Disney, Netflix Sign Exclusive Film Deal

Netflix members will be able to watch Disney films instantly in the pay TV window across multiple platforms

Netflix will replace Starz as the exclusive subscription television service for Disney's first-run live-action and animated films, per an agreement announced on Tuesday.

The deal, which covers films released in theaters from 2016 to 2018, will grant Netflix new Disney, Disney Animation, Pixar, Marvel and Disney nature titles. Disney's deal for Lucasfilm has not closed.

Netflix members will be able to watch films instantly about seven and a half months after they debut in theaters. 

Financial terms of the deal were not disclosed, although Netflix's will pay more than Starz had been, one individual with knowledge of the deal told TheWrap.

Starz holds the rights to first-run Disney movies through 2015, which means Disney will have "exclusive" titles on both platforms during 2016 and 2017, but none of the titles will be the same. 

The deal also rewards Netflix with a mutli-year catalog deal that includes such Disney classics as “Dumbo” and “Alice in Wonderland.” That deal begins today and its duration varies title to title, ranging from a few months to several years. Netflix also earns the rights to Disney's direct-to-video new releases starting in 2013.

"Disney and Netflix have shared a long and mutually beneficial relationship and this deal will bring to our subscribers, in the first pay TV window, some of the highest-quality, most imaginative family films being made today," Ted Sarandos, Chief Content Officer at Netflix, said in a statement. "It’s a bold leap forward for Internet television and we are incredibly pleased and proud this iconic family brand is teaming with Netflix to make it happen.”

Also Read: Netflix Stock Sinks After Q3 Earnings Report

Netflix's stock rose 14 percent on Tuesday thanks to the news, a welcome shift for a company whose share price dropped precipitously last year before rebounding in 2012.

Netflix's core business has shifted from its film library to television, where rights deals are less expensive and viewers watch multiple episodes in a row. Netflix once had a deal with Starz, which included both Sony and Disney titles, but chose not to renew the relationship earlier this year, forfeiting more than 1,000 titles.

At the same time, Netflix has begun to produce its own shows, including the resurrection of "Arrested Development" and the upcoming "House of Cards." The latter, developed by David Fincher and starring Kevin Spacey, debuts in February.

Challengers such as Amazon and Hulu have posed a greater threat to Netflix in the streaming space, signing new licensing deals. In September, Amazon locked up a streaming deal with Epix, which once offered its titles exclusively to Netflix. CEO Reed Hastings has also hinted at the potential end of the company's deal with Epix, which supplies films from MGM, Lionsgate and Paramount.

Netflix has focused more on kid-friendly titles, including a deal with DreamWorks Animation.

This new deal with Disney provides more of those, from its catalog to new animation titles.  It also awards Netflix a new exclusive deal, filling its library with content that distinguish the service from its competitors ranging from Amazon to HBO and Starz.

That content all comes from one of Hollywood's biggest brands, a studio home to not just Disney titles but Pixar, Marvel and now Lucasfilm.