, DVD and digital copy all in one. It’s retailing for about $22.99 on Amazon ($35.99 MSRP) and you get everything. Plus, you get those households that have a Blu-Ray player (or PS3), Xbox 360 and PC and they become loyal consumers because you gave them so much, which didn’t really cost you all that much extra to make, for a reasonable price.

Now, some people will probably say my schedule is wrong and that streaming will be after the Blu-Ray release and I would say: NNNNNTTT!! WRONG!

No really, I would just ask why? The two medium are very, very different and appeal to two different subsections of consumers, those that really need that physical disc and want all the extra bells, whistles, deleted scenes, bloopers and such, and those that want the flexibility of streaming. Yes, I know there will be some overlap. Rabid fans will probably see it in the theater, watch it streaming then get the Blu-Ray pack. But you see why the streaming comes first? Because when the Blu-Ray comes out first, you would lose some streaming revenue, because you’ve given them a digital copy. By allowing streaming first, you get those fans who will buy the hard copy, but who can’t wait to see the film again. BOOM! PROFIT!

So now, streaming video content finally has its proper place in the pecking order. I wonder how long it will take everyone else to realize it. I also wonder who will be the next big deal to hook up with Netflix in this manner.

What say you all?

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