Amazon Snags Viacom Programs After Netflix Passed in Favor of Disney

Streaming video competitor Netflix Inc. (NASDAQ: NFLX) had let its contract with Viacom expire in April after it became clear that Viacom would not give Netflix just the shows it wanted. Netflix had signed an expensive deal with Walt Disney Co. (NYSE: DIS) in December that gives the streaming company exclusive rights to Disney studio films beginning in 2016 and other Disney programming.

Netflix probably would have liked to keep Viacom’s children’s programming like “Dora the Explorer” and “Spongebob Squarepants,” but Viacom would not separate the two shows from the package deal it wanted Netflix to take. Amazon had no such reservations and will gain “hundreds of TV shows and thousands of TV episodes” in the deal with Viacom.

There have been reports that Amazon paid Viacom about $200 million for the program rights, but it is unclear whether that represents a one-time fee for multiple years or an annual fee. Netflix is thought to be paying as much as $300 million annually to Disney. At that price, it cannot afford to license too much third-party content and continue to expand its original programming.

The exclusive deals that both Amazon and Netflix have signed are also signals that the leading streaming video companies are looking to differentiate themselves on content offerings, in much that same manner that HBO and Showtime and, for that matter, the broadcast networks differentiate themselves from one another. Time will tell if that is the winning model.