EXCLUSIVE
Update at 12:00 a.m.:
Relativity and Netflix officially announced their "groundbreaking deal to stream first run, studio quality theatrical movies to Netflix subscribers."
"Our continued goal is to expand the breadth and timeliness of films and TV shows available to stream on Netflix," said Ted Sarandos, chief content officer for Netflix.
"Historically, the rights to distribute these films are pre-sold to pay TV for as long as nine years after their theatrical release," he said. "Through our partnership with Relativity, these films will start to become available to our members just months after their DVD release."
"We have always been about finding new ways to grow and monetize our business," said Ryan Kavanaugh, Relativity's CEO. "This clearly is a natural step in the evolution of the movie business and opens up a whole new world of revenue and marketing opportunities. Netflix has certainly made its mark, with a service that reaches over 13 million people and allows consumers to have what they want, when they want it. We have a shared vision, and this deal marks a significant change in our industry."
(see full news release below)
Earlier:
In a deal that may change the landscape of pay television deals, Relativity Media and Netflix are gearing up to announce an alliance in which the online streaming service will exclusively release Relativity movies in what would otherwise be the pay TV window, TheWrap as learned.
The Relativity deal is set to be announced officially on Tuesday, according to knowledgeable individuals.
Under the terms of the deal, Relativity will provide Netflix with the licensing rights to all movies on which it controls distribution. The production company, which has co-financing and co-production deals with both Universal and Sony, controls the rights to 14 movies over the next 12 months.
(Left: Relativity Media CEO Ryan Kavanaugh)
They include the upcoming “The Fighter,” starring Mark Wahlberg and Christian Bale, the buzzed-about documentary “Catfish” and the Medieval thriller “Season of the Witch."
The deal would effectively make Netflix a new player in the pay television window, competing with the likes of HBO, Showtime and Starz.
Those premium pay TV deals are critical to Hollywood studios, bringing in an estimated more than $100 million per year to each of the major studios. The Netflix deal with Relativity is believed to be on a par with or better than the major studios' pay TV deals.
For Netflix, the deal gives the streaming service access to premium movies that it otherwise would have no hope of offering its subscribers until the expiration of the pay TV window, which can go as long as nine years.
For Relativity, the deal offers lucrative release terms that it could not hope to have with HBO and Showtime, which each have deals with the major studios and a limited number of slots for movies.
