Netflix has struck a deal with Relativity Media which will allow streaming of first run theatrical movies to Netflix subscribers. The deal will make it possible for the rental giant to start competing against HBO and Showtime, and allow Netflix customers access to the latest releases from Relatively Media. In a recent news article it stated that:

LOS ANGELES, July 6 /PRNewswire-FirstCall/ — Netflix, Inc. (Nasdaq: NFLX) and Relativity Media, LLC today announced a long term agreement through which major theatrically released films owned by Relativity will be licensed directly and exclusively to Netflix for streaming to its subscribers during the “pay TV window.” Traditionally, these films have flowed through Relativity’s studio releasing partners to output deals with premium TV channels.

The deal marks a continued shift in the distribution of major motion pictures in the U.S. Under the agreement, an increasing amount of popular contemporary movies previously encumbered by pay TV agreements with premium channels such as HBO, Showtime and Starz will become available to be streamed from Netflix months – and not years – after their release on DVD. It will be the first time that studio quality theatrical feature films will be streamed via subscription by Netflix instead of being broadcast by the traditional pay providers, and it opens up a new revenue stream for such movies.

Before you start jumping up and down, don’t believe that you are going to be able to view ALL of the latest movies via streaming. It seems this deal currently only applies to the movies under Relatively Media’s control. The company has about 50 latest release movies in their inventory. I would venture a guess that this deal is just one of many that Netflix will be inking in the future.

What is also unknown is whether Netflix will offer a premium service to watch these latest release movies. Currently those using the $8.99 plan or higher can stream movies from Netflix.

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