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Netflix Loses Starz Content as Prices Increase

Is this a significant loss for Netflix? How angry are subscribers?

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Netflix Loses Starz Content as Prices Increase
[ Business]

Two interesting things just happened in the world of Netflix. First, those much-talked-about and generally despised price changes went into effect. Second, Netflix lost all of its Starz content.

Starz called off talks in the contract renewal process, leaving Netflix without one of its largest providers of newer content. This collapse in negotiations takes away Netflix’s ability to offer newer movies from Walt Disney Co. and Sony, both of which have their distribution controlled by Starz.

According to the Wall Street Journal, an inside source claims that Starz wanted Netflix to pay them 10 times the licensing fee that Netflix paid them in 2008. Netflix offered the premium TV network $300 million plus a year to renew the agreement, but Starz declined.

What do you plan to do to meet your streaming video needs, now that Netflix has changed their prices and lost Starz? Let us know in the comments.

Apparently, what Starz wanted was a tiered pricing system which would have Netflix customers pay more than the baseline $7.99 streaming price in order to access additional content from Starz. No dice, said Netflix.

Here’s what Starz said about the failed negotiations in a release –

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.

Netflix CEO Reed Hastings talked to Business Insider about the deal, saying that he “regrets their decision to let out agreement lapse.”

He went on to say that Starz doesn’t account for that much of Netflix’s content anymore –

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 a huge 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.

Shares of Netflix fell 10% Thursday night before closing.

The price change that went into effect on Sept. 1st, the same day of the collapse of the Starz deal, splits up the streaming service and DVD-delivery service into two different plans, both costing $7.99. That’s a total of $15.98 if you want to keep both plans. Before, streaming was $7.99 but the 1-DVD-at-a-time service was only a $2 add-on to that package, making it $9.99 total.

This announcement back in July didn’t go over too well, as the internet community threw a collective fit.

So, the most basic description of the day’s events is as follows: Netflix upped their prices and lost content at the same time. That’s a bummer, right?

The Reed Hastings argument, basically, is that the loss of Starz isn’t going to hurt Netflix at all. If Starz only accounts for 8% of the content that subscribers are watching on a regular basis, it’s true that Netflix isn’t going to be absolutely crippled by this loss. That statement becomes even more compelling if his projections are correct and Starz ends up accounting for only 5-6% of viewed content in Q1 2012.

But you have to consider what Netflix loses when it loses Starz: newer releases – Disney and Sony stuff. This is not the kind of stuff that resides in the outer regions of the library or stuff that will collect dust in a queue for months – this is popular stuff that people want to watch.

And even if Starz didn’t provide the most premium content, subscribers may have a legitimate reason to be perturbed. Isn’t any loss of content, especially 8% of the content watched, unacceptable?

Hastings said that they will take the $300 that they were going to give to Starz and use it to snatch up different content. But do subscribers want new content to replace lost content? Or do they want new content to add the all the existing content. I think I’ll bank on the latter.

It is important to remember through all of this, that the price you pay for your Netflix subscription doesn’t have to increase. If you choose to go streaming only, your monthly fee will actually go down. It’s only if you really want the physical DVDs that you’ll see a real price hike.

But on a day where many existing Netflix users feel forced into a streaming-only decision, Netflix announces that a lot of important streaming content (all the Starz play stuff) will be going away.

How do you feel about Netflix losing it’s deal with Starz? Do you think that it will have a significant negative effect on the company? Let us know in the comments.

Netflix Loses Starz Content as Prices Increase
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  • Mabbas

    So…. Mark my calendar to remind me to cancel my account in February, right?

  • Dick Wilson

    I canceled my streaming with Netflix, kept only the DVD mail service. I’ll wait for a competitor to offer a better package and then switch companies. Too bad . . . I have been with Netflix for many years.

  • rm

    the whole film industry stinks, who cares – I gave up on them.

