Netflix Shells Out $200 Million to CBS for VOD Inventory

written by: Richard Kastelein

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Published on Wednesday, 23 February 2011 17:13

In the ongoing battle of VOD between Hulu, Amazon and Netflix in the USA, Netflix likely delivered a digital Coup de grâce yesterday with a $200 million dollar deal with CBS, making it the only online and Connected TV premium subscription service with shows featured on all four broadcast networks and dozens of cable TV's biggest brands. The deal arrived in the mayhem of rights issues - as media companies tackle how far they will push the envelope in seeking additional revenue from online video upstarts that can cannibalize their offline advertising business, their DVD sales and traditional pay-TV providers, like cable and satellite companies, which have become an increasingly important contributor to the media and entertainment industry's revenue mix.

CBS Corp. and Netflix have announced a two-year, non-exclusive licensing agreement that allows select U.S. shows from CBS's library to be streamed on Netflix.

Peter Kafka from All Things Digital made some great points:

This is the best-case scenario for the networks and studios: That Netflix, and now competitors like Amazon, and likely Microsoft, Apple, etc, line up to write big checks for stuff the networks and studios have already sold a couple times before. So it's all found money, and doesn't conflict with their core businesses.

The flip side, of course, is that the more video you consume over the Web, the more likely you may be stop watching conventional TV. So long-term, it's possible that CBS and the other networks are helping to hasten their demise.

But that's a tomorrow problem. Today, big media is getting paid

The deal pertains to episodes of the dramas"Medium" and "Flashpoint," as well as full seasons of sitcoms such as "Family Ties," "Frasier" and "Cheers." Installments of the original "Hawaii Five-0" are included in the package, as are episodes from all generations of the sci-fi series "Star Trek" and the cult favorite, "Twin Peaks." Installments of '60s classics such as "The Twilight Zone" and "The Andy Griffith Show" will be available, too.

In December 2010, Netflix closed a deal with Walt Disney for inventory from its ABC network as well as cable channels ABC Family and Disney Channel. That pact, which was for one year with options, was valued at between $150 million and $200 million. Unlike the CBS deal, it includes access to more current programming, including recent episodes of "Grey's Anatomy" and "Brothers & Sisters."

Get ready for 'Star Trek' and 'Twin Peaks' when you want it, where you want it!