Quote Originally Posted by Feanor View Post
Clarify this for us, Wooch: does Liberty Media/Starz by Sony on a per viewing basis or a flat rate basis? I don't get what the Sony-imposed limitation is all about if it's on a per viewing basis.

It's strange economics if media licensers demand more per viewing if number of viewings goes up. In the rest of the commercial world you get volume discounts.
These content deals that the studios negotiate with the premium movie channels are done as a blanket coverage arrangement at a flat rate. This saves the studios and broadcasters from having to negotiate separate deals for every individual movie. The broadcaster pays a flat rate for the rights, and gets access to the studios' movies after it has passed through the theatrical, home video, and PPV release windows.

You have to remember that all of the content deals that Netflix negotiated when their streaming service was just starting up assumed a low number of viewers. Now that Netflix has exceeded 20 million subscribers, the content providers want more. And the new content deals coming up for renewal have resulted in much higher payouts.

In the case of Sony, I would guess that this this subscriber cap is a technicality where the flat rate gets renegotiated if Starz's subscriber growth exceeds a certain amount. Starz currently has about 19 million subscribers, so that subscriber cap in the Sony contract obviously had Starz's subscriber count in mind.

But, to me it illustrates just how easy it is for thousands of titles to become instantly unavailable on Netflix or any other streaming service. Premium movie channels like HBO, Showtime, and Starz decided a long time ago that they would not carry all movies from all studios.

Each of those channels have exclusivity deals with specific studios, where the recent releases go exclusively to one channel. That's where I potentially see the streaming market headed, with different services carving out their own turf with different studios.

Original programming is how HBO, Showtime, and Starz have insulated themselves, and that's where Netflix is already headed as well. With all six major studios asking for exorbitant fee increases, Netflix very well might get to a point where they're no longer willing to pay those fees to every studio anymore (and that decision might be out of their hands anyway, if someone like Amazon for example is willing to pay more for exclusivity). Original programming allows them to retain (and attract) their subscriber base, and those rights cannot be taken away because they own the programming.