Another $200 Million A Year For Reruns
Netflix has now done deals with CBS and Disney for television reruns of primarily older shows – including Star Trek! – that will cost the streamcaster and estimated $200 million a year… or about $14 a year for every household currently subscribing to the service. These non-exclusive deals join, so far, EPIX and Relativity Media to put Netflix’s content costs over the $700 million a year mark… or slightly more than $50-a-year per $96-a-year subscriber.
This does not include any of the future, similarly costly deals the company will have to do with Universal, WB, Fox, Disney, and Sony – perhaps through third-parties, like Starz – to offer streaming content. There are also more television deals to do.
The streaming bubble is a real boon for studios. Libraries that had gotten wildly devalued are suddenly worth premium prices to streaming companies looking to grow or maintain position in the arena. Streaming has gone from a marginal revenue business to a $2 billion-plus a year chunk of business in less than a year. Eventually, this bubble will burst for the middle companies and everything will re-set. But for now, studios couldn’t be happier… unless they are still in line for the next deal… praying that this hyperactive spending will continue.
Meanwhile, who is screwed?
The Unions, who basically gave away the streaming business like they gave away the DVD business years ago. Unions members are likely to end up getting less than 1% of the revenues created by this new spending on old product. Sigh…
Less than 1 percent? Wow. That aside, this deal is just fucking stupid. Seriously, they are just giving money away when they have more money yet to spend.
David, they really are spending like the Yankees but with a Minnesota Twins budget.
I was never good at math but if you don’t have exclusivity aren’t those deals slightly insane? What percentage of subscribing viewing will be those reruns? How on earth can a limited licence non exclusive deal be good in anyone’s books? Market share aside, this is nuts isn’t it?
David: Curious about something. Will deals like this ultimately affect how much syndicators can ask for older TV shows? To be specific: There’s an indie broadcast TV station here in Houston that strips reruns of Star Treak. (I have no connection with this station, BTW.) If the series is available for downstreaming — might the station insist on paying less the next time the contract is negotiated?
The syndication market is already so weak that it’s not a huge concern for CBS/nee’ Paramount in this kind of case. So, yea. But local stations are in for a hard fight as this transition takes place.
Won’t these streaming reruns also put the final nail in the annual sales of DVD TV-series boxed sets?
I don’t know how it is in other markets, but there are two indie stations in Houston — including one to which I do have ties — that run older shows like Twilight Zone, Gunsmoke, Magnum P.I., I Dream of Jeannie, Simon and Simon, I Love Lucy and the original Hawaii 5-0. Each time I hear about a deal like this, I wonder: Will this hurt those stations? Or is it a demographic thing? That is: Are the people who watch these old shows on broadcast TV not the sort of people who downstream?
JBD, yeah it’s totally crazy deal but that’s apparently how Netflix do it. They either have money to burn or they really are under the delusion that spending 200m for these shows is a good idea. It’s not like I am not going to watch some DS9 as soon as possible but 200m is a bit much.
Also, seriously, Paramount are not making any money off of those DVDs. They may have made some fat cash from them at the beginning of the boom, but they have been withering on the vine for close to 4 or 5 years. Now they get 200m that justifies rarely putting their ST collections on sale and all the millions they spent on OS:SE!
Seriously, I’ve seen DS9 on sale ONCE when the new Star Trek movie came out, and I only had the money to buy the first season. Ungodly expensive ever since. So yay for having Netflix to re-watch that when I want to. Syndication SUCKS in central Nebraska. We don’t even have The Simpsons on syndication, so I’m always the biggest idiot when I’m out-of-state, and the biggest weirdo when I drop a reference in-state. And the goggles do nothing!
Not sure what everyone in the comments is so excited about. The math in the article is fine, but the whole idea is that with a bigger catalog of streaming content, the larger Netflix will grow their subscriber base. I think they’re around 15 million subscribers now. That means that there is tons of room for growth in the USA alone (I know they have different content for Canada, etc.). It’s not like they’re paying a percentage of their income. As their subscriber base grows, so will their profit. Since the most consistent complaint I hear about Netflix is the lack of good streaming content, this deal makes sense to me, especially from a company that doesn’t want to send any more discs in the mail. I love that they’re being so aggressive for the deals. It keeps making HULU+ look less attractive.
This could be genius – hands up anyone who thinks the cable companies have a stronger brand (and more loyalty) than Netflix? They could end up a real alternative to (premium) cable service, if they can assemble the deals and if we assume that Apple or someone else make streaming mainstream over the next few years. Then again, they could overpay, inflate a bubble, and… ciao ciao Netflix. Just fun to watch unless you own stock in them.
The people watching reruns of Andy Griffith or Hawaii 5-0 are the retired folk, not the streaming crowd. Netflix says that half of its streaming is old tv shows, so this is actually what the customer wants. I just noticed they added a bunch of Carsey Warner titles and my wife is excited about having the entire run of Roseanne at the touch of a button. Since this is a Paramount deal does this mean I can expect Cheers and Fraiser to pop up as well?
As for the box sets, everyone who wanted a box set of Star Trek already has one. They will make much more off this annual deal than they will from sales or syndication.
As for the local stations, you have to remember that people have different viewing habits. A majority of people just watch tv to watch tv and don’t really care whats on, they want a lot of options but will settle for whatever happens to be on. Streaming is for the more decision orientated viewer.
And I also want to point out that every night I spend streaming reruns of Larry Sanders is another day of postage that Netflix saves.
Just curious DP . . . what would Netflix have to do for you to post something positive about them?
It’s my understanding that we get 1.2% of 100% of rental streaming (which includes Netflix streaming) in the 2001 MBA deal hashed out during John Wells’ first time around as WGA president.
The free streaming rate is not as good (the free streaming rate was agreed to in the far-more-annoying Patrick Verrone-era, in the aftermath of the 2007-08 strike).
Of course, anything produced before July 1, 1971 (like Star Trek: TOS) doesn’t pay residuals.
The rental streaming rate is still not awesome, but it’s considerably better than the DVD rate.
Still kinda pissed the bottom fell out of the “old TV shows on DVD business,” since the DVD biz essentially pays the bills for me, or at least definitely did circa the mid-00s. Used to make a decent living because they were literally putting EVERYTHING out, and even though I was glad to make a small fortune working double shifts to QC the transfer or sub translations of every sixth-season episode of Home Improvement at Ye Old Posthouse, I did always wonder, “Who the FUCK needs to own an entire middle season of SANFORD AND SON on DVD for 60 bucks?”
I’ve only ever bought a few season sets of big shows, but I can’t imagine ANYONE in the world watching that shit on any regular basis. I can see maybe LOST or GLEE or SOPRANOS, but even then…. In general, did people fall for that, at least for a while? Anyone here get stung by loading up on old season sets of MAGNUM PI or HARDCASTLE AND MCCORMICK then realize it didn’t hold up at all and you damn sure weren’t gonna watch it?
Larry Sanders is on Netflix streaming?
HEY NOW!
Will Harry O be available on Netflix streaming? Or Amazon?