Netflix (Nasdaq: NFLX) has chilly relations with Time Warner (NYSE: TWX), to say the least. But in Viacom (NYSE: VIA)(NYSE: VIA-B), the video rental pioneer seems to have found an ally.
The Canadian arm of Netflix just got a little longer, as the company announced a fresh content deal with Viacom's Paramount studio for streaming Up North. This five-year contract, with unspecified financial heft, will stream both new releases and back-catalog films to Canadian subscribers. The deal includes 350 titles, starting with immediate access to Iron Man 2 and The Curious Case of Benjamin Button.
That's far from an all-access pass to Paramount's library, given that IMDB lists more than 3,700 feature films with Paramount among their producers and rightsholders. On the other hand, the Canadian service has been devoid of serious hit material so far, and adding films like Titanic and Wayne's World surely can't hurt the quest to sign up millions of hockey-loving, poutine-cooking subscribers, eh?
And then there's the ally angle. Paramount spokesman Hal Richardson is positively gleeful about this contract, in stark contrast to the verbal barbs Warner CEO Jeff Bewkes has hurled. "We are especially delighted that this arrangement serves to broaden the growing relationship with our friends at Netflix," Richardson said. You won't hear that kind of language from Bewkes anytime soon.
In related news, Netflix reacted to bandwidth caps imposed by Canadian data service providers by giving Canadian customers more direct control over their movie streams. By default, Netflix streams will now come in a svelte, low-fidelity bundle that uses about nine gigabytes of bandwidth for 30 hours of movie watching. For the occasional high-def splurge, or for customers blessed with unlimited data plans, full-quality streams about three times that size are still available.
We might eventually need something like that in America, too, if AT&T (NYSE: T) and Comcast (Nasdaq: CMCSA) adopt the Canadian model to preserve their precious backbone capacity. Mobile data plans are already moving in that direction.
Netflix is taking its cross-border opportunity seriously, while learning a thing or two along the way that could be useful in the American market as well. Anything less would make me a disappointed shareholder.
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