New Challenges For Netflix
Netflix, once known for providing the best flat rate DVD-by-mail and the on-demand internet streaming video in United States, has attracted millions of users and have delivered over a billion DVDs.
However, recently, the Studio is having competitors like Google, Amazon and others instill the mentality of ‘survival of the fittest’, resulting in the reason that the providers want to be paid more for the content they are providing.
Surely, boosting the costs of Netflix’s streaming content as competitors realize the additional money they could be making.
In the past, Netflix had easily secured contracts with Warner Bros. Studios and MTV for about $5 million to $10 million per year but may now have to pay ten times the amount to renew those contracts.
An analyst from ThinkEquity, Atul Bagga said, “The cost of content is going to go up, no doubt about it…It’s going to come down to who has the ability and the willingness to write big checks. Netflix is probably the one to do it.”
In October 2008, Netflix announced a partnership with Starz Entertainment to bring 2,500+ new movies and television shows to Watch Instantly in what is being called Starz Play.
Sony movies were pulled from Netflix Inc.’s online streaming service because of what Netflix said is a “temporary contract issue” between Sony Corp. and its pay TV distributor, Starz and the Starz said in a statement that “all parties are working diligently to resolve the issue.”
The CEO Reed Hastings said “it wouldn’t be shocking if Netflix paid more than $200 million per year for Starz’ service, far more than the estimated $30 million a year it is paying currently”.