Starz Falls Out With Netflix: Who Will Take Advantage?


The Netflix (NFLX) Goliath was seriously weakened this week when Starz said it will pull its content from the company's streaming feed in February: Is it time for the industry Davids such as Redbox to pull out their slingshots?

The decision by Starz (LSTZA) to end renegotiation talks will leave Netflix without Starz-owned Sony (SNE) and Disney (DIS) streamed movies.

"As far as how this news will impact Redbox, we will not speculate," Redbox (CSTR) spokeswoman Laura Dihel told DailyFinance. "Disney and Sony titles are available on release date to Redbox consumers at our more than 27,800 locations nationwide."

Polite as can be -- with a little plug thrown in for good measure. But Starz's announcement Thursday definitely leaves an opening for the content-providing competition -- and could give consumers pause. Netflix's queue is soon to get more than 1,000 movies shorter, losing such hits as Alice in Wonderland and The Social Network. For cinephiles who love foreign and art-house fare, Netflix will remain a giant of streaming cinema. But consumers with more popular tastes will probably feel the big studios' absence.

Netflix reportedly offered Starz $300 million to re-up their contract -- the same amount it was paying NBCUniversal. Starz wanted a lot more, because Sony wanted a lot more from Starz as Netflix's subscription base unexpectedly mushroomed.

Netflix still wasn't talking after multiple efforts to reach it as of this writing. Surprisingly, neither were many of its competitors.

Let's take a look at what's out there for consumers, and how these viservices can take advantage of Netflix's suddenly compromised position.

• Amazon Instant Video is perhaps the most potent streaming rival of Netflix on the movie front -- and it's the cheapest, too. Its $79 a year fee comes out to $6.60 a month compared to Netflix's $7.99 unlimited streaming. Amazon (AMZN) customers also get free shipping on goods purchased on Amazon. The downside is its more limited film collection. You can watch on computers of course, but you'll have to consult a particular list of recent HDTV makes and Roku and Blu-ray conveyors for TV viewing.

• DISH Network-owned Blockbuster (DISH) could fill the Starz void because it offers Starz content via both its mail and on-demand services, often getting a month's head start on Netflix for big releases, DISH spokesman Marc Lumpkin pointed out to DailyFinance. Blockbuster also touts its DVD delivery system over Netflix's, because it has both kiosks (a la Redbox) and stores for returns of any by-mail DVD. Blockbuster's $1-a-day DVD rental machines could also prove attractive to viewers seeking alternatives to Netflix's minimum $8-a-month DVD-by-post single-disc structure. The downside: Blockbuster's streaming price structure is on the high side: New releases cost $3.99 on an individual basis.

• HuluPlus stands to gain the least from the Netflix fallout because its repertoire is heavy on TV. It's almost a non-player in the arena of prominent theatrical releases. But for a $7.99 monthly streaming fee through lots of platforms, including Xbox 360 and Roku, it's an option for lovers of boob-tube programs.

• Redbox's $1 DVD rental machines could also provide an alternative antidote to the spotty Netflix streaming that this reporter has experienced at home recently. Seems a little retro now, but I'm finding DVDs to be more reliable on my older flat-screen. For a New Yorker like myself, the kiosks aren't convenient. (There are just two in Manhattan.) However, those who live near a Redbox, hate monthly contracts and love movies on the cheap, can put off the streaming revolution for a while.

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