Netflix suffers major setback with loss of Starz content

Summary:Netflix's digital streaming library is about to get significantly smaller now that Starz is pulling its content.

Just as Netflix completed rolling out a major spike in subscription pricing, customers might be angry to learn that they'll be paying more for less.

The online rental giant has suffered a major setback now that Starz, one of the more significant content contributors to Netflix's Watch Instantly digital streaming library, has decided to pull all of its movies and TV shows early next year.

Starz CEO and president Chris Albrecht wrote the following statement explaining his company's decision:

Starz Entertainment has ended contract renewal negotiations with Netflix. When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform. 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. With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business.

Examples of Starz content on Netflix right now include Disney's Alice in Wonderland and Prince of Persia. That might not sound like much, but actually Starz is rather important to Netflix as it is the only network that has exclusive rights to first-run Sony and Disney movies on paid-TV in the U.S. Those rights include being able to distribute its programming on Netflix immediately as well, which was a coup for Netflix considering most new releases aren't available on the site until at least 30 days after being released on DVD and Blu-ray.

This isn't to say that Netflix isn't worth paying for anymore. There are certainly plenty of more (and better) digital content providers that have inked deals with the rental service.

Netflix is also trying to spin this in the best way possible, telling Reuters that it will take the money (reportedly between $200 million and $300 million) that it had "earmarked for Starz renewal next year and spend it with other content providers to maintain or even improve the Netflix experience."

Related:

Topics: Apple, Amazon, Google, India

About

Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider, FastCompany.com, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for MainStreet.com, Irish Americ... Full Bio

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