NETFLIX BECOMING MAJOR STUDIO INCOME SOURCE
Netflix probably wont get a star on Hollywoods Walk of Fame anytime soon, but the Webs top video-rental service has recently become a blockbuster hit with film-industry chieftains. Just nine months ago, sources in the film industry told CNET that Netflixs long string of Wall Street-wowing earnings reports hadnt gone unnoticed at the studios. With all that money rolling in, many studio decision makers werent happy with their cut--especially when it came to the companys blossoming streaming-movie service. Netflix CEO Reed Hastings has apparently solved the problem, at least for now--by writing checks. In the quarter that ended June 30, 2009, Netflix spent $9 million on acquiring films and television shows for its streaming service. Last week, Netflix reported that for the same period this year, it spent $66 million--more than seven times as much. That wasnt a fluke. For the first six months of 2010, Netflix has paid the studios $116 million for streaming content, compared with $31 million for the same period last year. Some analysts expect those payments to keep going up as the company continues to fill out its film library. Netflixs ability and willingness to shell out big bucks for higher and higher grades of movies and TV shows was clearly illustrated earlier this month when the company announced it had struck a $100 million deal with film financier Relativity Media to acquire about a dozen movies per year starting in 2011. As part of the agreement, Netflix will offer the upcoming film, "The Fighter," starring Mark Wahlberg, Amy Adams, and Christian Bale.
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