When the history of Netflix is written in some future
book iPad holographic image projected from your eyeballs, today’s date may hold quite a bit of significance. First, today’s the day that Netflix started splitting its streaming and DVD services into two separate plans, thereby raising monthly fees by 60 percent for those who want to keep both services. But today’s also the day that premium cable network Starz Entertainment announced that it’s ending contract renewal negotiations with Netflix. When Starz’ contract expires on Feb. 28 next year, the company will no longer distribute its content – including newly released movies from Sony and Disney – via Netflix streaming.
Talk about a double whammy. Of course, considering that Starz chose to make this announcement on the same day as Netflix’s price hike, there’s a chance that the network is bluffing and attempting to humiliate Netflix into renegotiating. Alternatively, Starz may have decided that it didn’t make sense to offer its content to a company that has essentially become a competitor – why would someone subscribe to Starz if they could watch the network’s content for less money through Netflix? “This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content,” said Starz president and CEO Chris Albrecht in a statement.
Starz’ asking price could have been a sticking point, too. Last year, Netflix struck a deal with the premium network Epix and gained the streaming rights to movies from Paramount, Lionsgate, and MGM. That agreement was estimated to cost Netflix $1 billion over the course of five years. As a result, it’s likely that Starz was asking for at least $200 million per year from Netflix, compared to the estimated $30 million per year the network currently receives.
Regardless, the losers here may be Netflix’s 25 million users. If Starz and Netflix don’t patch things up by February, Netflix subscribers will lose access to approximately 2,500 titles – 1,000 of which are movies. (In June, Starz pulled its Sony movies off of Netflix streaming, so the real loss here will be the disappearance of Disney films like Toy Story 3 and Alice in Wonderland.)
Of course, Netflix could strike deals with other companies to fill the gap left by Starz. “We are confident we can take the money we had earmarked for [the] Starz renewal next year and spend it with other content providers to maintain or even improve the Netflix experience,” the company said today in a statement. Netflix also took a shot at the true value of Starz’ content: “Because we’ve licensed so much other great content, Starz content is now down to about 8 percent of domestic Netflix subscribers’ viewing.”
I, for one, usually avoided Starz’ offerings on Netflix because the non-HD streaming quality wasn’t up to my absurdly picky standards. But I imagine many Netflix customers enjoyed having the option of watching recent Disney and Sony films. And now, at the precise moment when many folks are considering whether they truly need DVDs and streaming content from Netflix, Starz may have made that decision a little easier.