Netflix, Relativity Media Partner On Streaming Movie Service - InformationWeek

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Netflix, Relativity Media Partner On Streaming Movie Service

Select films from the Hollywood studio will be available from Netflix's "Watch Instantly" service before they are available on HBO, Showtime and other pay channels.

Netflix has signed a deal with Hollywood studio Relativity Media, which has agreed to show some of it movies through Netflix's streaming movie service before they are shown on pay TV.

The long-term agreement, announced Tuesday, marks the first time Netflix will be showing major motion pictures on its "Watch Instantly" service months after they're released on DVDs. Netflix typically gets the license to such films years after they're available DVD.

Relativity usually licenses films after they appear in theaters to pay TV channels, such as HBO, Showtime and Starz. The latest deal marks a cautious departure from that typical scenario, a reflection of the growing popularity of the Internet for watching movies.

Not all of Relativity's films will be shown on Netflix before TV and how movies will be chosen for one or the other distribution channel is not clear. In addition, the fact that movies will appear online after the DVD release show that the Internet remains on the lower rung of the release ladder for major films, which start in the more lucrative movie theaters and then head to DVD.

Nevertheless, the latest deal shows some progress in getting movies faster to Internet users. Films that head to pay TV first are often unavailable on online services like Netflix for as long as nine years after the movies' theatrical release.

"We have always been about finding new ways to grow and monetize our business," Ryan Kavanaugh, chief executive of Relativity, said in a statement. "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 has financed, co-financed or produced more than 200 movies, generating more than $13 billion is worldwide box-office revenue, according to the company. Current major releases include "Robin Hood," starring Russell Crowe, and "Grown Ups," starting Adam Sandler, Chris Rock, Kevin James, David Spade and Rob Schneider.

On tap for showing on Netflix in early 2011 are "The Fighter," starring Christian Bale and Mark Wahlberg, and "Skyline," a supernatural thriller co-directed by Brothers Strause. Other films showing in theaters this year that will be shown through Netflix are action-thrillers "Season of the Witch," starring Nicolas Cage, and "Movie 43," written and directed by Peter Farley. Netflix did not say when the latter two films would be available through the site.

Netflix has been building out its Internet-based distribution network. The company has signed deals with manufacturers to embed the service into consumer electronics, such as Blu-Ray disc players, digital TVs and set-top boxes. Netflix rival Blockbuster is pursuing a similar strategy.

In March, the company announced a deal with Akamai to improve Netflix's streaming service, which serves 12 million customers. Akamai operates a global network of distributed servers for distributing online content.

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