Starz Entertainment is the pay-TV/online distributor for many Sony and Disney films. Sony has a contract clause with Starz that lets it ask for more money if its films reached a certain level of distribution. Netflix has almost 23 million subscribers. Sony was like, let us in on that action please. The contract was sort of famous/infamous for being really one-sided in favor of Netflix because it was negotiated before the other side understood how big Netflix would be). Now Starz is not renewing its Netflix agreement after Feb., 2012.
The LA Times adds an interesting angle to this story. They say it wasn't the money, it was the terms of the deal. Netflix was offering, by some reports, $300 million to keep this selection going. But what Starz wanted was a change in the Netflix pricing plan so that if customers wanted its movies, they would pay extra. In other words, more like cable. In other words, a system that netted them extra dollars but also made Netflix (a competitor, after all) less compelling of a service and sent people back to cable. Netflix said no way.
Netflix shares are dropping and its no gift that this news comes at the same time as the company's new pricing plan goes into effect.
But it still amazes me that people could have complaints about Netflix streaming. For eight measly bucks a month - eight bucks! - you get some 20,000 titles that just magically appear on your TV, your computer, your phone, your iPad. And you can watch as many as you want however often you want and they don't skip or scratch and there's no disc to lose. It wasn't very long ago that we had to watch stuff on expensive video cassettes or just look to see when it was on and arrange our lives around that. Now, for eight bucks a month, I get complete series histories of lots of shows and a massive bank of movies including lots of good ones. So Toy Story 3 won't be among them, I'll watch something else. Maybe the world needs to stop being such babies about everything not being absolutely perfect.