Netflix and Starz Break Up, Netflix Loses a Lot of Content

Starz has announced that it will not renew its deal with Netflix which provides Netflix subscribers with streaming content from the Starz and Encore brands, which will take effect starting February 2012. Starz not only wanted Netflix to pay a premium price for its content, but it wanted Netflix users to pay more as well, and even though Netflix offered Starz over $300 million, Starz decided to end the deal. Starz was seeking a premium price for its content from both Netflix and Netflix subscribers in order to keep the pricing structure in line with multiplatform video programming distributors, like DirecTV and Time Warner Cable, because the relationship Starz has with those providers is important for Starz.

A person close with the talks between Netflix and Starz claims Netflix was willing pay over ten times more than what they pay now for Walt Disney and Sony Pictures movies, as well as the original programming Starz controls. The Starz catalog represents a pretty large backlog of movies — not particularly the newest films, but popular ones, and losing those and the handful of original series — original series being the main reason I personally use Netflix — seems like quite a blow for Netflix.

A statement from Netflix shows that they aren’t just going to give up on the original and licensed content Starz controls:

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.

So, hopefully all is not lost.

(LA Times, The Next Web via Techmeme)