7 ms·

Netflix to lose Starz, its most valuable source of new movies

239 points by mattjaynes 15y ago

WayneDB 15y ago
Astraweb, SabNZBd, Sickbeard, nzbmatrix. Never going back.
- ericflo 15y ago
  Shhhh, don't tell everyone!
  - WayneDB 15y ago
    Hehe, sorry.
bittermang 15y ago
"However, executives at Starz apparently concluded that they would lose even more money by giving consumers a reason to subscribe to Netflix instead of the cable channel." I don't think they get it. The landscape has changed and I'm not going back. I don't have cable. I don't have satelite. I don't have an antenna for broadcast TV. I have the Internet serving content to my TV via my Xbox, and I use it to watch Netflix. If your content isn't available on Netflix. I'm not consuming your content. Period. I'm done bending over backwards. I'm done with schedules. I'm done with managing the space on my DVR. I'm done keeping up with new episodes and seasons. I'm done with movie theaters full of loud other people who aren't me, and the litany of other issues that have been discussed to death from overpriced tickets, to concessions, to 3D projector woes and content. I'm done with physical media getting scratched. Hell, I'm even done with sketchy torrent sites, and different scene groups fighting over who gets to release what, and a billion codecs and formats. I'm done with it. I'm done. So frankly, good bye and good riddance to Starz. Go climb this hill and die upon it. I never liked the fact that their schizophrenic content releases would appear during a timed window, only to disappear from my list later before I actually got a chance to watch it. I grew to avoid movies labeled with the Starz logo, and my heart would sink when a feature would open with one, because I knew the experience was fleeting and I wouldn't be able to enjoy the content later. So I'm done with that too.
- deleted 15y ago
  [deleted]
- joshontheweb 15y ago
  agreed, why waste my time and money waiting on their schedules to watch movies. Im not necessarily a netflix loyalist, but Im definitely not going back to cable.
- MatthewB 15y ago
  I'm in the same boat as you. I cut the cord about 5 months ago and haven't looked back. I have Netflix and Hulu, Amazon Prime, and Apple TV. I know I am missing out on a lot of great content and it pisses me off...until I get my bill, which is a fraction of what I was paying before. Also, the convenience of my current setup is unmatchable. The thing is, like you said, the technology has changed. I want shows on my current setup. I am willing to pay more for more content. One thing I thought was very interesting is Apple removing TV show rentals. I never purchase movies or TV shows. I like to rent them, watch them once and I usually don't want to watch them again. If I do, I will rent it again. Why can't content providers understand this? Netflix and Hulu need to start creating their own content, which I know they are both working towards. One semi-related note: AMC is ending Breaking Bad next season because of Madmen sucking up the budget - Netflix and Hulu: go buy that show! I would gladly pay for a show-specific season pass just to watch Breaking Bad.
  - MatthewPhillips 15y ago
    Not to get off-topic, but why did you buy an Apple TV instead of a Roku (or do you have both)?
    - wbienek 15y ago
      Everyone makies mistakes.
    - swilliams 15y ago
      I have both. The UI on the Apple TV is better (but not leaps and bounds better), and the Netflix quality seems to be just a little better in HD. Both are connected to HDMI. Of course, the Roku also does Hulu and Pandora, and I have a second one upstairs on the non-SD tv. From what I've gathered the Apple TV 2 doesn't play nice on SD.
serge2k 15y ago
Well, guess I have no choice but to subscribe to starz. Oh wait, their network is pretty much irrelevant to me, I have watched a few of their movies on netflix and I like Torchwood (although parts of this season have sucked) and Spartacus. Other that I honestly couldn't care less and I won't be spending a dime on their second rate premium channel. When does their deal with Disney and Sony expire? Can't imagine they would go with starz over netflix.
- mbreese 15y ago
  Sony movies are already off of Netflix, and Disney owns a decent amount of Hulu, so I'm pretty sure you won't be seeing either of them back on Netflix outside of a Starz-like deal.
  - serge2k 15y ago
    Hulu then, same basic point. Starz is making a foolish move. and as for Sony, wasn't that just a money problem? Netflix is growing, it will (hopefully) be easier for them to deal with studios as time goes on.
- ghshephard 15y ago
  Torchwood? I tried, I really did to purchase Miracle Day on iTunes, Amazon, Netflix - wasn't able to. I was _happy_ to give them my money - but they didn't provide me a mechanism (and "Cable" or "Satellite" was last considered a reasonable channel by me about 8 years ago. ) I think everyone here realizes where all the up-to-date Torchwood episodes could be found after I finally gave up looking for someone to take my money. Ideally the marketplace will resolve these issues, and companies that fail to understand that their business model now has to be centered around providing content that people want, rather than forcing their "packages", will disappear while those that understand how to serve their customers will rise to the top. (And get my money while they're at it)
  - Ein2015 15y ago
    Yup, it's shocking how much content providers fail to provide content. I love Amazon Prime and I've been considering getting a Netflix sub as well.
invisiblefunnel 15y ago
Starz was breaking new ground for cable tv content providers. Now they decide to return to the stone age? Of course their internal numbers might tell a different story, but this still seems shortsighted.
- technoslut 15y ago
  It never would've really worked because Starz is an unnecessary middleman through this whole process. Netflix should be dealing with the studios directly. Prices would always be higher since Starz wants their cut of the action.
bpeebles 15y ago
I watch a goodly percentage of my content through Netflix instant, and I actively avoid the Starz provided content. It's never in HD, and even for that the quality varies from middling to almost poor. I've watched a couple of things from Starz, but mostly it's because I didn't notice until I had my heart set on watching it. So, I don't really care if Netflix loses this. I hope it lets them be more aggressive at doing new deals to get movies.
- mbreese 15y ago
  I hope that this frees up some more capital for them to do direct deals with production houses (like their Lionsgate deal). I know that Sony already bolted from Netflix (via Starz), but perhaps directly dealing with the studios (and more money) will help Netflix start to get more current movies faster.
- wmf 15y ago
