UPFRONTS 2013: The Overachievers 
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UPDATE, 5:20 PM: Netflix shares tumbled in after-hours trading after Starz announced it had ended contract renewal discussions. The stock was quoted at $213.03, down 8.7%, on volume of around 520,000, according to Nasdaq.com. Netflix spokesman Steve Swasey said in an email that the company was “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.” Starz movies and shows account for just 8% of U.S. subscribers’ viewing, Netflix said, and the company had projected that to fall to 5%-6% percent by the first quarter of 2012, when the deal dies.
ENGLEWOOD, Colo., Sept. 1, 2011 /PRNewswire/ — Starz, LLC, President and Chief Executive Officer, Chris Albrecht, issued the following statement today regarding the status of affiliation agreement renewal discussions with Netflix.
“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.”
Starz operates 17 premium cable channels, including the flagship Starz and Encore brands, and is controlled by John Malone’s Liberty Media. Starz Entertainment airs more than 1,000 movies and original series every month across its pay TV channels. The way the deal with Netflix worked, Netflix gained online access to newer films from Sony Pictures and Walt Disney through the streaming agreement with Starz. But that pact ends February 28, 2012. Access to Sony movies was already halted. Netflix CEO Reed Hastings said in June it “wouldn’t be shocking” to pay $300 million a year, or 10x more, to renew the Starz rights.
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So what was the price hike for exactly?
NetFAIL bro! NOTflix dudez!!
It was to get you off the mail-DVD teat. Running that side of the business is expensive.
One has nothing to do with the other. Starz mostly likely had no intention of renewing their contract with Netflix. Fortunately, not every studio is like that.
TRANSLATION: The cable companies are threatening to drop us if we continue working with you. Goodbye.
Good.
I cancelled Netflix streaming yesterday — back to the old DVD plan for us. With the kids returning to school, who needs streaming (of mostly old TV & older movies)?
Good? Just because you cancelled, you think it’s good the rest of us lose out?
Congrats, dinosaur!
It was for that awesome “Svetlana” series.
Ouch. Is this the beginning of the end?
Of Netflix? I doubt that. It’s not surprising to see these so-called premium channels withhold their product because they want to keep people anchored to the cable/satellite option. Even though HBO and Cinemax are making their product available online, you still have to be a subscriber to a cable or satellite provider.
Netflix in some form or another will outlive these dinosaurs.
For companies like Starz, yes. Netfix has introduced everyone to streaming. It is the reality. It is the future. If you don’t provide people access to shows instantly, they will seek them out and find them illegally online.
But, Stars was only 8% of their viewed shows. Just a blip that can easily be replaced.
In the meantime, illegal streaming goes up.
Yeah, but what quality was the content from Starz?
The vast majority of streaming videos on Netflix is filler garbage that they picked up from desperate Indie filmmakers that are willing to sell the rights to their films for $500 a pop.
I’m sure that 8% that they are losing was material that drove consumers to their service.
Call it… we are seeing the begining of the end for Netflix. It was great while it lasted but content owners are seeing less need for the middle man. Not to mention the backlash people seem to have for Netflix’s streaming service, as if they should be able to access any movie ever made at anytime for next to nothing.
Would this be considered strike 2 or strike 3 for Netflix in less than 6 weeks? Which reminds me, I need to change my plan tomorrow before the new pricing effects me on the 3rd.
Will probably renew when the entertainment industry figures out streaming, like the VCR in the 80′s, won’t kill them.
Couldn’t agree with you more. The only difference – people are used to getting content for free due to being spoiled by the inernet. (Hence the Netflix backlash which to me sounded like a bunch of spoiled brats crying because they had to pay for something they should’ve paid for from the beginning) That’s going to be a big hurdle. When the VCR and VHS first appeared on the scene, having movies at your disposal to watch at home was a novelty, and people were willing to pay.
Since when is the Starz brand in any way Premium?
I think Starz has exclusive first-run premium cable rights to films from Disney and Sony, and the studios started having problems with Starz over their content being streamed through netflix without getting paid for it.
Starz was “premium” to Netflix because it provided them with access to Disney and Sony product during the Pay TV window, much earlier than Netflix gets those items in the “streaming” window.
To recap, in the last 6 weeks Netflix has doubled its price and will be reducing it’s content.
Great for business.
Looks like I’ll be cancelling my streaming subscription in February then. Already dropped dvd’s yesterday. Oh well, it was a fun 8 years. Thanks for the memories Netflix, but Redbox and I have a good thing going now and it’s time to move on.