    Sony = evil

    Disney = make money at all costs to pr and consumer wishes corp

    film industry = exploitation

    I spend time doing other intelligent and awareness, skill growing things on the computer, I get out and hike, ride my bike and socialize – life is better with out their garbage

  • nick

    I use the Netflix Roku which was great when it had all the Starz movies and features but this will definitely change how I feel about netflix. Mainly because a lot of the first run films end up on Amazon.com and you can get them on streaming via Roku but you have to pay for each one you want to see. We are probably going to go with our cable companies movies/features with their ‘On Demand’ program and pay as we go because of this recent change

  • Ed

    I cancelled the DVD by mail and kept the streaming content. Keeping a close watch on better options. I also have Blockbuster which I plan on doing away with within the next few months. Not happy with their pay as you view program. There has to be a better program coming in the near future to put both Netflix and Blockbuster out of the main stream media giants. Would like Netflix close up after their questionable decision to increase fees and lower quality of service since their decision to do this was particly due to the contant their were offering. I for one may end up doing away with Netflix for good.

  • http://www.flkinfo.com Marilyn Davis

    Recently netflix advised me of their rate hikes & I was not happy at all.

    Fortunately for me my bank merged with another & I got a new debit card with new numbers. Net Flix was looking for $10.00, but sadly enough they had the wrong numbers.

    I have had HuluPlus for a while now before Netflix & the charge is only $7/month & they don’t keep increasing prices etc.
    I would highly recommend them.

  • Derek

    Starz is playing hardball, trying to make a fundamental change in Netflix delivery requiring a charge per movie for their content. While that is standard with other services like VUDU and BlockBuster, Netflix provides a predictable monthly charge. Netflix affordability is and will remain the most popular delivery system with consumers, especially in times of economic weakness.

    There is plenty of premium content on Netflix without Starz. VUDU and BlockBuster “sell” movies for more than they cost to buy physical copies from Amazon.com and other DVD retail sites or your local Target. That formula significantly limits the VUDU and BlockBuster customer base. The VUDU and BlockBuster “rental” prices are not competitive producing limited interest so it is no surprise Starz would like to force Netflix to “join” that pack. Let Starz find another source for the $300 million delivered 30 days or more after they give it to VUDU and BlockBuster.

    Netflix provides virtually unlimited entertainment (all you can watch 7/24) for $7.99 per month. The cost of two “regular” movie rentals at VUDU or BlockBuster is $7.98 and more for many titles.

    Netflix reinvestment of the $300 million into other choices will be interesting to watch. For that kind of money, they could purchase a few dozen premium/popular movies for their viewers each year.

    • Tabby

      I couldn’t agree more, thank you for posting it!

    • Max

      Well thought-out response. Arguing over $7.99 a month seems ludicrous, given the cost of a single trip to a local movie theater.

  • kate

    I think it encourages me to go to Rapidshare more :P

    It makes me lose faith even more in Disney, greedy jerks. Why would I pay to support that?

  • Jerrie DeRose

    I will not be renewing my netflix subscription. Today Starz will not be providing movies to netflix, tomorrow who else will it be and how much will netflix subscription fees continue to rise?

  • Mike Panchyshyn

    We have used Netflix a lot over the last year or so. It’s been decent but the streaming content was always a little limited. Still had to occasionally rent movies elsewhere.
    In today’s economy, every expense is scrutinized. Netflix was already on the verge of being cut from our monthly expenses. The new price changes hit hard but we still hung on to the hope that better content would soon follow. This news kind of took the wind out of the sails. They have lost their edge and out priced themselves prematurely.
    In my opinion, the CEO took a risk but ended up being a poor move.

  • http://www.greenplan.pt www.greenplan.pt

    Let’s see what happends…

  • http://legendaryletters.com Stacy

    I am so disappointed with this news. We recently switched to just the streaming plan because that is what my family used most, but without the newer movies including Disney for our kids, I’m wondering if we will cancel Netflix all together. I think Starz asking 10x the previous rate is completely unreasonable, and hopefully, they will reconsider.

