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Starz Is Adding Insult to Netflix’s Injury
Netflix stumbled last week as it implemented its widely reviled new pricing plan, and Starz decided to kick some dirt in its face while it…
Netflix stumbled last week as it implemented its widely reviled new pricing plan, and Starz decided to kick some dirt in its face while it was down. Starz CEO Chris Albrecht announced last week that Starz will no longer offer its content to Netflix for streaming once its contract runs out in February. Albrecht was quoted saying that “This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content.” After Albrecht made this announcement, Netflix stock dropped 9 percent in after hours trading. Netflix’ new pricing plan, which was reviled when it came out in July, split up the mail-away DVD plans and streaming service, making each component $7.99 each, as opposed to the $9.99 they’ve cost together for years. The plan went into effect on Thursday, and users had to pay $15.98 to keep their same services, a steep price hike.
While the timing of the announcement was a bit vicious, this seems like a wise decision by Starz. Why would consumers buy Starz when their programming is available to stream on Netflix for, even with the price hikes, a cheaper rate than the channel? While Starz has lagged severely behind both HBO and Showtime in original content for the last decade, they still hold a valuable commodity with their immense catalogue of movies. Keeping that library exclusive to the channel may help them retain customers that have moved to streaming websites like Netflix and Hulu Plus. On the other side of the deal, this couldn’t come at a worse time for Netflix. Users will demand to see where their extra money is going to, and losing a streaming deal is a vital blow. The only positive publicity that Netflix has gotten in recent months was when they announced that they’d be streaming seasons of Mad Men, the critical darling on AMC. Besides that, though, there are problems on the horizon. As I’ve mentioned before, Hulu Plus has a clear advantage when it comes to TV shows, since they stream current episodes from most networks only a day after they air on TV, and Netflix just can’t match that. Netflix had that capability with Saturday Night Live for the last few seasons, but NBC discontinued that partnership over the summer, despite Netflix’ claim that they were expanding the deal. Netflix still doesn’t have any sort of streaming deal with HBO, so movies have been where Netflix had a leg up over the competition. If they lose that now, there’ll be almost no reason for people to continue streaming.
Netflix needs to do something splashy. Even if they have to overpay for some sort of rights, whatever they may be, Netflix has a duty to show their audience that they’re committed to providing top-flight entertainment for the prices that they’re charging. Come February, Netflix will be offering far less than they did in the previous year, and they’ll be charging significantly more. People won’t stand for that. It’s time for Netflix to do something grandiose to reverse its public image. Go big or go home, guys.