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Netflix down? Those two words can strike a chord of fear in every online streaming movie and TV show lover. And unfortunately for Netflix, Sony movies getting pulled off their "instant view" might only be the tip of the iceberg when it comes to contracts with big studios.
Viewers who are all-too used to instant gratification via the Netflix website, or their PS3, Xbox 360, or Netflix-ready players, were sad to find many recent releases by Sony no longer available to be readily watched online last weekend, reports CNet.
The reason? There's a good old-fashioned contract dispute between Netflix, Starz, and Sony.
Netflix and Starz, the cable channel, had an agreement in place which allowed Netflix to stream its library.
Starz itself had a deal with Sony that allowed Starz to stream Sony movies online. But, this contract had a clause in it that limited the number of subscribers that could view the digital movies, reports CNN Money.
With the Netflix subscribers added in, Starz had tipped over the number of subscribers that were given access to Sony films, essentially making the contract void, according to CNN Money.
Netflix had already hammered out a deal with Starz in 2008 to give it 4-year access to Starz's library. The "hiccup" between Starz and Sony, however, will affect this deal. Starz and Sony will have to renegotiate the contract first before Sony films can be made available on the Netflix site again, CNN Money reports.
Netflix's role in streaming entertainment is unparalleled. However, rival tech giants may soon be taking them on, as Hulu, Netflix's competitor, might be up for sale soon, according to CNN Money.
With more competition, renegotiating contracts will be tougher. And, Netflix may soon have to shell out more money in licensing fees due to both its increasing subscriber base and the existence of direct competition.
Hopefully though, Netflix's Sony movie selection will be reinstated. And, Netflix's down time will be further eliminated - otherwise Netflix may be facing expensive licensing contracts in addition to unsatisfied customers.
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