  I kept getting my hopes up by seeing decent movies listed on Netflix, only to then realize that they're low (visual) quality Starz movies. Good riddance.
SwellJoe 15y ago
Unless they've got a better deal with Hulu or someone else, they've just cut off their nose to spite their face. Old media are amazingly good at being blind to the paradigm shift that will kill them, even when they have the opportunity to make money from that paradigm shift. The options Starz (and every other premium cable provider) have right now are these: 1. Get that content online, now, in a convenient form that is cost competitive with Netflix and Hulu or at least Amazon Video on Demand. Or: 2. Stagnate and eventually die, because the subscriber base for pay cable is going to do just that. Only old people are going to have cable in two or three years. There are no other options. Without Netflix or Hulu, if Starz doesn't have the ability to launch their own effective pay service online, they will never see any of my money (they probably wouldn't anyway; as others have mentioned, Starz videos tended to be ones I avoided due to quality problems). I have never had cable in my life...but I pay to consume premium content online. I have both Netflix and Hulu+ accounts, and I spend an average of $10 a month on movie rentals and purchases at Amazon. I'm a new customer; an entirely new revenue stream. I didn't cancel cable to use Netflix. I used Netflix because it was the only way I was going to watch TV and movies at home. I'm where their growth could come from, and they don't want it.
- mikeryan 15y ago
  1. Get that content online, now, in a convenient form that is cost competitive with Netflix and Hulu or at least Amazon Video on Demand. I think this is the way you're going to see most of these networks going. Particularly subscription supported services like Starz/HBO/Showtime. These services are actually already the least tied to the traditional cable model since they're pure subscription without ad revenues. They, frankly, would likely really prefer to stream you content via IP and not have to pay a distributor (cable operator or Netflix) their cut. They have to go about it slowly and carefully however. Right now while us internet masses may be clamoring for streamed content they aren't going to risk their primary revenue methods (cable) until they can rely on their secondary revenue streams. HBO-Go is the start of this, right now its very closely tied to the cable operators. But its a step in the right direction.
- MatthewPhillips 15y ago
  False dichotomy. The smart move is what they're probably going to do; ride cable as long as they can, while profiting wildly, then transitioning towards the internet when the margins on cable become too tight. Since they own the rights to the content they'll have no problems opening their own internet channels.
Steko 15y ago
http://www.businessinsider.com/reed-hastings-heres-why-netflix-let-starz-walk-away-2011-9 http://www.businessinsider.com/reed-hastings-heres-why-netfl... Reed Hastings replies: "Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add a huge more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. We are 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."
- e40 15y ago
  This sounds like spin. I remember seeing the Starz logo on almost everything I watched, when I had Watch Instantly on Netflix. I canceled when they raised the price to $16 for DVD+streaming.
lchengify 15y ago
"However, executives at Starz apparently concluded that they would lose even more money by giving consumers a reason to subscribe to Netflix instead of the cable channel." s/subscribe to Netflix/download from bittorrent The level of disconnect is shocking, however I doubt the Netflix guys are sweating it. No one is going cancel instant content for $8/mo based on Starz backing out.
mkr-hn 15y ago
Give this whole mess ten years. Netflix or something like it will buy up companies like Starz and HBO in the bankruptcy. A self-solving problem.
- danssig 15y ago
  Starz I can see, but HBO? Content trumps all and HBO is one of the best content producers there is. No matter what happens, they will continue to find ways to make money so long as they keep delivering. Personally I would expect Netflix to be gone in 10 years unless they start producing their own content.
  - mkr-hn 15y ago
    Depends on whether or not they open Go up after it's clear that the cable companies aren't capable of dealing with the modern world.
    - danssig 15y ago
      I don't think it does. Even if Go sucks and goes down in flame, they'll be able to find someone willing to pick up their programming. And most likely at a premium.
angryasian 15y ago
Everyone is looking negatively at Starz, but I imagine there might be some outside pressures from the cable providers, Starz main source of revenue, to not continue. They are in a tough position. We've seen online services set back with this, and the recent Fox - hulu waiting period. I imagine these cable providers are not ready to give up yet.
- ams6110 15y ago
  Waiting periods don't bother me. There is so much content out there there's always something I haven't seen yet.
  - Ein2015 15y ago
    They don't bother me either. The torrent sites always have content available minutes after broadcasts conclude. Hours for 1080p. Shocking how much the content providers fail to provide content.
    - deleted 15y ago
      [deleted]
- ctdonath 15y ago
  What does Starz DO? They own content, but beyond that they don't create hardly any, don't do the to-eyeball distribution, etc. As I posted earlier, they're falling for what killed Kodak: they're confusing distributors with customers, and when the customers switch en masse to a different distribution model they'll have missed the boat and paying end-consumers will be content with a very different product line.
Jun8 15y ago
This is a stupid (or desparate) move by Starz, but it also shows the weakness of Netflix: if you rely on someone else for content (same goes for API) for revenue, theye can screw you up (e.g. there goes 11% of our valuation), even if it's in the short term. I think Netflix should be more aggressive in creating own content (key to HBO's success). They are already moving in this direction but very slowly. Why doesn't Netflix outsource content (to film & journalism schools or just YouTube era amateurs) and stream it theirselves?
- tsotha 15y ago
  The real question in my mind is "what is Netflix bringing to the table?" I mean, there's no reason Starz can't set up its own download channel right next to Netflix and Amazon on my Roku, is there? Why should they give Netflix a cut?
  - parfe 15y ago
    >what is Netflix bringing to the table? My credit card. I'm not going to sign up for 5 different sites for content as each network puts up its own little fiefdom.
    - tsotha 15y ago
