Netflix, which is already dealing with the backlash against a price increase for some of its subscribers, was hit with another major blow today. The Starz pay cable network announced that it won't renew its current three year contract with Netflix. The contract allows Netflix to stream most of Starz's movie and television show line up. Today, Starz announced that agreement will end on February 28, 2012.
In its statement Starz says, "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." Netflix has not yet commented on Starz's decision. However shares of Netflix's stock went down 9 percent in after hours trading following the Starz press release.
Netflix got a big boost when it signed its streaming deal with Starz in October 2008. The deal allowed Netflix to give its streaming customers access to a number of major Hollywood movies from Disney, Sony and others. The deal helped to make the streaming service more attractive to consumers. In 2010 Netflix announced another new multi-year deal to show movies from another pay cable channel, Epix, that offers films from Paramount, MGM and Lionsgate.
Starz's announcement comes on the same day that new subscriber rates go into effect at Netflix. Subscribers who use the streaming service plus one DVD mail order rental at a time will now have to pay $15.98 per month, over 60 percent higher from its previous price.