Two-timing Disney makes same deal with Netflix & Amazon

Faith Merino · October 31, 2011 · Short URL:

The Disney-ABC group renewed its contract with Netflix while making the same exact deal with Amazon

Good news and bad news for Netflix.  The good news is that the Disney-ABC group has agreed to extend its licensing contract with Netflix.  The bad news: the Disney-ABC group has just made the same exact deal with Amazon.

Netflix first obtained streaming rights two years ago, which, at the time, meant Netflix could stream some TV shows the day after they aired.  Disney put the brakes on that in December 2010, but sweetened the deal by adding more content. 

The deal announced today includes past seasons of hit TV shows across all of the Disney-ABC group’s channels (ABC, ABC Family, ABC Studios, and the Disney Channel), such as “Grey’s Anatomy,” “Desperate Housewives,” “The Secret Life of the American Teenager,” “Melissa & Joey” (so that’s what Joey Lawrence is up to these days), “The Suite Life on Deck,” and “Hannah Montana,” among others.

The deal also includes new content, such as ABC Family’s “Switched at Birth,” the Disney Channel’s “Kick Buttowski,” and ABC’s “Alias.”

And these are all the same shows that Amazon users will now be able to stream via their Prime memberships.  The deal adds 800 new shows to Amazon Prime’s catalogue, bringing the total to nearly 13,000 titles (Amazon’s Director of Video Content Acquisition Brad Beale expects Prime to have 13,000 titles by early 2012).

Tough break for Netflix, since—in an apples to apples comparison—Prime is the cheaper way to go.  At only $79 a year, that breaks down to about $6.50 a month, compared to Netflix’s $7.99 unlimited streaming package.  But, while Prime has been beefing up its content offerings in recent months, its selection is still pretty anemic and doesn’t include new releases in movies—users would have to pay $3.99 to stream “Captain America” or the seventeenth Pirates of the Caribbean movie.

But Netflix needs all the help it can get these days.  Last Tuesday, the company’s stock dropped more than 37% to $74 from $118 as investors fled after Netflix announced its third quarter earnings, which included a little tidbit about losing more customers than previously anticipated—about 800,000 versus the previously predicted 500,000.  

Netflix shares climbed back up to $84 on closing on Friday, but are down slightly to $82.94 in pre-market trading Monday morning.


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