      For Roku, at least, I think the way it works is you give your credit card once and then you select channels through Roku. So in this case it's not any less convenient. It made sense to go with Netflix when nobody else really had a streaming implementation, and Netflix had its own advertising the content providers could piggyback off of. But these days more and more people are getting content through third party boxes that already act as payment processors.
cletus 15y ago
I don't have cable TV. Hell, I don't have a TV. I watch about 3 hours of TV... per week. And you think I'm going to pay for cable to get your movies? Heh. Fact is, $8/month for Netflix is all I can justify and I justify that largely based on TV reruns than movies. Add in Hulu (not Plus) and that's my limit. Given all that if I could just get HBO Go without subscribing to cable, I'd gladly fork over maybe even $20/month. As it stands, I can't justify spending >$100/month for the "privilege" so I guess I have to continue relying on, well, other sources.
- Florin_Andrei 15y ago
  I do have a big TV, but it's mostly for games and Netflix, via a PS3. Oh, and there's also a PC next to it, browsing the Internet on a large screen is awesome. :) So that's it, it's just a big screen.
  - brk 15y ago
    So that's it, it's just a big screen. The TV we watch most often is a Panasonic 42" commercial plasma display. Just a big monitor. No tuner, no speakers, just a screen and some inputs. One of those inputs is a Tivo, and 1/2 of the time we're watching Netflix through it. 1/4 of the time we're watching torrented shows off of a WD media player box. The other 1/4 of the time we're watching the local news, or listening to it in the background (for what purpose I'm not sure, it's mostly garbage). I had digital cable for about 3 months earlier this year. Decided to finally try it. And, after 3 months, decided it wasn't worth it. The US is moving away from the old "broadcast" models quickly. People almost don't even care about the actual content, to the extent that there are many viable options to fill a block of time with various programs.
zach 15y ago
This is the right move for Starz. They should focus on moving onto the iPad and the app/channel stores for Apple TV and the next-gen Google TV. Re-upping would only antagonize their existing content partners who they also have to renegotiate contracts with. Plus it is probably killing their subscriptions on traditional outlets ("Starz? Oh, no thanks, that's the one I get on Netflix"). At least this way they can turn off the spigot and entice people to subscribe before Netflix is primarily cord-cutters anyway. As for the way forward, licensing to Netflix is not exactly a forward-looking move -- Starz just a licensing middleman in this arrangement and they know it. They need to control a branded and coherent channel, not be a movie broker. Starz was valuable because of their mainstream movie content. Despite comments about bittorrent, the major value of Starz on Netflix is about 8-year-old girls being able to watch Tangled on an Xbox 360 (again and again...). It has been huge for rounding out Netflix's pitch as an alternative to rental. But to hear Reed talk about it, he probably was negotiating with the expectation that they'd be parting ways (how could they fix the Sony thing?) and so Netflix may not have been offering as much as last time anyway. I don't think the negotiations failing caught either side flat-footed. I think these companies can focus better on their revenue when they're separated. Netflix will have to overpay to get their first big chunk of studio newish-releases, but that's okay. They'll have some different stuff and get creative and I bet we'll like the result. Starz can figure out how to sell themselves to consumers without chopping themselves up. How? Well, every current Apple TV has 8GB of flash memory and Apple has put an App Store on every other platform they own, so you can see where that's going. And Google has gone double-or-nothing on Google TV for that reason. It sure seems like the Apple TV is the cable box of the future. Is Starz well-positioned to become a subscription service on the Apple TV? Sure. But maybe not if people can go next door to the Netflix app and get Starz movies there too. Seems like the right thing is happening here. I like where this is going.
- MatthewPhillips 15y ago
  Good post. I disagree about Apple TV. I think they don't want to have an app store. I think they're fine with adding sports channels, but for movies they want you to buy them through iTunes. They'd love a deal with Starz, through iTunes. I don't think they want competing middlemen on their platform though.
chaostheory 15y ago
At least Netflix seems to have good PR on this occasion.
jsherry 15y ago
I'm sure that Starz gets it: the future of content is streaming. Everybody gets it. And it's frustrating that we don't have everything streaming today b/c the technology is there and has been there for some time. But the bottom line is that cable is still alive and well today, and the margins are much better there than what Netflix is offering. Pirating is not the burning platform here like it was for music. Netflix is not iTunes. Content providers still have the option to make plenty of money through cable and they're going to do just that until that medium becomes completely disrupted and they no longer have that as a lucrative channel. Starz sees Netflix streaming as cannibalizing their cable business, and to a reasonably large extent they're probably right b/c Netflix streaming has gone mainstream. The day will come when cable will no longer support Starz (and others') content and they know it's coming. Until then, sad to say but this is just smart business.
rickdale 15y ago
I have been critical of Netflix in the past for the quality of their streaming material. Honestly, I like Netflix most because if I see a Starz movie on my cable box I know I can watch it later on Netflix. I dont have Starz. What I do have though is HBO. I pay for it in my cable bill, but they also let me stream 100% of their content using HBO GO. I admit HBO GO has a long way to go and isn't the online video store, but for quality shows to stream it is hard to beat. This seems like a big blow for netflix; I thought the streaming material was consistently getting better, this will make it worse.
kin 15y ago
I'm assuming most people here have Netflix and do not have cable. Here is Starz' dilemma: Let's take all cable subscribers and consider them potential Starz customers. They can A. Pay $15/month to get Starz or B. Pay $8/month to get Netflix + Starz. They would all choose B. Now let's take all the non-cable subscribers and call them potential Starz customers. Starz technically wants to keep this too, but they would lose out on all the customers in the 1st scenario, which make them more money. Thus, their unfortunate decision. As consumers, we need to wage war against cable companies by not subscribing. Unfortunately, this is difficult to do considering quality sports programming is dominantly viewed via cable and the like.
