Netflix shoots itself in the foot... aka no more free streaming

[Robert Maxwell]

If Netflix gets to a point where they aren't streaming anything I want to see, I will cancel. It's as simple as that. Everything else is academic. I think I might have watched one or two Starz offerings in the past couple months. I probably won't even notice them being gone.

[PsychoPere]

Starz has walked away from negotiating a new deal to continue streaming their catalog via Netflix.

For the past year, the companies had been negotiating a renewal, which likely would have cost exponentially more than the $20 million-$30 million Netflix paid for its initial four-year deal. [...]

While the dissolution of the deal wasn't entirely surprising, both Starz and Netflix execs have spoken optimistically in past months about reaching a new deal.

Starz was said to be seeking at least $200 million per year to renew the deal, a sum that Netflix CEO Reed Hastings acknowledged as reasonable. [...]

The current agreement expires on Feb. 28, 2012.

The article also points out that Netflix had been streaming around 1,000 movies as part of the Starz deal. This would certainly seem to be a pretty big blow for the company, especially in combination with its recent PR problems regarding the new pricing structure (which also went into full effect today...), though the article includes a quote from Hastings that "top-shelf titles" only account for 8% of digital viewing.

As far as I can recall right now, this is the first big content loss for Netflix (not counting the Sony Pictures/Starz issue earlier this year separately), and - as a subscriber - I hope it doesn't presage other companies following in Starz's footsteps. Netflix's decision to enter into original series of their own with House of Cards seems like an even wiser decision now.

[Temis the Vorta]

...and this is why I jumped to all-DVD when Netflix made me choose. There is no way studios are going to pry loose their content when it comes to streaming. They don't care about DVDs because that technology is on its way out. But as long as Netflix's streaming library can't match its DVD library, it's not out for me.

What the consumer wants is Netflix with a streaming library of every title ever made. But Netflix is having trouble convincing the studios to give them that at a price it can pass on to consumers at a reasonable cost.

In the end, technology wins out, so sooner or later, Netflix or some similar service will offer streaming with a very broad library of titles. But it's going to be a bumpy road getting there. I'm taking my DVDs and hiding until it all sorts out.

Netflix's decision to enter into original series of their own with House of Cards seems like an even wiser decision now.

Netflix making their own content won't make up for the content that the consumer wants and can't get through them. Their expansive library is a major selling point. When I want a TV show or movie, I don't want to have to think about who made it. I don't care who made it.

[RoJoHen]

I'm on the verge of canceling (or at least temporarily de-activating) my Netflix account. I've had the same DVD sitting in my living room, unwatched, for the last 2 months, and there is not enough on the streaming menu that I watch to justify paying for it.

I just don't watch that much TV in general. All of the stuff that I've wanted to watch, I've either already seen or I own.

[Temis the Vorta]

Robert Maxwell wrote:

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The "premium nature of our brand"? Who do they think they are, HBO?

Get a grip, Starz.

I loved that part, too. Their rep is pretty trashy so far. They've yet to produce anything that sounds worth even putting on my queue. I have no idea why anyone would subscribe.

[Snaploud]

It really never made much sense for Starz to be streaming on Netflix in the first place. Starz may not exactly be HBO-level-quality, but their business model is fairly similar. They have to actually get people to purchase their channel, and Netflix is more of a deterrent than a help.

[Temis the Vorta]

That's true for HBO and Showtime as well. And you could throw all of cable in there - AMC, TNT, FX, etc - pretty soon you've eliminated everything on TV worth watching. Half of my queue is TV shows (some stuff like Justified that I could have watched live but missed out on, but mostly premium cable shows), so that doesn't work for me.

It's far cheaper for me to pay under $1 for 3-4 DVDs for a full season than it would be to subscribe for a 3 month season for $20/month. That's $3 vs $60, kind of a no-brainer, huh? So no wonder premium cable is angry at Netflix. I've been expecting them to crunch the numbers sooner or later. I just hope they continue to regard DVDs as irrelevant.

