Starz to Netflix: give us tiered plan, or else!

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Or else, Netflix’es streaming plan is pretty much dead. I mean, I don’t know how else to interpret the current situation.

First of all, Starz-Netflix negotiation was already at $300 million a year (see LA Times story). Which is a huge increase from previous extra cheap all-you-can-stream license Netflix was so lucky to get. Starz doesn’t have that many extra nice TV series, but hold a number of licenses to recent Disney content. And I bet those licenses are exclusive, which means chances are slim for “getting around it”, so Netflix comments to the tune of “we’ll buy some other content” are a bit of an empty posturing. No matter how, through which provider, but Netflix needs Disney content. Because otherwise those who buy the streaming plan for families will be deeply disappointed. Those who say Starz would have to find a replacement for $300million a year forget, that this is purely “new” licenses, and they lived without it up until now (plus, I don’t see what exactly is the amount that Starz itself pays to content providers, there could be a giant expense for them as well).

Another more interesting aspect, is that Starz demands essentially the same model as cable companies — their content should be “premium” and be on top of regular “junky pile” subscription. So if Starz gets it’s way, Netflix would have same pricing structure as your local “friendly” cable company — basic streaming for $8, plus extra $N for Starz. Theoretically they can roll everything into one price, but that’d just mean everyone’s price will go up a lot. Again. This probably was an idea from the cable cos, that have that on-again, off-again acknowledgment of cord-cutting phenomenon. If Netflix gets into the same packages and sets of virtual “channels” shuffle, there will be less incentive for users to switch to Netflix. Keep in mind, that in most cases premium channels automatically come with “free” on-demand streaming.

Do I think that Starz-Netflix negotiations are really dead? No. I bet by February of next year there will be an agreement, which will be touted as a “big success” for everyone. And then Netflix will send out the next round of “yay, our streaming plans are a bit less crappy, so price rise for everyone!” emails. And it’ll be the time to consider switching to DVD-only plan.

p.s. there’s an additional small wrinkle in the story — Starz will be providing license to Blockbuster’s online streaming. I bet they’ll get the asked price there…

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