New Competitors, Licensing Issues Among Many Netflix Problems

By Joey Jackson –

Comcast announced Tuesday of a new video streaming service in the works, a service that could prove disastrous to the current leading online video streaming service, and high school student favorite, Netflix.

Although Netflix’s library will still contain much more content than the new Xfinity Streampix, the new service would be offered to all of Comcast’s current subscribers with premium channels free of charge, versus the eight dollars a month for those out there that are currently subscribed to Netflix.

Even with the drop in price, the new addition isn’t worrying Penn Manor students.

“I think I could benefit from the competition,” guessed senior Bob Warfel, a current subscriber to both Netflix and Comcast. “They will both start adding shows and movies to their library and I’ll get to watch the additions to both.”

This outlook may differ from person to person, as some students pay for their bill while others rely on their parents.

“I’m not going to pay for Netflix anymore,” said a student at Penn Manor. “It’s not worth it to pay for both since they will probably have a lot of the same things.”

Netflix logo. Image credit ohinternet.com

This isn’t the first time Netflix subscribers have been given an incentive to drop its service. Not only did Netflix nearly double their monthly subscription price, also Starz, who provides Netflix with over 1000 shows and movies, announced that they will not renew their contract with Netflix. Their contract is set to end today.

Bad news for Netflix subscribers, as arguably the most important provider of shows and movies to Netflix’s library will have all of their content pulled by Thursday. Some of this content includes Tron: Legacy and Toy Story 3.

“It’s a bummer,” Warfel said. “A lot of my favorite stuff was from Starz. Now I’m not going to be able to watch the last season of Weeds or Party Down.”

Starz, who could have made an estimated $300 million by renewing their contract with Netflix, decided to end their agreement when they realized that subscribers to Netflix received new content to Starz for eight dollars a month instead of subscribing to Starz through a cable company for $15 a month.

“I’m going to go home and watch Starz stuff for about 13 hours,” Warfel added. “I need to finish the last 10 episodes of Weeds before they disappear.”

HBO, a premium TV station much like Starz, has also declined to partner up with Netflix.

Unfortunately for Netflix, however, their contract issues are only one of their current leading problems.

Wal-Mart, Verizon, Redbox, and Amazon have also released statements regarding a future online video streaming service for their respective companies.

So, after all of this, Netflix stock, which cost almost $300 a share in July of 2011, has dropped all the way down to around $110 a share.

Graph illustrating the sell off in Netflix Stock. Image credit businessinsider.com

Netflix, on the other hand, is confident that the transition to a time without Starz will be smooth.

“While Starz was a huge part of viewing on Netflix several years ago because it was some of the only mainstream content Netflix offered, over the years Netflix has spent more and more licensing great TV shows from all four broadcast networks and many cable networks,” said Steve Swasey, a Netflix spokesman, in an interview with the Los Angeles Times.

Signs of both growth and decay have come forth in the past few weeks for Netflix, with much more content being added to the instant streaming in preparation for the Starz departure but also the stock has progressively dropped $17 in the past week.

“I really think Netflix will survive this,” Warfel concluded. “It’s a company that has been around for a long time and pretty much everybody that has it loves it, I can’t see it doing poorly.”

Comments

  1. Well that stinks that Netflix is lost the Starz titles. I don’t know how they are going to justify the price increase that they did. I dropped them as soon as they raised prices because I’m not going to pay for mediocrity. I now have Blockbuster @Home, and I have never been better. I still have access to many Starz titles like Toy Story 3, and can still stream movies and shows to my iPad wherever I am, such as on lunch at DISH where I work or at school waiting for class to start. Too bad Netflix and Starz weren’t able to work something out, but I am glad that I’ll still be able to watch what I want!