Sony, Netflix, and Starz dispute arises from their own success

By Pankaj Ladhar of Manos • Alwine P.L.

Recently a business dispute between Sony and Starz has left Netflix subscribers unable to stream the Sony content over the internet via Netflix. As you are likely aware, Netflix now includes in its service live streaming of movies over the internet in addition to sending DVDs through the mail. The rapid growth in subscribers’ use of the streaming option surpassed the expectations of the studios.

Sony is engaged in an agreement with Starz which gives Starz the exclusive right to distribute first-run Sony movies on Pay television. As a part of that agreement Straz also has the option of distributing the movies on other platforms such as streaming over the internet. But that agreement allows Sony to seek additional compensation when the number of people streaming Sony’s movies reaches a certain number.

So now that Netflix streaming has become more popular and many people are streaming Sony’s movies, Sony would like a larger cut of the pie. But because the size of that piece of the pie has yet to be determined Starz has asked Netflix to take down the Sony Movies it was delivering.

Netflix took down the Sony-Starz movies and explained in a blog post that the movies were taken down temporarily due to a contract dispute.

Another factor in how the proceeds derived from Netflix subscribers streaming these movies is the deal between Netflix and Starz, this deal is separate from the one between Sony and Starz. The deal between STraz and Netlfix expires next spring, and Starz is likely to ask for a several time more in remuneration now that streaming has become such a popular option.

Source: Reuters “Sony movies still off Netflix in Starz dispute” Yinka Adegoke, June 20, 2011