  • http://www.livingwithfibromyalgia.ca Shannon

    I plan on watching tv online w/o commercials the same way I always have. Without Netflix or their pathetic Canadian version. I happily await the day when local cable companies finally admit defeat and stream their content online (as if that’ll ever happen). I haven’t watched a tv in well over a year and don’t plan to ever do it again.

  • http://giveaway50.ws Victor

    I think this will hurt Netflix in the near term, but things will eventually settle. I don’t think they will go out of business. As for me, I don’t watch that much “new” content anyway. Hulu has a lot of great content for free, and if I really want to view a newer movie, it is almost more cost effective to buy it on DVD after the price comes down.

  • Lisa

    Starz is obviously being greedy and has an overblown sense of self-worth. I appreciate that Netflix did not give into their unreasonable demands. As for the price change, I never used the streaming anyway, just the dvd rentals. The price change is good for me. But even for those affected differently, it is still a great deal.

  • http://www.lmpmaps.com mike adams

    No one is irreplaceable. DISH got to expensive in this economy, so I looked for an alternative, found them and canceled by DISH subscription, sent back the junk and saved 199.00 per month. When we saw Netflix was going to cost more because they want more for streaming, I said, hmmmm, who is their competition, so I found FREE content I can stream. When Stars becomes unavailable, I will look for free content in that world. When it is bad for the customer, it is an opportunity for competitors and good for customers. Netflix is the most vulnerable here, but Stars is hurting viewers in this deal, it cannot be good for them.

    Big companies do what Big Government does. They both loose sight of who the customer is, what they want and what they are willing to purchase. At least we still have options with how we spend our discretionary funds. With government we are at the mercy of the electorate.

  • http://cprsafetyservices.com Norman Patton

    I will boycott Starz and If Netflix does not have sufficient content for my viewing needs, I will cancel. I look to netflix for TV Shows and a way to get away from the high cable prices.

    This is another effort from the entertainment community to gouge their customers.

  • Lorraine Panagos

    Netflix make a huge mistake when they upped their prices this month. They must have lost a ton of customers by doing this. I, for one, reduced my membership to streaming only. Now that they lost Starz distribution, they are going to lose even more customers. When you get a huge hike in your rates, you expect the quality and selection to improve, not be reduced. I may quit Netflix altogether if their streaming content doesn’t improve in the next few months. And, I have been a steady customer since 2005.

  • http://caththallena.com Cathie Berry

    The hard part lately is when I go into Netflix to enjoy a movie, its always the same old movies over and over again. Then when I finally find a new one and sit down to enjoy it, it’s usually in a language I don’t understand. When I see an old movie that I might enjoy watching it might be in the 50′s and I can’t enjoy it unless I order the DVD package as well. It dosen’t matter what Starz wants what matters is meeting the customers needs. I’ve been looking around hoping someone new that cares about meeting the customers needs more than haggling over their profits. If they just concerned what makes the consumer happy they would get referrals and their business would continue to grow. I don’t mind paying the less than 8.00 a month,I just wished they would put in more enjoyable movies to watch. Consumer, Cathie Berry

  • Gregory

    While I prefer to get the DVD instead of dealing with many issues of streaming, I think the larger issue here is access to content. First, Internet providers across America are looking to change your ability to access information by how much you pay monthly. Similar to what telecom companies charge for data usage. Cable for the most part was accessible by most. With the introduction of streaming content driven majorly by Netflix now hulu, users have lost access to video stores requiring you to have either cable or Internet. Streaming content will further lead to increased prices separating users with information access and those that do not.

    I don’t subscribe to netflix because of the issues related to streaming. Hulu also went on to charging then also adding commercials. I don’t want to pay for services that advertise to me as well. The Chinese will continue to copy Hollywood and with streaming content making it easier to download and change in services like realplayer downloader it will only be a matter of time before the web sees more offshore servers hosting free content.

