Netflix Inc. (NASDAQ:NFLX) has acquired the streaming rights to Sony Animation films (NYSE: SNE), bringing a number of Sony’s kid-friendly movies like “Cloudy with a Chance of Meatballs 2” to the streaming service. Previously, rights to Sony’s animated offerings belonged to cable network Starz (NASDAQ:STRZA), which still holds the rights to Sony’s live-action catalog.
The deal, announced Tuesday, will result in Sony Animation features released in 2014 and beyond making their way to Netflix shortly after appearing in theaters, while earlier Sony Animation films stay in Starz’s TV rotation. Sony’s “Cloudy with a Chance of Meatballs 2” is already available on Netflix, and Janney Montomery Scott analyst Anthony Wible estimates that two more Sony features will follow yearly. Meanwhile, live-action Sony features will continue to air on Starz after their theatrical runs through at least 2021. Financial terms were not disclosed.
Even if only a handful of new films appear online yearly, the Sony Animation deal is a big win for the Los Gatos, California, company, allowing it to regain the rights to some of the content it lost to an expired licensing agreement with Starz. When Starz cut ties with Netflix, stating a desire to preserve the brand, Netflix access to lost more than a thousand films that Starz had licensed from studios including Disney (NYSE:DIS), Sony and 20th Century Fox. Netflix has since been attempting to reclaim the lost content piecemeal without Starz’s involvement. In 2012, Netflix announced that it had signed a deal with Disney to begin streaming its newly-released properties exclusively, starting 2016. Sony Animation puts Netflix closer to that goal, though Sony produces considerably more live-action offerings, which Netflix may pursue when the deal with Starz expires in 2021.
The Sony Animation deal also allows Netflix to expand its focus on kid-friendly features. Netflix wants to be a destination for the whole family, and a strong animated lineup is a surefire way to ensure that children keep borrowing their parents’ iPads to watch cartoons. Now, Sony’s films like “The Smurfs 2” and the upcoming "Popeye" will join Netflix’s stable of animated content from other studios like Disney, Dreamworks and Pixar.
Starz might be losing Sony Animation content to Netflix, but don’t cry for them just yet. Anthony Wible tells the Hollywood Reporter that Starz will likely invest the approximately $35 million yearly it will no longer spend on Sony Animation in a new original series after having success with “Spartacus” and “Party Down.” Starz currently has six series set to premiere in 2014, including pirate drama “Treasure Island” prequel “Black Sails” and "Outlander," from “Battlestar Galactica” creator Ronald D. Moore.