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Starz will not renew its distribution deal with Netflix in February 2012  (Source: ecoustics.com)
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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By stm1185 on 9/6/2011 1:16:14 PM , Rating: 2
I have satellite and I still use an antenna from time to time so I can dvr 2 shows and watch a 3rd. Interestingly enough the picture from the antenna is BETTER then what I get from the HD DVR's hdmi output. I'm guessing it has to do with compression.


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