- william42 15y ago
  Sportswise, you can get a lot of stuff on ESPN3 now.
yequalsx 15y ago
I think that there is sufficient hatred for cable and satellite TV that people who are on the instant streaming only plan will pay for a DVD plan as well. Currently I am on streaming only but would rather pay for a DVD plan than for cable. It's much cheaper this way. I think an unintended consequence of this is that Netflix ends up making more money.
pbreit 15y ago
Both companies are posturing. I expect a new deal in the end.
bitsm 15y ago
I wonder if this shot across Netflix's bow (which it likely is, way too early to definitively walk away), combined with Netflix's lower (base) digital subscription, will open the door to premium Netflix packages -- Starz as a premium add-on for $5/mo. That might create tons of new opportunities network content bundles or al a carte show seasons, and mute the furor over the digital-only switch. For $15/mo. you might be able to get Netflix Streaming + Starz + Breaking Bad.
timjahn 15y ago
My son turned a year old a few weeks ago. He's going to grow up choosing content on demand from our Roku. Maybe some WonderPets from Netflix. Or a current TV show from Hulu. Or the latest viral video of some kid a year older than him rocking out the Beatles on the drums on YouTube. He won't be familiar with linear television schedules, or the idea of running home in time for a show. To him, our TV will be the place where he chooses what to watch, when he wants to watch it. What these stupid studio executives don't understand is their grandchildren will be doing the same thing. Whether they like it or not.
- AdamTReineke 15y ago
  Have you seen http://www.netflix.com/kids http://www.netflix.com/kids
  - timjahn 15y ago
    No, but I've noticed Netflix definitely doesn't lack in children's programming. It's insane! This is pretty sweet too.
stmartin 15y ago
Long live RedBox!
trocker 15y ago
Take a look at this: http://online.wsj.com/article/BT-CO-20110901-715069.html http://online.wsj.com/article/BT-CO-20110901-715069.html @bittermang : true, going back is painful and networks & cable operators are probably aware of this. But, as wsj puts it - investors of netflix are scared that its expenditure on the content deals will overtake their revenue and with netflix threatening the existence of so many network companies, netflix soon has to create its own content OR devise an extraordinary plan to sustain the network grudges against it. It will be interesting to see individual networks starting up their own streaming services.
rglover 15y ago
Not specifically Starz, but the idea about how to handle all of the different cable networks has been on my mind for awhile now. Here's a question for Comcast, Time Warner, and all of the other service providers out there: why don't you quit wasting time and compete with Netflix? The one thing cable and satellite companies have that Netflix doesn't is a large collection of long-standing relationships with networks. With a bit of work, cable/satellite providers could easily build a system just like Netflix. Offer a web-based, a la carte service. All content is presented just like Netflix in a VOD package. Users sign up for an account and are given the option to pick out which networks they want to receive content from. Any network can be dropped/added whenever the user wants. Worried about costs? Tier the service out: $29.99 a month gets you 10 networks, $49.99 gets you 20, and so on so forth. No real change to what's taking place now aside from customers being happy and being allowed to access content whenever they want, wherever they want. Oh, and let's not forget the social layer that would fit beautifully on top of this. Allow users to easily post episodes/networks to Facebook/Twitter/etc. Facilitate a conversation between people watching a show. Each show page has a comments section where fans can discuss what they just watched/are watching. Just the beginning of ideas for this. If you want to keep discussing (hint: I'd love to), shoot me an email: ryan@getconduit.com.
aidenn0 15y ago
"Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. " How about "Because all Sony films disappeared from Starz, Starz content is now down to about 8% of domestic Netflix subscribers' viewing." That would be more honest
nhangen 15y ago
I for one am extremely tired of this kind of stuff happening and as a result, never knowing wheat I can watch, and can't watch, with Netflix streaming. Two weeks ago, my son and I were watching LOTR and had to pause for some travel. When we got back, I was puzzled that I couldn't find a way to get it back on to finish...turns out their contract expired. How is this OK for a company in this day and age? I'm tired of giving Netflix a pass because the content partners aren't playing fair. I'm sorry, but that's your business model, and now that you put the competition out of business, I need you to perform and not act like a 10 day old startup. Screw both TV and video. If this is how it's going to be, I'm out. I'll stick to This Week in Startups, 5by5, and my book collection.
- rmc 15y ago
  Piracy has none of these problems.
sixtofour 15y ago
As long as Netflix keeps streaming Korean crime movies and Japanese dystopia movies and Scandinavian crime/thriller movies and The Third Man, I could give a rats ass about Starz.
- mark_l_watson 15y ago
  Yeah! I have ;earned to really like South Korean SciFi because of Netflix. (Unfortunately, my wife always leaves the room when I watch this stuff). The world is full of interesting material to watch.
bobx11 15y ago
Netflix streaming doesn't have waynes world and many of these movies I would love to watch... how much more do i have to pay to get this content legally? Who's up for making a grooveshark for movies? ;)
AndrewDucker 15y ago
What this makes clear is that we need standards. If there was a standard way of getting video from the producer to the consumer then producers could either go through middle-men (like Netflix) or host the videos themselves, and it wouldn't matter at all to the viewer. I want to sit in front of my TV (or iPad, or laptop), choose some video from the biggest menu in the history of mankind, and watch it. I have no interest in who produced it, or who shipped me the bits. And I shouldn't have to have.
- jerf 15y ago
  We have standards. Anyone can play an x264 file. Anyone can play an MPG. Wrap whatever media player you like around them. But... the standards don't have DRM. If you could buy videos like you could buy MP3s off of Amazon, and nobody flipped out about the DRM, we wouldn't need middlemen to do the job of standing up for their customers and making sure the videos actually work, which they basically wouldn't if the studios had their way, unopposed.

