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Cable Technology Feature Article

June 21, 2011

Contract Woes: Sony Movies Remain Unavailable on Netflix

By Rachel Ramsey, TMCnet Editorial Assistant

As Sony and Starz work out a temporary contract issue with Netflix, Netflix movie devotees will be without their Sony films for the time being. Users have been without these movies for four days now.

The current deal between Netflix and Starz was reached in 2008 and expires in the first quarter of 2012. Industry analysts said the original deal underestimated the rapid growth of online video viewing by Netflix subscribers, and the new deal is anticipated to be much more expensive for Netflix.

Netflix has grown faster than partners expected in the last 18 months, therefore triggering a deal clause last quarter when it announced that it now has more than 22.8 million subscribers in the U.S., of which nearly two-thirds were streaming videos.

To contribute to the company’s growth, Netflix changed its focus from DVD rentals to online video to help shrink its overall costs by reducing postal fees.

Starz, the exclusive distributor of first-run Sony and Walt Disney (News - Alert) Co. movies on pay-TV in the United States, is under an agreement to distribute the programming wholesale on multiple platforms, including online streaming.

Starz had allowed the Netflix streaming service to hit a licensing usage cap which had been agreed with Sony. Starz now needs to work out a new streaming agreement with the Hollywood studio before the programming can be returned to Netflix.

"Sony movies have been taken down temporarily from the StarzPlay service on Netflix. All parties are working diligently to resolve the issue and return these films to Netflix members," said a Starz spokesman in a statement on Monday.

Customers do not seem to be thrilled with Netflix. On top of the pull of Sony movies, a recent website re-design resulted in 5,000 negative comments on a blog post (the maximum limit for comments on Blogger), and the company just recovered from a third service outage in nine months.

Rachel Ramsey is a TMCnet editorial assistant, contributing news items and feature articles on a variety of communications and technology topics. Rachel has previously worked in PR and communications at The Wriglesworth Consultancy, an award-winning London PR firm. She has also contributed to the creative services department at CBS 3 and The CW Philly in Philadelphia. To read more of Rachel's articles, please visit her columnist page.

Edited by Carrie Schmelkin