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When it comes to Starz and Netflix Inc., all one can say is, it was good while it lasted.
Netflix subscribers got access to first-run movies from Walt Disney Co. and, for a while, Sony Corp.; Netflix got a larger streaming library and a starting point for negotiations with other cable networks; and the relationship was arguably even good for Starz, as it provided the channel with brand exposure.
But all good things must end sometime.
For Starz and Netflix, the end will come Feb. 28, 2012. Contract renewal negotiations between the two companies ended, and Starz said it will pull its content. Netflix indicated the loss will be no big deal, noting that Starz content represents only about 8% of domestic subscribers' viewing. But many analysts and other industry observers feel otherwise.
"I think it's a big deal," StreamingMedia.com Executive Vice President Dan Rayburn told SNL Kagan. "The quality of Netflix's content is still poor in my personal opinion. I can't find a lot of stuff I ever want to watch -- basically, I can never find anything I want to watch. So anytime someone like Starz can't come to an agreement with Netflix on price, I don't think that's good for consumers or for Netflix."
Rayburn is not the only one who believes the loss of Starz content will sting. BTIG LLC analyst Richard Greenfield said in a Sept. 1 blog post that Starz titles represent "some of the most appealing movie content" in Netflix's streaming library, especially with regard to children and family content. "While the 'temporary loss' of Sony films does not appear to have had a meaningful impact on Netflix's growth trajectory, it is hard to imagine the loss of Disney/Pixar films will not be more problematic, especially given the recently launched 'Just for Kids' section on Netflix," Greenfield wrote.
Morgan Keegan & Co. analyst Justin Patterson estimates that Starz contributes 60% of Netflix's top children's titles.
Another problem for Netflix is that Starz may sign a distribution deal with another streaming service. Janney Montgomery Scott analyst Tony Wible told The Hollywood Reporter in a Sept. 1 report that he expected Starz to sign a deal with Amazon.com Inc., labeling...