  • Joe Machnik

    Already cancelled DVD subscription. Redbox works well for me. Netflix price goes up again, I’ll cancel streaming as well. ~

  • Jacque Desbiens

    HI

    I am concerned about netflix and his loss.
    Personnaly I never used the DVD service.

    My concern is now what will their contents
    Up to now, Netflix deliver old movies, you can’t get there new movies, so the solution to take netflix over cable or satellite for new movies is not a solution.

    Now I presume because of it, the new generation may be not the audience for them to reach.

    Also I find very difficult to reach someone there by email, I tried to find a email address few times and never found one, their online form is horrible to contact them and I never had a single reply.

    The only way I can reach them is when they send their feedback message on how was the last movy I checked.

    The real only thing I stay there is for their series, nice to watch all episodes and not wait.

    I started to check other provider and I am sure this loss for them will bring other competitors. So maybe at the end, the counsumer will be the winner

  • http://onlyessentialorganics.com Deborah White

    As streaming video is now my only content provider, I would say these changes are in the very least, disturbing. I went to streaming because my Dish network fees for the basic plan were too high and the content value too low. I needed an economical solution and I found Netflix. I was in love! Not only was it affordable but I was able to watch what I wanted to watch, when I wanted to watch it. No more fooling with the VCR and hoping I set it right! Anyway, I’m getting away from my point. It seems like we are getting forced more and more to find economical ways to watch TV. Netflix prices have almost doubled and now we’re getting less that we started with? I didn’t subscribe to the DVD option anyway but now I definitely won’t. I’m going to explore options for internet TV. There’s a lot of premium viewing out there for free!

  • paula h

    We had already decided to cancel our Netflix subscription due to the price rise. “Streaming only” doesn’t work for us, because most of the movies we want are only on DVD. The loss of Starz just adds a bit to the notion that we made the right decision.

  • Peter Connors

    For years I was bombarded by Netflix pop-up ads to lure me in. Finally I subscribed and also bought an Apple TV box to run Netflix. Then within two months they raised the price 60%! I say screw ‘em! I am dropping streaming because it only works some time anyway. I’m tired of watching the spinning pinwheel, waiting for the stream to reconnect. I live in central Jersey, close to the DVD distribution center. I only have the one DVD plan but I can turn around a new DVD every three days…and we make a point of it. Now all they have to do is work on their content. Some old movies are worth a second watching but most of their offerings aren’t worth the time.

  • Tabby

    Everybody is complaining both about content and the hike in price. However, from what I read in this article Starz was demanding that you pay even MORE for their content by attempting to require Netflix to tier their pricing. This would have made streaming Starz more than the flat $7.99 streaming price. Luckily Netflix said NO, they would not charge their customers more exclusively for Starz Play. While Starz has some decent content I do not want to pay more for it.

    While I am also annoyed with the recent price increase I will stay with Netflix because it is still a mere fraction of the price of cable, satellite and especially Blockbuster who does not offer a streaming package but instead offers a “play on demand” for $3.99 a pop. I truly believe that Starz will be the side to have regrets; they just threw away a $300 Million dollar contract with absolutely no one else to hand that contract to. I hope that Netflix does not give in to their demands.

    With this in mind, the people out there complaining on both accounts need to make a choice of which aspect they are angry about. It came straight from the horse’s mouth, you are not going to get the Starz content without having another price increase.

  • http://www.DaytonSeoservices.com Carlos Scarpero

    I’m with Netflix on this one. Sounds like Starz was being too greedy on this. I don’t see why everyone is whining. Get over it already! Netflix, even with the price increase, is still a way better deal than cable or satellite. Now, if I could just get live college football on my Roku…

  • Art

    I will be cancelling the dvd part of it shortly and probably the streaming porting in the near future…
    They are all getting to greedy.

