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Netflix has emerged the winner of a nearly two-year auction for the exclusive U.S. rights to stream Sony Pictures’ theatrical releases in the first pay TV window starting with the studio’s 2022 slate.

Netflix has also set a first-look agreement with Sony for all of the studio’s original movies produced for the direct-to-streaming market. That deal also requires Netflix to commit to a certain number of titles from the studio, but it doesn’t stop Sony from selling direct-to-streaming titles to Netflix’s rivals. In that case, however, Netflix would have to pass on the project for Sony to be able to sell it to another streamer.

As part of the pact, Netflix will license an unspecified number of older titles from Sony’s movie vault.

 

Sony Pictures’ primary pay TV partner has been Starz, now owned by Lionsgate, since 2006. The new theatrical output deal with Netflix, which only covers the U.S., is believed to run about five years and is undoubtedly worth hundreds of millions of dollars to the studio over the term. Industry sources said Sony executives are working on another significant theatrical movie licensing pact outside the Netflix agreement.

 

 

Netflix already had a deal with Sony Pictures for all of its animated releases. Starting with next year’s slate, all movies from the various film banners on the Culver City lot — including Columbia Pictures, Sony Pictures Classics, Screen Gems and TriStar Pictures — will stream exclusively on Netflix after their theatrical and home entertainment releases. That promises to bring to Netflix future installments of the “Spiderman,” “Venom” and “Jumanji” franchises, among others. The pay 1 window usually begins about nine months after a film’s theatrical release, although that timetable may have been sped up for Netflix. Over the course of the pandemic, Sony has sold multiple slate titles to Netflix outright, including Kevin Hart’s “Fatherhood,” and the animated films “The Mitchells Vs. The Machines” and “Wish Dragon.”

“Sony Pictures is a great partner and we are thrilled to expand our relationship through this forward-thinking agreement,” said Netflix global film head Scott Stuber. “This not only allows us to bring their impressive slate of beloved film franchises and new IP to Netflix in the U.S., but it also establishes a new source of first run films for Netflix movie lovers worldwide.”

Sources familiar with the deal said the pact will amount to a recording-setting price tag for a pay-one window agreement. The deal is said to be structured in a relatively traditional form with the fee that Netflix pays for each title determined on a sliding scale by each title’s domestic or worldwide box office haul.

Pay one deals have been an extremely lucrative and vital source of revenue for legacy film studios, but they’re an endangered species in Hollywood’s deal economy as media conglomerates keep more content in-house to feed new streaming platforms. Shops like WarnerMedia and Disney are directing their film libraries exclusively to services like HBO Max and Disney Plus and Hulu, respectively.

Netflix set its first big-league pay 1 movie deal with a Hollywood studio in December 2012 when it shocked the industry by unveiling a Disney pact that kicked in with the studio’s 2016 slate. That deal was estimated at $300 million over an unusually short three-year term, which indicated a certain caution on Disney’s part. That hedge was prescient because Disney wound up negotiating an early end to the agreement in 2017 after the studio announced plans to launch the streamer that would become Disney Plus, now a growing global dynamo.

In a sign of the current sensitivities around theatrical windowing and Hollywood studios’ commitment to the exhibition window, Sony’s announcement made a point of noting that the direct-to-streaming movies produced for Netflix and other streamers will be “additive” to Sony’s full theatrical slate, “which will continue at its current volume,” Sony said.

The new arrangement helps answer a lingering question about where SPE fits in the transformed marketplace. The studio has vowed to focus on supplying content to others rather than wading into the streaming platform wars. The crowded SVOD market that Netflix seeded now includes Amazon Prime, Disney Plus, HBO Max, Hulu, Paramount Plus, Apple TV Plus and many other niche players.

“Netflix has been a terrific partner as we continue to expand our relationship,” said Keith Le Goy, SPE’s president of worldwide distribution and networks. “At Sony Pictures, we produce some of the biggest blockbusters and the most creative, original films in the industry. This exciting agreement further demonstrates the importance of that content to our distribution partners as they grow their audiences and deliver the very best in entertainment.”

Netflix at present has about 74 million U.S. subscribers out of 204 million in total worldwide.

(Pictured: 2019’s “Jumanji: The Next Level”)

Source: Variety