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A Look At Netflix’s Plan To Woo The Studios With Digital Distribution

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Amid increasing speculation about which company would be an ideal suitor for Netflix (NSDQ: NFLX), comes insight into how the movie rental service plans to build longevity into its business—a bid to maintain its independence, perhaps—by brokering digital distribution deals directly with Hollywood studios.

SEE ALSO: Netflix Wants 50 Percent Discount Under Release Delay Scenario | paidContent

Netflix continues to deliver profits and strong revenues quarter-over-quarter and year-over-year, with much of that growth being driven by digital distribution (streaming and downloads). But as CEO Reed Hastings has maintained, the company needs to be able to deliver access to more new releases in order for its digital business to scale in a sustainable way. So that’s where Chief Content Officer Ted Sarandos will devote much of his time next year.

“Doing business in Hollywood is very much built on trust and relationships,” Sarandos told Bloomberg. To that end, Sarandos has been schmoozing with execs like Lions Gate President Steve Beeks and DreamWorks CEO Jeff Katzenberg, and plans to spend more time—and money—in an effort to get better digital distribution rights for their new releases and overall libraries.

Netflix currently has access to a limited number of new releases from studios like Disney and Sony—but that’s largely through deals it cut with third-party services like Starz. Both Sarandos and Hastings said Netflix is willing “to write big checks” to the studios directly to get access to a wider variety of new releases. The upfront payments would hopefully convince the studios that Netflix is a “friend” as opposed to an enemy (a la Redbox), but also to help the entire movie ecosystem move toward digital distribution in a profitable way.

Dec 29, 2009 1:10 PM ET

Netflix Photo: AP Images


Posted In: Entertainment, Movies, DVD, Media & Publishing, TV, VOD, Technologies / Formats, Broadband, Companies, Netflix

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