Even if Netflix goes out of business, something else would take its place and do essentially the same thing. The video stores that have gone under can't be saved.
There is a larger wave of change in business that is causing disruption and chaos, destroying some businesses and making opportunities for others. The trend is summarized like this: any business that is in the information business is going to see its products pushed into the digital realm (bits, not atoms) and the marginal cost of its products will be pushed downwards towards being free, by competition pressures. Which isn't fatal, if you can ramp up in the number of customers. That's how digital pennies can become far more profitable than analog dollars.
This is the same phenomenon that is elevating free online companies like Google and Facebook. Netflix is generally correct in trying to get on the same bandwagon. Starz, and Hollywood in general, is dragging their heels because they're afraid to lose their analog dollars, or they're deluded enough to think that they could make digital dollars instead of digital pennies.
Hollywood is going to learn the same lesson the music industry already has. You're in the information business; you're going digital; and there's no such thing as digital dollars.
However, restructuring Netflix streaming into some kind of points pricing structure might be a good idea. Just price Starz' content at a premium - two points vs one point for other content - and let the customers decide if it's really a premium. We might be seeing customer ire directed at Starz rather than Netflix now, as customers deliberately boycott Starz product to punish them for their hubris in thinking their content is so much more valuable (because frankly, it isn't - non-premium cable channels like FX and AMC are doing much better at producing great stuff). If they make less profit because of customer anger, that would send a chilling lesson to HBO, Showtime, et al, not to get a swelled head.
