Everyone loves Netflix, except for Relativity Media that is, who is suing Netflix for $1.5 billion. According to Relativity Media, they were asked to make original movies for Netflix. As part of the deal, Netflix would pay the studio between $100 million and $300 million each year. They also guaranteed the studio a minimum of $3.7 million per film. Relativity is claiming that they helped shape the company as 85% of Netflix’s new films were made by the studio.
Netflix continued to grow by leaps and bounds, but Relativity did not. Relativity became dependent on the studio as a major source of income to function. Three years into the deal however, Netflix was not happy with the content they were making and tried to renegotiate the contract. The recent bankruptcy of Relativity however, had Netflix trying to back out of the deal all together. Netflix has claimed that Relativity could not fulfill their end of the deal due to financial constraints, which is pretty ironic due the fact that they tried to release two of their movies (Masterminds and The Disappointments Room) before it even hit theaters.
Netflix has stated that the lawsuit is “baseless and ironic.” Is Relativity Media suing them simply because they’re upset over their own bankruptcy or was Netflix right to renegotiate their deal after Relativity started going down hill?
Drama between the media is one thing, but what does that mean for you? The revenue in 2015 for Netflix is $6.77 billion. However, in 2016 alone, Netflix spent $5 billion on original content! If Relativity won this lawsuit, it would no doubt throw Netflix into a tailspin.
It is hard to tell what such a lawsuit would do to Netflix and how that would trickle down to the consumer. We don’t know if Netflix would cancel shows or stop producing new ones. Netflix might consider raising their prices again although that move would be detrimental as well by alienating a lot of people.
Cases like these can take months or even years when they’re dragged out in court. There is also a big chance this lawsuit could be thrown out before it even gets a trial date. Whatever effects we see from these lawsuits, it won’t be for a long time. Don’t freak out yet fellow Netflix lovers. You will still have plenty of time to Netflix and Chill.
– Janiera Eldridge
Follow me on Twitter @janieraeldridge
SOURCE: Parent Herald