Netflix deal a small victory in competition against pay-cable networks
Netflix needed some good news. It got it.
On July 6, the same day the Postal Service proposed a 2-cent increase for the price of a First-Class stamp, the DVD subscription company announced it had reached a five-year agreement with independent film financing and production company Relativity Media. Relativity's movies will be distributed through Netflix's streaming Internet service, rather than on pay-cable channels.
Netflix has made no secret that it wants to beef up its Internet catalog, but networks such as HBO and Showtime refuse to allow Netflix to stream movies when they are running them.
While it is a step in the right direction, Netflix still has a way to go in building its library. Relativity is expected to produce 12 to 15 movies in 2011. Some of the company's recent productions include Dear John and MacGruber. That won't exactly send droves of movie lovers into Netflix's arms.
Meanwhile, the proposed postal hikes undoubtedly will hit the company hard. The blog NewTeeVee estimates Netflix stands to lose $50 million a year. Netflix, however, is taking the high road, saying it is “willing to take our share of the sacrifice to ensure a stronger, more viable United States Postal Service."