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Starz will not renew its distribution deal with Netflix in February 2012  (Source:
Starz released a statement that said it would not renew its distribution deal with Netflix when it expires next February, which means Netflix will lose Disney and Sony-related programming from its library

Earlier this year, Netflix was sitting pretty with favorable financial results and 29.7 percent of peak downstream traffic in North America, which made it the largest source of Internet traffic overall. The on-demand Internet streaming and DVD rental service even led Blockbuster to file bankruptcy and made Hollywood executives shake in their boots.

But in recent months, Netflix has lost some of that spark after announcing that it was changing its plans and prices. Instead of paying $9.99 per month for unlimited video streaming as well as DVD rentals, the two would be separated into their own monthly plans for $7.99 each. If a user wants to continue receiving both video streaming and DVD rental-by-mail, the monthly fee is $15.98. These changes just went into effect today.

Customers were outraged, but Netflix explained that it had to raise prices in order to afford hundreds of millions of dollars in streaming rights from movie studios and television networks. Of course, Netflix must pay these prices in order to build its streaming library legally.

Now, Netflix has some new problems on its hands. Satellite TV channel Starz released a statement that said it would not renew its distribution deal with Netflix when it expires next February, which means Netflix will lose Disney and Sony-related programming from its library.

The following is Starz's statement:

Starz Entertainment has ended contract renewal negotiations with Netflix. When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform. 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. With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business.

While Netflix has been running its service without Sony programming since June due to a contract violation, Netflix described it as temporary.

The split could mean that someone else will end up with Starz's digital rights, such as DISH Network or Amazon, both of which are building digital video libraries. Another option would be for Starz to create its own digital extension.

The following is Netflix's response to Starz's statement:

Starz has been a great content partner since 2008 and we are thankful for their support.

While we regret their decision to let our agreement lapse next February, we are grateful for the early notice of their decision, which will give us time to license other content before Starz expires.

While Starz was a huge part of viewing on Netflix several years ago because it was some of the only mainstream content Netflix offered, over the years Netflix has spent more and more licensing great TV shows from all four broadcast networks and many cable networks, and we have licensed 1st run movies from Relativity, MGM, Paramount, Lionsgate and others. Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add even more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. 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.

We have tremendous respect for the Starz creative team, and we look forward to someday licensing some of their original or licensed content.

Netflix shares fell 9 percent in after-market trading after Starz released its statement.

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RE: Doesn't make much of a difference.
By talozin on 9/1/2011 11:16:18 PM , Rating: 5
Netflix streaming is great for people who often find themselves saying, "Man, I'd like to watch a movie." It is a constant frustration for people who find themselves saying, "Man, I'd like to watch that movie."

Their selection of movies is good enough that I can almost always find something that looks like it'd be fun to watch. But it has a long way to go.

RE: Doesn't make much of a difference.
By mcnabney on 9/2/2011 9:37:44 AM , Rating: 2
Dead on.

There is always something worth streaming, but if you are looking for something in particular it is unlikely that they will have it.

/I have 23 items in my queue now. Only one is available to stream

RE: Doesn't make much of a difference.
By FITCamaro on 9/2/2011 9:48:31 AM , Rating: 4
The only that annoys me is how some extremely old movies aren't available to stream that they offer on their DVD service.

Tron, Blazing Saddles, Ghostbusters (strangely Ghostbusters 2 is available), etc

RE: Doesn't make much of a difference.
By Mitch101 on 9/2/2011 11:38:43 AM , Rating: 2
I don't know if its the Movie Studios or Netflix thats making those decisions on whats available for streaming. Probably a mix of both.

I suspect they feel if they make it difficult enough it will convince you to buy the movie or join both programs. One hit movie streamed and the other goes dvd rental.

But those movies you mention have replay value to me so when I see them on sale I pick them up. If you narrow it down to movies really worth owning that have true replay value its only a handful every year even then I try to only buy the disc that has directors edition and tons of bonus material when its under $12.00

By mcnabney on 9/2/2011 4:27:57 PM , Rating: 2
My theory is that Netflix only contracts to stream the absolutely cheapest content possible. If a studio wants a premium for streaming, Netflix won't get it. That is why there is a lot there now, but not a lot that you actually want to see.

Kind of like going to a grocery store and the only items available are generics and store brands.

By JW.C on 9/5/2011 1:38:03 AM , Rating: 2
The problem is that Starz wants to do a streaming website like HBOgo. I am not sure if it will make them more money, but it will provide better internet TV choices for some of us.

"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke

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