Netflix Streaming Continues to Face Licensing Issues


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When I first signed up for Netflix, my wife complained about the overall lack of content offered by the service. Everything she wanted to watch was only available on disc, a fact which irritated her to no end. That's when I offered an explanation, of sorts: You don't look for specific titles on Netflix streaming. Instead, you peruse the catalog for something to watch. Shopping for something specific, especially newer titles released by major studios, will lead to nothing more than endless frustration. I know these are silly rules to play by, but it may make your experience a bit more enjoyable.

Although the company sports an impressive number of DVD titles in their expansive catalog -- roughly 140,000, in case you were wondering -- the streaming service currently offers around 60,000. Not a bad collection, mind you, but there is always room for improvement, particularly in the feature film category. Unfortunately for subscribers, these content issues aren't likely to be resolved anytime soon.

Even as streaming becomes an increasingly popular way for individuals to consume cinema, Hollywood continues to refuse to license newer titles, including television shows, for use on the Netflix service. Studios feel that Netflix, as well as Redbox and their ilk, are cutting into their profits by offering their products at such a low price. This, they claim, prevents people from rushing out to the nearest retailer to purchase a copy. And while Blu-ray has certainly helped reverse this trend in recent years, packaged media just doesn't have the strength it had during the heyday of the DVD.

Also concerned about Netflix devaluing their product are pay-TV channels such as HBO and Showtime. They feel that if their more popular offerings are made available at such a low price -- it currently only costs $8 for a streaming account -- cable subscribers will jump ship for cheaper vessels. As someone who dumped cable for Netflix, I can't say that their fears are entirely unfounded.

Since Hollywood seems to think that Netflix is getting the better end of the deal, they've increased their licensing fees by astronomical amounts. When Starz offered up content back in 2008, Netflix paid only $30 million to make good use of it. However, when it came time to renew the contact, Starz demanded nearly $200 million for the same package. At first, CEO Reed Hastings seemed to be okay with the deal, though he soon changed his mind. His reasoning: Starz content only accounted for 8% of viewership, though many feel that he has underestimated the loss.

In order to distract customers from the lack of new material, Netflix has tinkered with their recommendation system, which takes advantage of the movies and television shows that are already available on the service. Now when you watch a title, dozens over similar choices pop up, giving you more options to choose from.

Streaming, in my humble opinion, is the wave of the future, which means that for Hollywood to survive in the new landscape, they will have to shuffle off the business model crafted during the days of VHS. Naturally, this is much easier said than done. However, when both parties come to some sort of agreement, the end result should be nothing short of impressive.