Will Netflix Threaten HBO, Showtime and Starz?

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Netflix just demonstrated a bit of clout in obtaining “pay TV” rights to movies — and proved you won’t be able to watch some of the latest movies in the “TV” release window through a cable, satellite or telco TV provider.

The company announced a deal with Relativity Media under which it will get access to stream 10-14 movies per year that otherwise would have been distributed through HBO, Showtime or Starz.

It’s a small deal, and the premium channels aren’t shaking in their boots yet. Anyway, they’re increasingly emphasizing original programming instead of movies.

And while Netflix and Relativity claimed the “groundbreaking” deal marks the first time that “studio-quality theatrical feature films” will be available via an over-the-top streaming video provider instead of the traditional pay channels, others pointed out that Netflix already has access to certain titles in the “pay TV” window. For example, Sony Pictures’ Julie & Julia was available on Netflix’s streaming service several weeks before it was available on Starz’s linear channel (although according to Starz, all Starz Play/Starz Online affiliates got access to the movie at the same time; in the case of Julie & Julia, the on-demand version was available on March 23 in advance of the April 10 premiere on the linear channel).

Plus, it doesn’t look like we’re talking about mega-blockbuster titles here.

Some of the first films covered under the Netflix-Relativity deal — scheduled to be available at Netflix in early 2011 — are The Fighter, starring Christian Bale, Mark Wahlberg and Amy Adams and distributed by Paramount Pictures, and Skyline, co-directed by the Brothers Strause and released by Rogue Pictures and Universal Studios.

“This isn’t going to touch our product,” said one executive at a premium programmer.

But the point is, Relativity thought it could get the best payback through Netflix’s 14 million subscribers rather than going through traditional cable networks.

Eventually, Netflix could have the checkbook to seriously give the premium channels a run for their money, even though it’s a relatively small fish, as the Wall Street Journal notes. In 2009, Netflix spent less than $200 million on acquiring streaming content (according to Lazard Capital Markets) whereas HBO spent $1.43 billion (per SNL Kagan), the Wall Street Journal notes.

“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,” Relativity CEO Ryan Kavanaugh said in announcing the deal. “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.”

Could it be one more push — however small — toward a “cord cutter” future of diminished power for pay-TV distributors?

Add your thoughts below.

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