239 points by mattjaynes 15y ago

WayneDB 15y ago

Astraweb, SabNZBd, Sickbeard, nzbmatrix. Never going back.

ericflo 15y ago
Shhhh, don't tell everyone!
- WayneDB 15y ago
  Hehe, sorry.

bittermang 15y ago

"However, executives at Starz apparently concluded that they would lose even more money by giving consumers a reason to subscribe to Netflix instead of the cable channel." I don't think they get it. The landscape has changed and I'm not going back. I don't have cable. I don't have satelite. I don't have an antenna for broadcast TV. I have the Internet serving content to my TV via my Xbox, and I use it to watch Netflix. If your content isn't available on Netflix. I'm not consuming your content. Period. I'm done bending over backwards. I'm done with schedules. I'm done with managing the space on my DVR. I'm done keeping up with new episodes and seasons. I'm done with movie theaters full of loud other people who aren't me, and the litany of other issues that have been discussed to death from overpriced tickets, to concessions, to 3D projector woes and content. I'm done with physical media getting scratched. Hell, I'm even done with sketchy torrent sites, and different scene groups fighting over who gets to release what, and a billion codecs and formats. I'm done with it. I'm done. So frankly, good bye and good riddance to Starz. Go climb this hill and die upon it. I never liked the fact that their schizophrenic content releases would appear during a timed window, only to disappear from my list later before I actually got a chance to watch it. I grew to avoid movies labeled with the Starz logo, and my heart would sink when a feature would open with one, because I knew the experience was fleeting and I wouldn't be able to enjoy the content later. So I'm done with that too.

deleted 15y ago
[deleted]
joshontheweb 15y ago
agreed, why waste my time and money waiting on their schedules to watch movies. Im not necessarily a netflix loyalist, but Im definitely not going back to cable.
MatthewB 15y ago
I'm in the same boat as you. I cut the cord about 5 months ago and haven't looked back. I have Netflix and Hulu, Amazon Prime, and Apple TV. I know I am missing out on a lot of great content and it pisses me off...until I get my bill, which is a fraction of what I was paying before. Also, the convenience of my current setup is unmatchable. The thing is, like you said, the technology has changed. I want shows on my current setup. I am willing to pay more for more content. One thing I thought was very interesting is Apple removing TV show rentals. I never purchase movies or TV shows. I like to rent them, watch them once and I usually don't want to watch them again. If I do, I will rent it again. Why can't content providers understand this? Netflix and Hulu need to start creating their own content, which I know they are both working towards. One semi-related note: AMC is ending Breaking Bad next season because of Madmen sucking up the budget - Netflix and Hulu: go buy that show! I would gladly pay for a show-specific season pass just to watch Breaking Bad.
- MatthewPhillips 15y ago
  Not to get off-topic, but why did you buy an Apple TV instead of a Roku (or do you have both)?
  - wbienek 15y ago
    Everyone makies mistakes.
  - swilliams 15y ago
    I have both. The UI on the Apple TV is better (but not leaps and bounds better), and the Netflix quality seems to be just a little better in HD. Both are connected to HDMI. Of course, the Roku also does Hulu and Pandora, and I have a second one upstairs on the non-SD tv. From what I've gathered the Apple TV 2 doesn't play nice on SD.

serge2k 15y ago

Well, guess I have no choice but to subscribe to starz. Oh wait, their network is pretty much irrelevant to me, I have watched a few of their movies on netflix and I like Torchwood (although parts of this season have sucked) and Spartacus. Other that I honestly couldn't care less and I won't be spending a dime on their second rate premium channel. When does their deal with Disney and Sony expire? Can't imagine they would go with starz over netflix.

mbreese 15y ago
Sony movies are already off of Netflix, and Disney owns a decent amount of Hulu, so I'm pretty sure you won't be seeing either of them back on Netflix outside of a Starz-like deal.
- serge2k 15y ago
  Hulu then, same basic point. Starz is making a foolish move. and as for Sony, wasn't that just a money problem? Netflix is growing, it will (hopefully) be easier for them to deal with studios as time goes on.
ghshephard 15y ago
Torchwood? I tried, I really did to purchase Miracle Day on iTunes, Amazon, Netflix - wasn't able to. I was _happy_ to give them my money - but they didn't provide me a mechanism (and "Cable" or "Satellite" was last considered a reasonable channel by me about 8 years ago. ) I think everyone here realizes where all the up-to-date Torchwood episodes could be found after I finally gave up looking for someone to take my money. Ideally the marketplace will resolve these issues, and companies that fail to understand that their business model now has to be centered around providing content that people want, rather than forcing their "packages", will disappear while those that understand how to serve their customers will rise to the top. (And get my money while they're at it)
- Ein2015 15y ago
  Yup, it's shocking how much content providers fail to provide content. I love Amazon Prime and I've been considering getting a Netflix sub as well.

invisiblefunnel 15y ago

Starz was breaking new ground for cable tv content providers. Now they decide to return to the stone age? Of course their internal numbers might tell a different story, but this still seems shortsighted.

technoslut 15y ago
It never would've really worked because Starz is an unnecessary middleman through this whole process. Netflix should be dealing with the studios directly. Prices would always be higher since Starz wants their cut of the action.

bpeebles 15y ago

I watch a goodly percentage of my content through Netflix instant, and I actively avoid the Starz provided content. It's never in HD, and even for that the quality varies from middling to almost poor. I've watched a couple of things from Starz, but mostly it's because I didn't notice until I had my heart set on watching it. So, I don't really care if Netflix loses this. I hope it lets them be more aggressive at doing new deals to get movies.

mbreese 15y ago
I hope that this frees up some more capital for them to do direct deals with production houses (like their Lionsgate deal). I know that Sony already bolted from Netflix (via Starz), but perhaps directly dealing with the studios (and more money) will help Netflix start to get more current movies faster.
wmf 15y ago
I kept getting my hopes up by seeing decent movies listed on Netflix, only to then realize that they're low (visual) quality Starz movies. Good riddance.