  • s manriquez

    Not only did they increase prices but their quality of DVD’s is gone to hell in a hand basket. We are evaluating if it is still worth keeping them. In general, we use to get 3 DVD’s at a time. Now we get two. Almost all of the DVD’s we get must be cleaned before we view them. Most are really scratch and some are broken or defective. For the same $23 plus now we get 2 DVD’s of inferior quality. I personally do not think they are giving their customers what they use too. It is called GREED!! I don’t use streaming but was given no choice on their new plans. At this point with the economy as bad as it is, this was the wrong time to hit their customers with price increases. But they figured that they had little competition because they drove DVD rental companies out of the market. We are seriously rethinking continuing their services.

  • http://louisventura.com Louis

    I am using Hulu Plus in tandum with Netflix. It isn’t as easy to sue as Netflix and does not have closed captioning which I enjoy using. Until someone comes up with a better method of delivering media to my home I am stuck with the best of the worst. Any ideas out there?

  • phil

    Prices always have to go up, that’s just the nature of business. How much and for what service offerings is the key. Obviously losing Starz offerings on the same day as raising prices will hurt. I’d expect something like a 10% drop in subscriptions for about 3 months.

    That being said, as long as Netflix fails to add good new, recent-run content on their streaming service, there will always be room for a killer competitor to move in. I’m aware that the myriad licensing issues for different delivery modes and competing distributors is tough, but if Netflix can throw around $300M for just one provider, I think they can do MUCH better than the cracked, scuffed DVDs and limited, dumbed-down streaming service.

    If you are going to raise prices, you need to immediately justify it to the cinsumer with an improved service offering. Otherwise, when Amazon or Blockbuster gets their acts together, Netflix will be on the way to out of business.

  • Chilly8

    There are a handful of titles in Starz play not available on DVD, so Netflix won’t even be able to offer them on DVD. Problem Child, Problem Child 2, Going Ape, Joy Of Sex, and Eddie Macon’s Run are three Starz Play titles that are not availabe on DVD. You can get them on VHS, but not DVD, so viewers will lose access to them.

  • John

    I’ll see what I can no longer view and decide if I want to live under the thumb of corporate mercenaries. Then, I just may start READING again.

  • Paula

    yes now we have to pay one price for streaming and another price to get movies in the mail. TWO DIFFERENT PRICES. it ticks me off. Hope they loose a lot of customers. Don’t know if I will stick with them or not.Mabey cancel one of them but you can not get on streaming a lot of the movies you can get by mail.

  • Michael

    Customers and end users are ALWAYS screwed by GREEDY corporations.

  • http:/aspiritualparadigm.com Connie

    Streaming is not a loss to those of us on satellite internet. Cannot get streaming. My choice was the dvd’s only.

    I get the price structure change and how some will not appreciate it. But currently I have not found a source that is less or free for all the movies and television shows I want to watch.

    Thank you for letting me share my few cents worth.

    • http://www.tubesgottalent.com McAbriel

      Using the DVD option I could only get about four maybe five movies a month with netflix. Redbox is cheaper at $1 per movie due to that.

  • Doug Erickson

    It is a really big rip off to the customer. Shame on you netflix

  • rparker

    …could care less about starz– but if the price goes up, we’ll drop netflix like a hot potato.

  • Sharon

    Seems like Starz did not feel like the offer was big enough to stand up to their expectations of what they think they are worth which in my opinion makes them look really greedy in these economic times. I will continue to support Netflicks but I think we should all blackball Starz and show them what it really feels like to not have the money coming in. Power to the people to show them how we feel.

  • http://asifoundit.com Dennis Nikols

    It seems to me that Starz is being greedy and someone is standing up to them. I for one will not even consider a service that requires a multiple level payment. Premium prices are only applicable to premium products and while Starz stuff is good it is simply not that good. These people are asking Netflicks to change them business model to accommodate their greed and overly inflated egos.

    It has always been obvious that NF could not keep doing what it started out doing without some price increases. Good on you Netflicks.

    • http://www.tubesgottalent.com McAbriel

      Starz said your not going to double your rates without giving us something as well.

