Hollywood studios say they’re breaking up with Netflix. But the reality isn’t that simple.
Two years ago, Walt Disney parted ways with Netflix in a public declaration of war. The owner of Star Wars, Marvel and Pixar movies would stop licensing films to the world’s most popular paid online TV network. Instead, Disney planned to keep them for its own streaming services.
Yet the media giant left out a key detail: Under their current deal, every movie released between January 2016 and December 2018 – including epics like “Black Panther” – will be back on Netflix starting around 2026, people familiar with the matter said. Similar issues confront other media titans like NBCUniversal and AT&T Inc., the owner of HBO and Warner Bros. Netflix, which has about 150 million subscribers worldwide, has some of their most-popular shows locked up for years.
“There has been no universal pullback,” said Michael Nathanson, an analyst at MoffettNathanson.
Much has been made in recent weeks about the prospect of Netflix losing popular programs like “Friends” and “The Office” as the owners of those shows – AT&T and Comcast Corp.’s NBC – plot their own online moves and debate whether to keep supplying programs. Netflix has used their shows and movies to upend pay TV and build a streaming business that investors value at more than $150 billion.Netflix bears have pointed to the risks of the company losing popular content. Though the shares climbed 30% this year through the middle of last week, they had lost more than 9% since hitting a high at the beginning of May.
But like Disney, the companies that own Netflix shows are bound by deals they made a long time ago, said the people, who asked not to be identified discussing nonpublic information.
Of the 10 most popular licensed programs on Netflix, at least eight will be on Netflix for years to come, according to the people. “Grey’s Anatomy,” “The Walking Dead” and a slate of shows from the CW network, including “Riverdale” and “Supernatural,” will stay on Netflix for as long as they remain on the air – and then for three to six years after that, said the people. That means they will be on Netflix until at least 2023, and likely well past that.
And when the big Marvel, Star Wars and Pixar films return to Netflix in a few years, they’ll disappear from Disney’s own online service, according to the people.
Disney began licensing movies to Netflix in 2012, four years after the streaming service gained access to 2,500 movies through an arrangement with the Starz cable network. Hollywood studios saw Netflix as a lucrative way to replace shrinking DVD sales. Nickelodeon, Warner Bros., Fox and others all cashed in, handing Netflix some of their most popular programs. Many doubted the long-term viability of Netflix, so the agreements may not have seemed like much of a gamble.
But their shows were a boon for Netflix’s nascent streaming service, which had a small library of old movies when it debuted in 2007. Reruns of popular hits are a perennial draw and the foundation of the lineup at TV networks like TBS and Comedy Central. Netflix operated online for five years before releasing its first original series, building its audience online with shows owned by other companies. Thousands of them.
Netflix’s library of other companies’ shows was so exhaustive that, ahead of the company’s 2013 debut in the U.K., Kasey Moore started a website just to track what shows were coming onto and off of the service every month. Moore called the website What’s on Netflix, and it now gets 4.5 million visitors a month.