Another day, another broken partnership which comes down to money, and nothing else but money. And as usual in these situations, no one wins, everybody loses, and the chances of broadcast television and the Web forging a healthy relationship lessens.
Netflix Loses Starz
The month of September started badly for Netflix, as Starz Entertainment announced it was walking away from negotiations to renew its contract with the former DVD-by-mail company which sees its future wholly in streaming content to customers via the Internet.
The two companies were discussing a new deal to replace the current one which ends in February 2012. But in order to “protect the premium nature” of its brand Starz has decided to walk away from any potential deal and take its football (in this case a back catalog of movies) with it.
That can only mean one thing got in the way of a deal being forged: money. Which, as we know, makes the world go round. But it’s not as if Netflix wasn’t willing to pay Starz a hefty wedge of cash for its content.
Starz Loses Its Head
According to The L.A. Times, Netflix offered Starz a whopping $300 million-per-year to renew the existing contract. That is more than 10-times the amount the company has been paying since the deal was first struck in 2008.
Two things which have happened in that time are important to note: Netflix has grown in popularity, gaining subscribers every quarter; and it has added more and more content in that time. The former made Starz demand more money, the latter gave Netflix the confidence not to cave to its demands.
Netflix CEO Reed Hastings has stated that Starz represents around 8 percent of content viewed at the present time, and will likely hit around 5 percent by the time the deal concludes. Which means other content the company is currently pursuing will be able to fill the void left when Starz moves on.
Everyone Loses
The sad thing is that everybody loses here. Netflix loses a content partner, Starz loses a potential $300 million of annual revenue, and Netflix subscribers lose the opportunity to watch that content quickly and easily. And all because of greed.
[Via PR Newswire]
