Netflix Might Lose a Friend as Starz Delays Content for Netflix Users

 Since 2008, Netflix and Starz have enjoyed an amicable relationship. For about $25 million a year, Netflix has been able to stream immediate content from Starz. Things are changing. Yesterday, Starz announced there would be a 90-day delay, as in 90 days between the release of an episode and its availability on Netflix. “Starz to Delay Release of Shows on Netflix” by Brian Stelter reports the delay “would begin on April 1, the day its new show ‘Camelot’ plays for the first time.”

This is a significant move considering two things: 1, the deal was seen as the dumbest deal on Starz part and became one of the main reasons the cable industry did not like Netflix; and 2, Netflix recently announced it would start having its own exclusive content, thus competing directly with cable channels.

I previously wrote about the cable industry hating Netflix due to the belief that Netflix was the chief motivator behind people “cutting the cord” with cable. The source article for that post is “Time Warner Views Netflix as a Fading Star” by Tim Arango. In that article, a few harsh remarks were made about the Netflix - Starz deal:

“The original deal from 2008, in which Netflix paid an estimated $25 million annually… is now seen as a major coup for Netflix, and a major mistake by Starz”

"...probably one of the dumbest deals ever. Starz gave up valuable content for tens of millions of dollars”

                                                      - Michael Nathanson, a media analyst at Nomura

“Why should anyone subscribe to Starz when they can basically get the whole thing for about nothing?”                                                                                                                                                                                 

                           - Jeffrey Bewkes, CEO of Time Warner, and Netflix’s biggest critic

Now, with “Spartacus” and “Spartacus: Blood and Sand” (mini-series prequel) becoming successful and helping to promote its new show “Camelot”, Starz may start to realize the value of its content and the need to stop “giving it away”. 

With Netflix producing new content, Starz may also see themselves as a seasonal variable in the Netflix family. The theory could be that if its venture into T.V. becomes successful, Netflix wouldn’t need to depend on immediate availability from cable content. Or maybe Starz is simply making moves to play the role of a friend turned competitor; the channel has always needed to compete for subscribers.

For those with cable, the delay might encourage them to subscribe. But Starz fails to consider that for Netflix subscribers without cable they will not be easily encouraged to get cable just for Starz. Many “cable-cutters” did not make their decision based on one channel they did or did not like. For many, the need to cut cable or purchase has become an economic issue. This is the reason Netflix has enjoyed success because they bring cable content at a low price. Starz might anger some people but those people will not be easily persuaded to get cable, just to subscribe to Starz, just so they don’t have to wait 3 months for a new episode. Nevertheless, the delay might hurt Netflix and could signal a tougher, more expensive contract when the current one expires in February.