Netflix Paying More Than $1 Billion For Streaming Rights

Reed Hastings, Netflix CEO

The number of users streaming video content from Netflix may be growing like crazy, but the company’s latest earnings filing on Monday (PDF here) shows that the transition from discs to bits won’t be cheap.

Acquisition of streaming content was the number-one drain on cash flow during the quarter, costing more than $115 million. By way of comparison, the company only spent about $30 million on acquisition of DVD discs. Netflix also revealed that it now owes $1.2 billion in commitments for streaming content deals–that’s up from $115 million at the end of 2009.

As Peter Kafka reports at Media Memo, a lot of the expense probably comes from the company’s deal with the Epix Pay TV channel, which was signed in August. That deal cost an estimated $1 billion, and gave Netflix rights to films from Epix partners Paramount, Lionsgate, and MGM. Netflix could also end up on the hook for more than $2 billion when it has to renew its deal with Starz, which gives the company streaming rights to films from Disney and Sony.

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