Netflix loses Starz contract, content to be pulled February 28

By on September 2, 2011, 9:00 AM

In a blow to Netflix's catalog, Starz has announced that its content will be yanked from the streaming platform early next year. In a single-paragraph press release, the Liberty-owned media firm explained that the companies failed to reach contract renewal terms because Netflix wouldn't commit to the "appropriate pricing and packaging" for Starz' videos.

The companies signed a four-year agreement in 2008 that allowed Netflix to host Starz' content, which includes about 1,000 videos from Sony, Walt Disney and other studios. Starz is the exclusive distributor of first-run Sony and Disney movies in the US. Unless talks resume soon, those flicks will disappear from your library on February 28, 2012.

Starz wouldn't elaborate on the negotiations, simply noting that it's in a position to "evaluate new opportunities" and "expand its overall business." Which begs the question: who's willing to pay more than Netflix for Starz' content? We can't think of anyone, which could mean this is a part of Starz' negotiation tactics. If that's the case, the plan has failed.

Netflix stock dropped by about 9% following Starz' announcement but despite the additional pressure, the company released a statement effectively telling the content firm to watch the door on its way out. Netflix said Starz videos account for about 8% of domestic subscribers' viewing and that figure is expected to decline by another percent or two as Netflix adds more material this year. "We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience," the company said.

Netflix has faced some rough PR this summer and we imagine this will only fan the flames. In June, some 250 Sony movies were pulled from the service because they were viewed too many times. There's reportedly a clause in the Starz agreement which caps the number of IP address that can watch each video. This restriction might be part of the friction that has halted negotiations as Starz would surely demand more cash to raise the limit, but that's just speculation.

In July, users protested Netflix's decision to increase its rates. The company launched new DVD-only plans: $8 a month for one DVD rental at a time or $12 for two. Additionally, it separated its unlimited DVD and unlimited streaming services, which were previously offered together for only $10 a month. Under the new payment system, users must cough up $8 per month for unlimited streaming and another $8 to receive DVDs via mail -- a 60% premium. Those changes affected new users immediately while existing accounts are set to be billed under the new plans starting sometime this month.




User Comments: 11

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Guest said:

I'm glad there is Netflix for the masses. Personally I think the content sucks and is dated and it sounds like it will be getting worse. Thats ok for us in the know we get real content elsewhere.

Darkshadoe Darkshadoe said:

I like Netflix but most of their stuff I have seen or is just B movie grade crap.

Muggs said:

Their streaming service is abysmal. I am glad I dropped them when they raised the price since they are offering less and charging more.

MrAnderson said:

This is a big loss for them. Perhaps a big loss for Starz if they don't get where they expect. To be honest I only saw Starz distributed movies that were already produced by others. Did I miss out on some original Starz content?! Netflix is going to have to become more agressive after uping the price (which hurts, but I was fine with), but after lossing content from Starz, it does make some of the streaming less interesting. I guess I will see where the gap leaves us when it happens.

howzz1854 said:

if this is the reason we're paying extra for the steaming and rental then blasphemy.

netflix you're going downhill for me.

Relic Relic, TechSpot Chancellor, said:

Disappointing but not really surprised here, especially when reading this from the LA Times: "Starz wanted Netflix to charge a premium price for its content in order to put the popular online video service more in line with cable and satellite providers". They don't get it, like most of the content industry. Hard to blame Netflix for absurdity like this, but they better find quality supplements after the major price hike.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

howzz1854 said:

if this is the reason we're paying extra for the steaming and rental then blasphemy.

netflix you're going downhill for me.

Ok, so consider what you just said... Outfits like Starz and studios are trying to squeeze more and more money out of Netflix for streaming rights, to the point of leaving the service if they don't get what they want... They are essentially just taking their ball and going home, since they can't get the rules changed in their favor enough. Attitudes like this one from Starz are prime examples of why the overhead for the streaming content side of Netflix has exploded in cost, enough that they had to implement a change and separate the streaming service from the physical media service. Yet Netflix is to blame and is "going downhill." Really?

I hated the pricing/service change as much as anyone else, but as the dust settles and stories like this pop up, at least I can see why it was done. And it's probably just going to get worse - once greed takes hold, and studios smell money in the water, they start expecting more and more.

Guest said:

I hope Netflix can ride out the rough waters ahead. I dropped cable...too expensive for what you get. I hope in the mean time torrent users stick it to the studios to the point they come back to netflix begging for whatever money netflix will give them since I don't think normal consumers are interested in paying the ridiculous amounts the studios feel their content is worth.

Hang in there netflix! Let the masses screw the studios and you can sweep in a get the content down the road at a better price...just like the music studios are doing now with itunes and Apple. Apple may not control all music content but they control enough to have a lot of leverage and I think another year or so and netflix will be the same way with online video.

howzz1854 said:

Vrmithrax said:

howzz1854 said:

if this is the reason we're paying extra for the steaming and rental then blasphemy.

netflix you're going downhill for me.

Ok, so consider what you just said... Outfits like Starz and studios are trying to squeeze more and more money out of Netflix for streaming rights, to the point of leaving the service if they don't get what they want... They are essentially just taking their ball and going home, since they can't get the rules changed in their favor enough. Attitudes like this one from Starz are prime examples of why the overhead for the streaming content side of Netflix has exploded in cost, enough that they had to implement a change and separate the streaming service from the physical media service. Yet Netflix is to blame and is "going downhill." Really?

I hated the pricing/service change as much as anyone else, but as the dust settles and stories like this pop up, at least I can see why it was done. And it's probably just going to get worse - once greed takes hold, and studios smell money in the water, they start expecting more and more.

you have a valid point, and that's one way of looking at it.

unfortunately, from a customer's point of view. when a customer gets a price hike, we expect equal if not more quality and more service, NOT less. One can also argue that the studios saw netflix's price hike and decided to slam them with a huge bill. it's a chicken and egg situation. at the end of the day, the fact of matter is that if Netflix doesn't get this sorted out, and increase its quality of service (not decrease), more and more customers like myself are going to be unhappy.

pcnthuziast said:

Netflix has unfortunately become the online equivalent of the little mom & pop video rental stores of yore.

Guest said:

The last time I checked, only like 8 of the top 100 movies on Netflix were stream able. Pathetic if you ask me. I am 85 percent sure I am dropping the streaming option until they have at least 50 out of 100 stream able.

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