Pretty much since the beginning of Netflix' Watch Instantly platform, Starz has been one of the subscription service's most cherished clients. For a long time they were the only home video distribution venue that had relatively new and high profile films available through Watch Instantly. Sadly, in about 5 months, that's going to change.
Starz has decided to not renew its contract with Netflix once it expires in February of 2012, meaning they're pulling their entire catalog of new and old movies off of Watch Instantly. We're talking hundreds of movies, including all of Disney's new releases. The reason? Starz is apparently already profitable without the $200 million that Netflix was offering them to renew their contract.
This really stinks for Netflix subscribers. Even if you never watched any of the hundreds of films and TV shows available under the Starz Play label, this is unfortunately a sad sign of things to come. Distributors have Netflix in a headlock as far as the supply-and-demand equation goes, so you can bet that Starz won't be the last company to hold its films hostage out of hopes of getting an even higher premium now that streaming has become big business: Netflix' stock is down close to 10% today after this news, and though investors are a fickle bunch, it's certainly a sign that stockholders are doubting Netflix' ability to branch out its streaming library even farther.