SwellJoe 15y ago

Unless they've got a better deal with Hulu or someone else, they've just cut off their nose to spite their face. Old media are amazingly good at being blind to the paradigm shift that will kill them, even when they have the opportunity to make money from that paradigm shift. The options Starz (and every other premium cable provider) have right now are these: 1. Get that content online, now, in a convenient form that is cost competitive with Netflix and Hulu or at least Amazon Video on Demand. Or: 2. Stagnate and eventually die, because the subscriber base for pay cable is going to do just that. Only old people are going to have cable in two or three years. There are no other options. Without Netflix or Hulu, if Starz doesn't have the ability to launch their own effective pay service online, they will never see any of my money (they probably wouldn't anyway; as others have mentioned, Starz videos tended to be ones I avoided due to quality problems). I have never had cable in my life...but I pay to consume premium content online. I have both Netflix and Hulu+ accounts, and I spend an average of $10 a month on movie rentals and purchases at Amazon. I'm a new customer; an entirely new revenue stream. I didn't cancel cable to use Netflix. I used Netflix because it was the only way I was going to watch TV and movies at home. I'm where their growth could come from, and they don't want it.

mikeryan 15y ago
1. Get that content online, now, in a convenient form that is cost competitive with Netflix and Hulu or at least Amazon Video on Demand. I think this is the way you're going to see most of these networks going. Particularly subscription supported services like Starz/HBO/Showtime. These services are actually already the least tied to the traditional cable model since they're pure subscription without ad revenues. They, frankly, would likely really prefer to stream you content via IP and not have to pay a distributor (cable operator or Netflix) their cut. They have to go about it slowly and carefully however. Right now while us internet masses may be clamoring for streamed content they aren't going to risk their primary revenue methods (cable) until they can rely on their secondary revenue streams. HBO-Go is the start of this, right now its very closely tied to the cable operators. But its a step in the right direction.
MatthewPhillips 15y ago
False dichotomy. The smart move is what they're probably going to do; ride cable as long as they can, while profiting wildly, then transitioning towards the internet when the margins on cable become too tight. Since they own the rights to the content they'll have no problems opening their own internet channels.

Steko 15y ago

http://www.businessinsider.com/reed-hastings-heres-why-netflix-let-starz-walk-away-2011-9 http://www.businessinsider.com/reed-hastings-heres-why-netfl... Reed Hastings replies: "Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add a huge more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. We are 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."

e40 15y ago
This sounds like spin. I remember seeing the Starz logo on almost everything I watched, when I had Watch Instantly on Netflix. I canceled when they raised the price to $16 for DVD+streaming.

lchengify 15y ago

"However, executives at Starz apparently concluded that they would lose even more money by giving consumers a reason to subscribe to Netflix instead of the cable channel." s/subscribe to Netflix/download from bittorrent The level of disconnect is shocking, however I doubt the Netflix guys are sweating it. No one is going cancel instant content for $8/mo based on Starz backing out.

mkr-hn 15y ago

Give this whole mess ten years. Netflix or something like it will buy up companies like Starz and HBO in the bankruptcy. A self-solving problem.

danssig 15y ago
Starz I can see, but HBO? Content trumps all and HBO is one of the best content producers there is. No matter what happens, they will continue to find ways to make money so long as they keep delivering. Personally I would expect Netflix to be gone in 10 years unless they start producing their own content.
- mkr-hn 15y ago
  Depends on whether or not they open Go up after it's clear that the cable companies aren't capable of dealing with the modern world.
  - danssig 15y ago
    I don't think it does. Even if Go sucks and goes down in flame, they'll be able to find someone willing to pick up their programming. And most likely at a premium.

angryasian 15y ago

Everyone is looking negatively at Starz, but I imagine there might be some outside pressures from the cable providers, Starz main source of revenue, to not continue. They are in a tough position. We've seen online services set back with this, and the recent Fox - hulu waiting period. I imagine these cable providers are not ready to give up yet.

ams6110 15y ago
Waiting periods don't bother me. There is so much content out there there's always something I haven't seen yet.
- Ein2015 15y ago
  They don't bother me either. The torrent sites always have content available minutes after broadcasts conclude. Hours for 1080p. Shocking how much the content providers fail to provide content.
  - deleted 15y ago
    [deleted]
ctdonath 15y ago
What does Starz DO? They own content, but beyond that they don't create hardly any, don't do the to-eyeball distribution, etc. As I posted earlier, they're falling for what killed Kodak: they're confusing distributors with customers, and when the customers switch en masse to a different distribution model they'll have missed the boat and paying end-consumers will be content with a very different product line.

