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Starz decides to hit the road after Netflix refuses to introduce tiered pricing for the pay cable channel's content   (Source: wordpress.com)
Starz insisted on tiered pricing instead, which would charge Netflix customers more than the $7.99 per month subscription fee

Yesterday, Starz announced that it would not renew its distribution deal with Netflix when the contract expires in February 2012, which will eliminate Disney and Sony-related programming from Netflix's digital video library.

Now, new reports are saying that Netflix had offered Starz $300 million per year to renew their agreement. This amount is 10 times the rate it currently pays.

But this offer wasn't exactly what Starz was looking for. Instead, the pay cable channel insisted on tiered pricing, which would require Netflix subscribers to pay more than the standard $7.99 per month for movies and television shows from Starz.

Starz was hoping Netflix would charge a premium price for its content so the video streaming/DVD-by-rental service would be more "in line" with cable and satellite providers like DirecTV and Time Warner Cable, since these relationships are important to Starz. These service providers are cautious when it comes to Netflix because they believe customers may stop using their services if enough new content is available for cheaper prices on Netflix. 

But Netflix refused to charge higher prices for access to Starz content on its streaming service. Instead, it was willing to pay the $300 million annual fee for popular Disney and Sony-related content.

When Starz refused, it was decided that the two would go their separate ways once February comes around. Netflix must now decide how it's going to keep up its subscriber growth while Starz determines how it will make up that $300 million it just lost, whether it be through its conventional TV business or possibly through a new digital subscription service.




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