Under the terms of the new agreement, Netflix will stream online video from the Disney channel as well as the ABC Family and ABC TV. However, content will be delayed for fifteen days following the initial broadcast.
Netflix is finding that members are abandoning movies by mail in favor of Internet-delivered entertainment in the form of streaming video.
Cashing in on the move, Netflix recently offered a streaming-only subscription plan to its customers. DVD’s that are available in kiosks that are practically on every corner, such as Redbox, have caused Netflix to expand its repertoire of delivery methods, and made new approaches necessary.
Scrubs, Ugly Betty, and Good Luck Charley from Disney are among new offerings from Netflix. ABC Family will contribute Melissa and Joey and Greek. Family movies, such as High School Musical, are on the list too.
As to the company’s financial situation, they are experiencing the departure of their CFO of 11 years, Barry McCarthy, whose total compensation in 2009 almost topped $2 million. Apparently, he feels that any further advancement in the company is not probable and he is seeking greener pastures.
Still, third quarter earnings unexpectedly were higher, but Netflix's shares dropped as McCarthy’s plans were announced. The company has had its ups and downs. The 52 week low stock price was $48.52, while it has reached as high as $209.24.
Today has seen a swing of more than $6. Analysts are split in recommending “buy” and “sell” calls. McCarthy apparently is leaving on amicable terms with his now-previous employer, saying that he will continue to hold significant shares in Netflix.
Industry watchers first suspected that Netflix might cut a deal with the Mickey Mouse house when Steve Jobs unveiled the second-generation Apple TV, the Californian company's second-generation set-top box that now comes with built-in support for Netflix. Then, weeks later Netflix released free iOS apps that brought Netflix streaming to Apple's iDevices. It should be noted that Steve Jobs has a board seat at Disney, of which he is the largest individual shareholder.
The Netflix agreement with Disney flies in the face of Jeff Bewkes of Time Warner who warns that subscriptions such as Netflix's $7.99 a month unlimited viewing plan devalue their content and harm the studio's ability to profit from sales elsewhere.
Not to worry, the content licensed to Netflix is second hand anyway, as TV reruns or those already on the Internet at ABC.com. Hulu also offers free viewing. There is justifiable concern that cable TV providers may see a further dwindling of subscribers.
Warner Bros Studio has restricted what they have licensed to Netflix. They also put a 28-day delay on new DVD’s available to Netflix, while Disney has not imposed such a restriction, emphasizing two different views of the situation. Robert Iger, CEO of Walt Disney, is of the opinion that current and future digital technologies should be welcomed.
The consumer will drive the final outcome, however. What the public wants, the public gets, one way or another. And at 16 million members and growing, Netflix is a powerful lobby.
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