Netflix Acquired Disney, Sony Movies Thanks To 'Contractual Loophole' During Company's Early Years

Netflix has become a dominant player in the business world since its decision to start streaming movies and TV shows in 2007, but they may not have become the company we know today if a specific "contractural loophole" hadn't allowed them to obtain Disney and Sony titles during the early years.

In 2008, Netflix found itself presented with the opportunity to purchase "digital streaming rights to movies from Disney and Sony" through a backdoor option. At that time, premium cable channel Starz had also been trying to get its own streaming service called Vongo off the ground. However, as it became clear that it may not be as successful as they had initially hoped, they gave Netflix the opportunity to purchase the titles they had accumulated for roughly $30M a year.

As for what movies were included in the sale, an article from Broadcasting+Cable noted in 2008 that over 1,000 Starz titles were being shifted over to Netflix, including "Spider-Man 3," "Superbad," "Ratatouille," and "Pirates of the Caribbean: At World’s End."

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The unexpected deal over a decade ago resulted in Netflix having the opportunity to obtain the movies without actually making a deal with Disney and Sony directly. As noted by Recode by Vox, this model of obtaining old movies and TV shows that Hollywood didn't want and repackaging them in their own way would later help them to build the business to where it is today, which Forbes stated allowed them to surpass Disney stock prices earlier this year.

Since then, Netflix has gone on to offer subscribers a vast assortment of other highly-discussed titles, both new and old. Throughout 2020, those who paid for the service we're able to watch the polarizing film "365 DNI," and Jerry Seinfeld's standup special "23 Hours to Kill," to name a couple.

Anyone interested in a deeper dive into Netflix's history is in luck as Tuesday's episode of "Land of the Giants: The Netflix Effect," called "Netflix is Hollywood - Part 2," also explores the company's background. The Peter Kafka and Rani Molla-hosted podcast can be found on Spotify.