Jun8 15y ago

This is a stupid (or desparate) move by Starz, but it also shows the weakness of Netflix: if you rely on someone else for content (same goes for API) for revenue, theye can screw you up (e.g. there goes 11% of our valuation), even if it's in the short term. I think Netflix should be more aggressive in creating own content (key to HBO's success). They are already moving in this direction but very slowly. Why doesn't Netflix outsource content (to film & journalism schools or just YouTube era amateurs) and stream it theirselves?

tsotha 15y ago
The real question in my mind is "what is Netflix bringing to the table?" I mean, there's no reason Starz can't set up its own download channel right next to Netflix and Amazon on my Roku, is there? Why should they give Netflix a cut?
- parfe 15y ago
  >what is Netflix bringing to the table? My credit card. I'm not going to sign up for 5 different sites for content as each network puts up its own little fiefdom.
  - tsotha 15y ago
    For Roku, at least, I think the way it works is you give your credit card once and then you select channels through Roku. So in this case it's not any less convenient. It made sense to go with Netflix when nobody else really had a streaming implementation, and Netflix had its own advertising the content providers could piggyback off of. But these days more and more people are getting content through third party boxes that already act as payment processors.

cletus 15y ago

I don't have cable TV. Hell, I don't have a TV. I watch about 3 hours of TV... per week. And you think I'm going to pay for cable to get your movies? Heh. Fact is, $8/month for Netflix is all I can justify and I justify that largely based on TV reruns than movies. Add in Hulu (not Plus) and that's my limit. Given all that if I could just get HBO Go without subscribing to cable, I'd gladly fork over maybe even $20/month. As it stands, I can't justify spending >$100/month for the "privilege" so I guess I have to continue relying on, well, other sources.

Florin_Andrei 15y ago
I do have a big TV, but it's mostly for games and Netflix, via a PS3. Oh, and there's also a PC next to it, browsing the Internet on a large screen is awesome. :) So that's it, it's just a big screen.
- brk 15y ago
  So that's it, it's just a big screen. The TV we watch most often is a Panasonic 42" commercial plasma display. Just a big monitor. No tuner, no speakers, just a screen and some inputs. One of those inputs is a Tivo, and 1/2 of the time we're watching Netflix through it. 1/4 of the time we're watching torrented shows off of a WD media player box. The other 1/4 of the time we're watching the local news, or listening to it in the background (for what purpose I'm not sure, it's mostly garbage). I had digital cable for about 3 months earlier this year. Decided to finally try it. And, after 3 months, decided it wasn't worth it. The US is moving away from the old "broadcast" models quickly. People almost don't even care about the actual content, to the extent that there are many viable options to fill a block of time with various programs.

zach 15y ago

This is the right move for Starz. They should focus on moving onto the iPad and the app/channel stores for Apple TV and the next-gen Google TV. Re-upping would only antagonize their existing content partners who they also have to renegotiate contracts with. Plus it is probably killing their subscriptions on traditional outlets ("Starz? Oh, no thanks, that's the one I get on Netflix"). At least this way they can turn off the spigot and entice people to subscribe before Netflix is primarily cord-cutters anyway. As for the way forward, licensing to Netflix is not exactly a forward-looking move -- Starz just a licensing middleman in this arrangement and they know it. They need to control a branded and coherent channel, not be a movie broker. Starz was valuable because of their mainstream movie content. Despite comments about bittorrent, the major value of Starz on Netflix is about 8-year-old girls being able to watch Tangled on an Xbox 360 (again and again...). It has been huge for rounding out Netflix's pitch as an alternative to rental. But to hear Reed talk about it, he probably was negotiating with the expectation that they'd be parting ways (how could they fix the Sony thing?) and so Netflix may not have been offering as much as last time anyway. I don't think the negotiations failing caught either side flat-footed. I think these companies can focus better on their revenue when they're separated. Netflix will have to overpay to get their first big chunk of studio newish-releases, but that's okay. They'll have some different stuff and get creative and I bet we'll like the result. Starz can figure out how to sell themselves to consumers without chopping themselves up. How? Well, every current Apple TV has 8GB of flash memory and Apple has put an App Store on every other platform they own, so you can see where that's going. And Google has gone double-or-nothing on Google TV for that reason. It sure seems like the Apple TV is the cable box of the future. Is Starz well-positioned to become a subscription service on the Apple TV? Sure. But maybe not if people can go next door to the Netflix app and get Starz movies there too. Seems like the right thing is happening here. I like where this is going.

MatthewPhillips 15y ago
Good post. I disagree about Apple TV. I think they don't want to have an app store. I think they're fine with adding sports channels, but for movies they want you to buy them through iTunes. They'd love a deal with Starz, through iTunes. I don't think they want competing middlemen on their platform though.

chaostheory 15y ago

At least Netflix seems to have good PR on this occasion.

jsherry 15y ago

I'm sure that Starz gets it: the future of content is streaming. Everybody gets it. And it's frustrating that we don't have everything streaming today b/c the technology is there and has been there for some time. But the bottom line is that cable is still alive and well today, and the margins are much better there than what Netflix is offering. Pirating is not the burning platform here like it was for music. Netflix is not iTunes. Content providers still have the option to make plenty of money through cable and they're going to do just that until that medium becomes completely disrupted and they no longer have that as a lucrative channel. Starz sees Netflix streaming as cannibalizing their cable business, and to a reasonably large extent they're probably right b/c Netflix streaming has gone mainstream. The day will come when cable will no longer support Starz (and others') content and they know it's coming. Until then, sad to say but this is just smart business.

rickdale 15y ago

I have been critical of Netflix in the past for the quality of their streaming material. Honestly, I like Netflix most because if I see a Starz movie on my cable box I know I can watch it later on Netflix. I dont have Starz. What I do have though is HBO. I pay for it in my cable bill, but they also let me stream 100% of their content using HBO GO. I admit HBO GO has a long way to go and isn't the online video store, but for quality shows to stream it is hard to beat. This seems like a big blow for netflix; I thought the streaming material was consistently getting better, this will make it worse.

kin 15y ago

I'm assuming most people here have Netflix and do not have cable. Here is Starz' dilemma: Let's take all cable subscribers and consider them potential Starz customers. They can A. Pay $15/month to get Starz or B. Pay $8/month to get Netflix + Starz. They would all choose B. Now let's take all the non-cable subscribers and call them potential Starz customers. Starz technically wants to keep this too, but they would lose out on all the customers in the 1st scenario, which make them more money. Thus, their unfortunate decision. As consumers, we need to wage war against cable companies by not subscribing. Unfortunately, this is difficult to do considering quality sports programming is dominantly viewed via cable and the like.

