14 DAY TRIAL // Netflix has been riding a very precarious wave so far. Boosted by small prices, big catalog and simple service, it's been adding subscribers at a rapid pace. But its success is beginning to upset movie studios, TV networks and everyone else that licenses its content to the streaming service.
On the one hand, Netflix is handing out big checks in a time where media companies struggle to make ends meet.
On the other, the fear is that people won't buy DVDs, pay for premium cable and so on if they can get all they need from Netflix.
It seems that at least this time, the big check wasn't enough to convince Starz to continue to license its catalog of Sony and Disney movies.
Starz announced that it is ending negotiations to prolong licensing after the current deal expires at the end of February.
Netflix paid about $30 million a year for Starz content, in a deal that has been labeled as a huge mistake by both Starz and the movie studios.
This time around, Netflix was prepared to offer as much as $300 million per year, says the LA Times. But it wasn't enough.
Apparently, Starz was more concerned about the dilution of the perceived value of its content than the money it got from Netflix.
Starz makes money licensing its movies to premium TV networks, which would not be willing to pay as much if people could watch the same movies online at significantly lower prices.
So Starz pushed for a premium subscription of sorts for Netflix, where users would pay more if they wanted access to those movies. Netflix has no intention of doing this.
It has, however, dropped a subscription plan which offered both DVD rentals and streaming for $10, leaving only the option of getting separately for $8 each.
"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," Netflix CEO Reed Hastings commented on the decision and said that Starz content represented only about eight percent of views overall.