In a bidding war that went into the hundreds of millions, Netflix Internet video service outbid the Starz cable channel for the rights to stream Disney movies to customers shortly after the films leave theaters.
Although specific financial terms from the deal weren’t disclosed, expert analysts estimate Netflix will pay Disney more than $350 million a year.
It could be a big gain for Netflix or a costly mistake if they aren’t able to reel in more customers with the exclusive deal. If they can’t pull in more subscribers, they’ll have to raise prices again—something management has already promised they wouldn’t do after the failed rate hikes of 2011.
So far, the win seems to be working for them, as Netflix shares rose 14 percent after the deal was announced, its highest closing price since last April.
This deal marks one of the first times a major Hollywood studio has sold first-run rights to someone other than a premium TV network.
Netflix’s chief content officer, Ted Sarandos, couldn’t be more pleased with the news. “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,” he said.