william42 15y ago
Sportswise, you can get a lot of stuff on ESPN3 now.

yequalsx 15y ago

I think that there is sufficient hatred for cable and satellite TV that people who are on the instant streaming only plan will pay for a DVD plan as well. Currently I am on streaming only but would rather pay for a DVD plan than for cable. It's much cheaper this way. I think an unintended consequence of this is that Netflix ends up making more money.

pbreit 15y ago

Both companies are posturing. I expect a new deal in the end.

bitsm 15y ago

I wonder if this shot across Netflix's bow (which it likely is, way too early to definitively walk away), combined with Netflix's lower (base) digital subscription, will open the door to premium Netflix packages -- Starz as a premium add-on for $5/mo. That might create tons of new opportunities network content bundles or al a carte show seasons, and mute the furor over the digital-only switch. For $15/mo. you might be able to get Netflix Streaming + Starz + Breaking Bad.

timjahn 15y ago

My son turned a year old a few weeks ago. He's going to grow up choosing content on demand from our Roku. Maybe some WonderPets from Netflix. Or a current TV show from Hulu. Or the latest viral video of some kid a year older than him rocking out the Beatles on the drums on YouTube. He won't be familiar with linear television schedules, or the idea of running home in time for a show. To him, our TV will be the place where he chooses what to watch, when he wants to watch it. What these stupid studio executives don't understand is their grandchildren will be doing the same thing. Whether they like it or not.

AdamTReineke 15y ago
Have you seen http://www.netflix.com/kids http://www.netflix.com/kids
- timjahn 15y ago
  No, but I've noticed Netflix definitely doesn't lack in children's programming. It's insane! This is pretty sweet too.

stmartin 15y ago

Long live RedBox!

trocker 15y ago

Take a look at this: http://online.wsj.com/article/BT-CO-20110901-715069.html http://online.wsj.com/article/BT-CO-20110901-715069.html @bittermang : true, going back is painful and networks & cable operators are probably aware of this. But, as wsj puts it - investors of netflix are scared that its expenditure on the content deals will overtake their revenue and with netflix threatening the existence of so many network companies, netflix soon has to create its own content OR devise an extraordinary plan to sustain the network grudges against it. It will be interesting to see individual networks starting up their own streaming services.

rglover 15y ago

Not specifically Starz, but the idea about how to handle all of the different cable networks has been on my mind for awhile now. Here's a question for Comcast, Time Warner, and all of the other service providers out there: why don't you quit wasting time and compete with Netflix? The one thing cable and satellite companies have that Netflix doesn't is a large collection of long-standing relationships with networks. With a bit of work, cable/satellite providers could easily build a system just like Netflix. Offer a web-based, a la carte service. All content is presented just like Netflix in a VOD package. Users sign up for an account and are given the option to pick out which networks they want to receive content from. Any network can be dropped/added whenever the user wants. Worried about costs? Tier the service out: $29.99 a month gets you 10 networks, $49.99 gets you 20, and so on so forth. No real change to what's taking place now aside from customers being happy and being allowed to access content whenever they want, wherever they want. Oh, and let's not forget the social layer that would fit beautifully on top of this. Allow users to easily post episodes/networks to Facebook/Twitter/etc. Facilitate a conversation between people watching a show. Each show page has a comments section where fans can discuss what they just watched/are watching. Just the beginning of ideas for this. If you want to keep discussing (hint: I'd love to), shoot me an email: ryan@getconduit.com.

aidenn0 15y ago

"Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. " How about "Because all Sony films disappeared from Starz, Starz content is now down to about 8% of domestic Netflix subscribers' viewing." That would be more honest

nhangen 15y ago

I for one am extremely tired of this kind of stuff happening and as a result, never knowing wheat I can watch, and can't watch, with Netflix streaming. Two weeks ago, my son and I were watching LOTR and had to pause for some travel. When we got back, I was puzzled that I couldn't find a way to get it back on to finish...turns out their contract expired. How is this OK for a company in this day and age? I'm tired of giving Netflix a pass because the content partners aren't playing fair. I'm sorry, but that's your business model, and now that you put the competition out of business, I need you to perform and not act like a 10 day old startup. Screw both TV and video. If this is how it's going to be, I'm out. I'll stick to This Week in Startups, 5by5, and my book collection.

rmc 15y ago
Piracy has none of these problems.

sixtofour 15y ago

As long as Netflix keeps streaming Korean crime movies and Japanese dystopia movies and Scandinavian crime/thriller movies and The Third Man, I could give a rats ass about Starz.

mark_l_watson 15y ago
Yeah! I have ;earned to really like South Korean SciFi because of Netflix. (Unfortunately, my wife always leaves the room when I watch this stuff). The world is full of interesting material to watch.

bobx11 15y ago

Netflix streaming doesn't have waynes world and many of these movies I would love to watch... how much more do i have to pay to get this content legally? Who's up for making a grooveshark for movies? ;)

AndrewDucker 15y ago

What this makes clear is that we need standards. If there was a standard way of getting video from the producer to the consumer then producers could either go through middle-men (like Netflix) or host the videos themselves, and it wouldn't matter at all to the viewer. I want to sit in front of my TV (or iPad, or laptop), choose some video from the biggest menu in the history of mankind, and watch it. I have no interest in who produced it, or who shipped me the bits. And I shouldn't have to have.

jerf 15y ago
We have standards. Anyone can play an x264 file. Anyone can play an MPG. Wrap whatever media player you like around them. But... the standards don't have DRM. If you could buy videos like you could buy MP3s off of Amazon, and nobody flipped out about the DRM, we wouldn't need middlemen to do the job of standing up for their customers and making sure the videos actually work, which they basically wouldn't if the studios had their way, unopposed.