[bigdaddy]

Temis the Vorta wrote:

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That's true for HBO and Showtime as well. And you could throw all of cable in there - AMC, TNT, FX, etc - pretty soon you've eliminated everything on TV worth watching. Half of my queue is TV shows (some stuff like Justified that I could have watched live but missed out on, but mostly premium cable shows), so that doesn't work for me.

It's far cheaper for me to pay under $1 for 3-4 DVDs for a full season than it would be to subscribe for a 3 month season for $20/month. That's $3 vs $60, kind of a no-brainer, huh? So no wonder premium cable is angry at Netflix. I've been expecting them to crunch the numbers sooner or later. I just hope they continue to regard DVDs as irrelevant.

Exactly. Get the DVDs for cheap like Weeds and The Big C and there is no need to spend a hundred a year on a channel.

[Temis the Vorta]

But there is an argument to make that Netflix helps cable by giving viewers a way to catch up with serialized shows and then make the jump to live viewing. That's probably a stronger argument for basic cable networks, which are less likely to get cancelled in favor of Netflix since you'd have to cancel dozens of channels at once, including sports and news that are Netflix-proof. As long as CNN and ESPN are in the same tier, AMC/TNT/FX etc are probably safe, so Netflix does them a service of sometimes helping them get more eyeballs for ads.

[Data Holmes]

This is a three way battle, and Starz! Made a strategic mistake when they cut the streaming deal with Netflix.

Studios were unwilling to cut deals directly with Netflix because they threatened their already existing relationships with the cable and premium networks. Netflix did an end run around this with their deal with stars!. However the content gained from that deal showed the potential in streaming, and the studios have grown more willing to talk to Netflix, which the networks fear. Also, Netflix is beginning to act more and more like a proto-network, eating up syndicated shows, b movies, and just starting to look at a small number of flagship original programing.

With their dividing of the into two distinct and separate divisions, they no longer have to treat both parts of the company the same. It's smart. They can build the streaming side as the first true internet based tv replacement model, without the anchor of the DVD-by-mail rental business holding that change back.

Also, keep in mind that epix just signed a deal with Netflix, so that may have carried some weight in stars! decision to pull out.

[Temis the Vorta]

Well this clarifies things.

Just as Netflix’s price increase takes effect, Dish Network is setting up a streaming movie service for Blockbuster, Bloomberg reports. The streaming service also is expected to include content from Starz, which ended talks with Netflix yesterday.

[Snaploud]

Temis the Vorta wrote:

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That's true for HBO and Showtime as well. And you could throw all of cable in there - AMC, TNT, FX, etc - pretty soon you've eliminated everything on TV worth watching.

HBO, Showtime, and Starz are in a slightly different financial category from AMC, TNT, and FX. I don't think AMC, TNT, and FX are nearly as hurt by having some of their content on Netflix.

[Data Holmes]

Netflix and epix just signed a streaming deal, and as mentioned in th other thread, starz! may have signed a streaming deal with dish/blockbuster. If such a deal with starz! was cut it could explain why the blockbuster stores recently lost their HBO focal wall.

[Data Holmes]

Temis the Vorta wrote:

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Well this clarifies things.

Could explain why the blockbuster stores recently lost their HBO focal wall.

Snaploud wrote:

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HBO, Showtime, and Starz are in a slightly different financial category from AMC, TNT, and FX. I don't think AMC, TNT, and FX are nearly as hurt by having some of their content on Netflix.

HBO, Showtime, and Starz! Are really getting into making, or co-making their own programing, while AMC, TNT, and FX are still mostly buying their shows from the studios. Also, Showtime is a part of the Epix group that just signed a deal with netflix for streaming.

[DBR]

Netflix in Canada has a terrible selection. TERRIBLE! I don't know why I maintain a subscription.

Just thought I'd throw that out there...