Warner Bros. pact marks step up in SVOD race

A new subscription VOD deal announced Friday between Amazon and Warner Bros. Domestic TV Distribution is stepping up the competition in a category dominated to date by Netflix.

Amazon will get WB-produced series “The West Wing” and “Fringe” to itself for the summer, marking the first time the retail giant has obtained exclusive rights to either TV or movie content for its SVOD rental service, Amazon Prime, or a la carte storefront Amazon Instant Video. That availability will bolster Amazon’s tablet product, Kindle Fire.

Pact also marks the first exposure in the SVOD window for “Wing,” an NBC series that WB has kept out of the marketplace until now. The deal also covers more short-lived WB series on a nonexclusive basis, including AMC’s “Rubicon,” TNT’s “Dark Blue,” Fox’s “Alcatraz” and ABC’s “The Whole Truth.”

Reps for the companies declined to divulge financial terms of the deal. UBS Investment Research analyst John Janedis estimated the deal to be in the $20-30 million range.

While unusual that Amazon will only get exclusivity for the short term, the fact that the service paid a premium to lock up any such content is an unprecedented indication that the company is willing to increase spending to be competitive with Netflix and Hulu Plus, which have made their share of exclusive deals as a means of differentiating their content from the pack.

That said, given the exclusivity lasts for just a few months, the deal reflects a continuing conservatism at Amazon, which like many digital services closely studies consumer data patterns in lieu of the more gut-based decision-making typically employed in Hollywood. The short-term route could allow Amazon to test if having exclusive content is as impactful to its business as studio sellers would like them to believe.

The prospect of increasing competition for Netflix has long been a sticking point for disapproving analysts. But while Amazon has been cited as its biggest competitive threat, the company hasn’t dug too deeply into its famously capacious pockets to date, relying instead entirely on catalog content that Netflix already has.

After spending much of its first decade in business snapping up non-exclusive rights given the absence of competitors, Netflix has made select high-priced exclusive deals in recent years including a pact for AMC’s “Mad Men” estimated to cost nearly $1 million per episode. Deals have come as new market entrants pour in though none that have made exclusive deals yet including Comcast’s Streampix and an upcoming joint venture from Verizon and Redbox.

Licensing exclusive content is only one of the fronts on which SVOD businesses will wage war. Creating their original programming is another: Netflix already has a full slate of series planned to follow its first effort, “Lilyhammer,” while Amazon is developing both movies and series under its Amazon Studios banner, though has yet to greenlight a production.

The Prime SVOD service, which is free for a month to Kindle Fire buyers, is bundled into Amazon’s two-day shipping service for $79 a year. Prime currently features 18,000 TV and movie titles from a range of major studios.

While the pact covers all seven seasons of “Wing,” which ended in 2006, Amazon Prime will only get the first three seasons of “Fringe” (though Amazon Instant Video will have all four). Fox announced in May that the upcoming season of “Fringe,” its fifth, would be its last.

While the sci-fi hour is, like “Wing,” features the style of heavily serialized storylines that don’t play well in the off-net syndication market, WB did manage to sell the series to Science Channel.

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