Just when it seemed like Netflix was due for some good news, the company is dealt another blow–although this one comes as a result of choosing not to raise prices.
The premium cable network Starz Entertainment has decided to end their deal to provide movies to Netflix’s Instant Watch catalog. Netflix’s new rates only came into effect yesterday, and while many customers complained about having to pay more, Starz still thinks the price is low enough to attract people away from subscribing to the cable company directly. The rise in popularity of video on demand and streaming services has inspired a lot of people to “cut the cord” and cancel their cable or satellite TV, and that’s exactly what Starz is afraid of. Even though Netflix offered Starz $300 million to continue their deal, Statz insisted that the company require subscribers to pay extra for access to their movies. Netflix refused, and the deal fell apart.
It’s really a case of being stuck between a rock and a hard place for Netflix. Starz was their main source of popular new releases, but the idea of asking people to pay more for what they’re already getting yet again might be even more of a death knell. The lost doesn’t take effect until February, and Netflix plans to put the $300 million to good use acquiring other content before that happens.