  • catt

    I think Starz was being greedy and netflix made a good decision – in the long run, losing them won’t hurt netflix – but having said that, their recent separation of streaming and physical dvd services and rate hikes will. We mostly stream video, once in a while getting a dvd we could not get streaming, so most months they made money off us from not having to mail us dvds. I went right to streaming when they doubled the price and discontinued getting dvds. I am not happy about having to do that because there are some things that you can’t get streaming. If prices for streaming go up too much or more content goes away, I will find another option other than netflix. They are good, but others could be better so I will keep my eyes and ears open for competitors who will do it like netflix used to for a more reasonable price.

    • http://www.tubesgottalent.com McAbriel

      Netflix lost me with the price increases and I really enjoyed the Starz original and probably would have left becauseofjustthis also.

  • Ron

    With hard times, I dropped my Netflix subscription several years ago. Now I find satelite service way too expensive and canceled.

    So, I rejoined Netflix last month when they began offering the streaming video only package. I watch local and network TV over the air. My home video entertainment costs dropped from around $70 a month to $7.99.

    So when I heard that Netflix will loose Starz I was disappointed. The Sony films alone are some of the best offered.

    Nevertheless, I praise Netflix for playing hardball rather than giving into extortion from Starz. That extortion would have eventually trickled down to subscribers in future rate increases. So thanks Netflix! Unfortunately Netflix may never get Starz back. I can live without Starz. Outfits like Amazon will likely negotiate deals with Starz. But that’s okay. Amazon’s costs will also trickle down to consumers in rate increase.

    The only long term effect is that Netflix will emerge as the low cost vendor and the other services will become more expensive in order to provide Starz content.

  • John

    I was on the fence when they separated DVD and streaming. I decided to go with DVD to get Starz’s more current and popular titles. With the loss of Starz, It’s looks like I’m done with Netflix. Too bad! I enjoyed the many titles available and having the choice between DVD and streaming.

  • Alex

    Definitely disappointed. they want to charge us more for a let value service. Seems like extortion and even this monster will fall. I am canceling my service. After years of loyalty netflix betrayed its users. O will find a better provider or none at all.

  • Casey Maness

    While I am a fairly new subscriber to Netflix (two months), I have known about their service but never subscribed until I got a PS3 so I could watch on my big screen TV. The service is simply awesome! I’ve been out of work for several months from an injury and have constant new (to me) movies to enjoy.

    That being said, I must also say that about a quarter of the movies I watch come from Starz, so I will be most disappointed when they are gone. I do believe that Netflix will make the necessary adjustments to overcome the change, however. What they were paying Starz will certainly buy more from other sources. Starz got greedy, Netflix wouldn’t agree to pass along the costs to its customers, and IMHO it was the right thing for ‘em to do.

    HOWEVER. I will certainly cancel my subscription if the content isn’t as good as it is now….

  • Marko

    Netflix was better and more convenient than piracy, but now that content owners are starting to get greedy, and netflix seems to have less and less available for streaming, I start getting more and more tempted to go back to the torrents…

  • Gerrod

    I find it funny that mostly all movie companies complain about piracy, but then they push the envelope to where piracy is the best alternative to watch what you are after. This is just another example of how the entertainment industry is just fueling piracy with its own greed.

  • Max

    I’m not surprised. It seems to be THE AMERICAN WAY in this era that as soon as a company becomes successful, it celebrates that success by INCREASING the cost of using its services – or buying its product – to its loyal customers! Gone, it seems, are the days when customer loyalty was rewarded with lower cost. Today it’s “hook ‘em and make them pay!”

  • Shannon

    I have canceled my Netflix and I guess I wait for it to come out on Starz or Showtime or just go to RedBox.

  • Luis ruiz

    Netflix has been great and at a very cheap price…the increase is fine ….we will been fine with out starz…..netflix is a form off additional entertainment not a way off life, we will entertain our selves with whatever is available on netflix.

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