Sony movies were removed en masse last Friday from Netflix's digital streaming service, thanks to an old agreement that now seems shortsighted due to Netflix's surging popularity
Netflix users have noticed hundreds of Sony movies have suddenly disappeared from their Netflix streaming queues, and the reason has to do with Netflix becoming far too successful.
Movies such as 'The Social Network' and 'Grown Ups' started disappearing from subscriber's Netflix Instant queues last Friday, which led to speculation that Sony was somehow pulling support for Netflix.
However, the truth is much more complicated, although still serious enough to mean an extended absence of Sony movies from Netflix Instant.
Instead of licensing movies directly to Sony, the company made a four year deal back in 2008 with Starz, owned by Liberty Media Corp., to distribute their movies on television. Starz also purchased exclusive online rights to the more than 1,000 movies as part of the agreement, which it has been re-licensing to Netflix since.
Unfortunately, due to short shortsightedness in the agreement, a clause was included that limited the number of people that could watch Sony movies online, and due to Netflix's soaring popularity, this limit was recently exceeded. And so, now, no more Sony movies on Netflix.
Starz will now need to renegotiate terms with Sony, and as a result, charge Netflix more than the $20-30 million in fees they currently receive from the deal, possibly ten times higher to cover the now 23 million strong Netflix subscriber list.
Insiders say that, soon, the same thing will happen with Disney movies, but also feel that a new deal is not far away to allow Sony movies back onto Netflix Instant, as well as allowing Disney movies to continue to be distributed.