Starz and Netflix End Negotiations for Streaming Deal

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Starz to End Streaming Deal With Netflix

HackingNetflix.com’s ongoing poll suggests that Netflix’s price increase, which took effect yesterday, will not yield the apocalyptic exodus that people on social media sites predicted; however, how will news that Starz announced that they are ending negotiations with Netflix over renewing the streaming video deal change Netflix’s future?

On September 1st, Starz President and CEO, Chris Albrecht, announced that the negotiations to renew the content streaming deal  have ended and Netflix will cease to distribute Starz’ content on February 28, 2012 as stipulated in the original contract.

Albrecht cites in the press release the desire “to to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content.” He believes Starz is “in an excellent position to evaluate new opportunities and expand its overall business.”

In other words, Albrecht and Starz probably wanted more than the $200 million that Netflix CEO Reed Hastings predicted and now want to test the waters with their content and will look for a more lucrative distribution deal.

The ending of negotiations will result in removal of Disney and other content from Netflix instant streaming in February and the permanent removal of Sony content, which was removed from instant queues last June due to a maximum subscriber clause in the contract between Sony and Starz.

HackingNetflix.com’s poll states that of the +4,500 respondents only 11% will cancel their account and 3.5% will put it on hold. This is a significant contrast to the poll they conducted immediately after Netflix announced the price hike where a third of the ~11,500 respondents declared they would kick Netflix to the curb.

The inability to distribute Starz’ content will definitely hurt Netflix and cause subscribers to look elsewhere for video streaming content; however, the most significant point is not Netflix’s loss, but a competitor’s gain.

The considerable decrease in people stating that they will drop Netflix is probably because there are not many other options, much less better options out there; however, if Starz signs a deal with Amazon or Blockbuster, Netflix will have serious competition for the top of the podium and customers will have other options.

This competition might be great for content producers who are jacking up prices as we speak, but at what cost to the consumer?

Movies and other creative products are not like other goods that your buy at a store. With Epix at Netflix and Starz at another provider, if you want to watch Iron Man 2 and The Social Network, you would need a subscription to two different services. Unlike competition in other industries, these exclusive deals may not drive prices down, but will divide content across a number of providers and in the end might drive the total cost to consumers up.

Update: Netflix reportedly offered Starz a $300 million-plus deal, but Starz wanted tiered pricing, which would have caused Netflix subscribers to pay more for the already $7.99 a month video streaming only plan.

About Arthur Pignotti

Before joining CD-Info in 2010, Pignotti worked as a video editor, a multimedia designer, and a multimedia development manager at US Digital Media for 6 years. He has two BAs in journalism and history from Arizona State University and will be receiving an MA in history from Arizona State next year.
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One Response to Starz and Netflix End Negotiations for Streaming Deal

  1. Riley says:

    Netflix doing its price increase was okay with me, but once I found out that they wouldn’t have Starz programming after February, I had to get rid of them. It just takes too long for them to get new releases and more programming, plus having less content for a higher price isn’t okay. I gave Blockbuster Movie Pass a try from my employer. Recently, Blockbuster joined with DISH Network to bring this Blockbuster Movie Pass. For $10 a month, I get 20 additional channels in my lineup, and streaming to my DVR or computer. To add to that, I also get unlimited DVD exchanges in store, and all exchanges include Blu-rays and games, which Netflix charged me extra for Blu-rays and didn’t even have games. For now, it is only available to DISH Network subscribers, but Blockbuster is working to create and alternative option for those who don’t have a TV subscription. For those who do have DISH Network, it is a fantastic option if you’ve cancelled Netflix recently!

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