In what looks like a watershed moment for Netflix as a streaming video provider, Relativity Media just signed a long-term contract that gives Netflix streaming licenses to the studio's major motion pictures. It isn't clear whether the deal covers all of Relativity's future releases or just a handpicked selection; the first batch features Christian Bale vehicle "The Fighter" and Nicholas Cage thriller "Season of the Witch," among others.
Relativity may not be a household name, but the studio has produced 48 hits big enough to break the $100 million benchmark in box office receipts, and the company behind familiar titles like "Zombieland" and "Get Him to the Greek." The studio has a history of shunting movies into the Pay TV window where movie channels such as HBO and Starz ply their trade, but this exclusive deal with Netflix leaves the film channels out in the cold.
It's a shrewd move by Netflix, building upon the existing rebroadcasting agreement with Starz but also presenting fresh films in streaming format much earlier than before. This is a field test with a relatively small studio. If Relativity can report healthy financial results from this move without cutting too deeply into DVD revenues, I fully expect Netflix to go after bigger fish. First the mid-level producers, Lionsgate
That's how I see the long-term future working out in the movie industry, as our homes become ever more broadband-connected and consumers get used to having Netflix logos on their TV sets and set-top boxes. The DVD had its day but will decline with crushing inevitability; Blu-ray is just a stop-gap measure to hold us over until everybody can stream high-definition movies at the flick of a remote control. And Netflix is positioning itself to be a leader in the brave new world. Digital entertainment is the future.
Does quick-release streaming make up for delayed DVDs? Settle the score in the comments box below.
Fool contributor Anders Bylund owns shares in Netflix and Disney, but he holds no other position in any of the companies discussed here. Walt Disney is a Motley Fool Inside Value recommendation. Walt Disney, DreamWorks Animation SKG, and Netflix are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.