Say goodbye to about 1,000 movies, Netflix, because Starz is throwing up its hands and taking a long, scowling walk in the opposite direction. The American cable and satellite TV service said late yesterday afternoon that it was ending negotiations with Netflix and pretty much hitting the road.
“Starz Entertainment has ended contract renewal negotiations with Netflix,” Starz said in a statement. “When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform.” No ifs, ands or buts.
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The decision means popular movies like Toy Story 3 will vanish from Netflix when Starz’s contract is up early next year. To elaborate with a trace of ominousness, think stuff from Disney and Sony, two studios with whom Starz has exclusive distribution agreements. It also means you can kiss exclusive Starz content goodbye, though in that case, we’re only talking about stuff like Spartacus and Camelot. I haven’t seen the new Torchwood yet, to be fair, so there’s that, but I can’t say I’ve heard positive things about the former two (still, if you’re a fan, you have my condolences).
Starz claims it’s all to do with “[protecting] the premium nature of [its] brand” and “preserving the appropriate pricing and packaging of [its] exclusive…content.” Instead, Starz will “evaluate new opportunities and expand its overall business.” Translation: We’ll just take our streaming content elsewhere, Netflix.
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The market reaction was predictable. Netflix’s stock tanked in early trading this morning, down 10%. The pundit-sphere’s mostly hacking on Starz for the decision, though a few like Wedbush Morgan’s Michael Pachter were critical of Netflix. Pachter this morning tweeted “In my view, NFLX claim that Starz only 8% of streams analogous to grocery store saying ‘milk only 8% of sales, so we don’t need to carry it’,” to which Techland‘s own Jared Newman responded (I think aptly) with: “[It's] a cute analogy but not sure I buy it. Everyone needs milk. Can’t say the same for Starz movies.”
Is anyone surprised this happened? The Wall Street Journal reports that Starz was asking Netflix for something like 10 times the licensing fee the streaming video provider paid Starz in 2008. Netflix apparently threw Starz a meaty $300 million-a-year bone this time around, but Starz balked, asking that users who want access to Starz content pay above and beyond Netflix’s current flat-rate, all-you-can-eat $8 a month.
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