Maybe it will force Netflix to start giving a crap about Blu-Ray again.
Streaming is the future. You all sound like people in the music business complaining about Napster. Albrecht wanted to BUY Netflix when he was at HBO and it would have been the smartest thing any content provider could have done. This is not the beginning of the end for Netflix, it is the beginning of the end for outdated television structures.
STARZ and SHOWTIME will probably go as HBO has with HBO and CINEMAX GO and offer the streaming themselves. They can protect their investment and get the moneys worth of what they pay for to license films and produce original programming. Netflix may have hit its stride already.
Now why would I pay for a subscription to Starz when I can go to one of many streaming sites and just watch it for free?
Thank you STARZ. Timely announcement. We the people appreciate the support.
I will be adding STARZ to my cable plan immediately.
Screw greedy Netflix.
So, wait, Netflix offered TEN TIMES as much for the same content (that’s a 1000% increase for those of you kvetching about a 60% increase) and was turned down, and THEY’RE the greedy ones?
Netflix is actually cheaper than it was 12 years ago. Can you say the same for your cable TV bill? (I don’t know, because I haven’t had cable since 1997, but I’m guessing not)
Now, I’m not happy about the Netflix increase, and realise that it’s almost impossible to get more than 8 discs a month for your $8 (then again, you’re not going to find the Netflix selection in some box or in most video stores). But if you don’t realise that this is still the best deal outside of piracy, then I suggest you have someone else do the math for you.
Up your disc count. I average 16 discs/mo for $12.
It seems like Netflix wants to expand internationally on the backs of their initial loyal customers. Not finding a replacement for Starz would show how little they care about their most loyal customers
OMG!!! STARZZZZ!! How will the business model survive without Starz?! This proves my ill-founded predictions that I’ve been dying to expound on!
The beginning of the end for Netflix or a ploy on Starz’s part to scare Netflix into more upfront $. Either way, it doesn’t look good for the newest digital power player.
So in other words they’re all just out to f*** us then?
I predict that NetFlix is going down . . . and another yet unidentified streaming service (not Hulu) will take its place at the top of the home entertainment chain.
NetFlix, it was nice knowing you.
I think it bodes well for the indie movies, I looked up Red Envelope Entertainment and found a lot of movies, some good, some not so good. Guess who owns Red Envelope Entertainment. Lol
Starz is so great Dish Network is giving it away free for a year. The only advantage for me is if I come in the middle of a movie I can watch the first half on Netflix, it is just a bunch of old movies at least 5 years old. HBO it isn’t.
I am sorry but Netflix`s streaming quality is superior that so called premium channels. I am very happy with it and will continue to use it. I dont watch anything at Starz and wont either, knowing they will remove their content.
according to a Roku website, Starz movies account for 437 of the current 20000 offerings on Netflix streaming. if that is true, and i dont have the time/desire to really research it myself, that doesnt exactly sound like the worst thing. In fact as a Roku user myself, i found the Starz content to generally be inferior to the rest of the Netflix streaming offerings….i dont think this is a bad thing for Netflix as long as they try to replace and grow their content…the more they do that, the better off they are…if they don’t…then its a short walk to death for them…
They have the best movies of the netfilix selection.
If you’ve never seen a film before, yes.
Yeah, get over having to pay less than $20 for unlimited access to [some, not all, but surely enough...?] movies via DVD and streaming. Consumers are such pampered crybabies; it’s a wonder that Netflix shouldn’t be paying us to deliver content to our fat couch-sitting butts… Time to break the freebie mould of thinking.
Is it just me? I feel like I’m taking crazy pills here! Probably 80% of the comments posted so far are anti-NetFlix. Sort of like when some network or cable outlet threatens to go dark because a cable operator won’t pay increased licensing fees and everyone gets angry at the cable company.
Don’t you people realize that the cost is ultimately being passed on to YOU???
Starz is withholding their library because they want NetFlix to pay them more. You don’t think that if Netflix has to pay more money to Starz, that they’re not going to charge YOU more?!
Screw Starz. I like Spartacus, but I’m current on the eps and can always get new ones at RedBox for $1 later on. As for their 1000 movie library, it’s been my experience that EVERY premium cable network touts how many films they offer, but I always feel like the same 5 movies are playing whenever I turn on the tv. Which is why I cancelled every premium cable channel years ago.