http://blogs.wsj.com/digits/2011/09/05/netflix-ceo-looks-beyond-starz-deal/?blog_id=100&post_id=23057&mod=igoogle_wsj_gadgv1
Netflix and the pay-television channel Starz are very unlikely to resume discussions about a movie distribution deal, Netflix CEO Reed Hastings said in an interview.
Hastings spoke by telephone on Monday from Sao Paulo, Brazil, where he inaugurated Netflixs launch of its online streaming service in Latin America. The streaming service became operational on Monday in Brazil where it costs the equivalent of about $9 a month and will spread to more than 40 other countries in Latin America and the Caribbean by Sept. 12.
Netflix
Netflix CEO Reed Hastings
While its international expansion is a critical piece of Netflixs effort to keep up growth, the collapse of its discussions with Starz raised the troubling question of whether it can retain enough good content to keep its audience happy. On Thursday evening, Starz issued a press release saying it was cutting off talks with Netflix to which Starz has licensed rights for the past several years to movies and television shows from Hollywood studios after the gap between the two camps appeared too great to bridge.
There has been speculation that Netflix and Starz might still hammer out a deal, partly because their existing agreement doesnt expire until the end of February and its unclear whether other Internet partners will be willing to spend as much as Netflix for rights to Starz content, which includes movies from the studios of Walt Disney and Sony.
Hastings said people shouldnt hold their breath for such an outcome. He said Netflix and Starz may talk about small licensing deals for individual shows, like the Starz original series Camelot, but the chances of resuming conversations about a much broader agreement are very unlikely on both sides.
Even though there are months before their current agreement expires, Hastings said Netflix is looking for partnerships with other content producers to deepen its selection of movies and television shows so there likely wont be a budget left for a Starz deal. By the time that rolls around, that money will be spent and committed, Hastings said.
Its worth noting, of course, that Hastings pessimism around the Starz deal could simply be a way of getting the pay channel back to the bargaining table.
Netflix and Starz were discussing a deal that would have boosted by nearly ten times the $30 million Netflix has paid annually to Starz under their current pact. The main sticking point for Starz in the discussions was that Netflix refused to include Starz content as part of a premium tier for Netflixs service a move that could have limited the loss of traditional cable subscribers from Starz to Netflixs $7.99-a-month streaming service.
We would have liked to renew but their view was the low price that we have is very challenging for them, Hastings said.
Netflixs performance in overseas markets like Latin America will be closely watched by investors rattled by the loss of the Starz deal (Netflixs shares fell 9% on Friday). Hastings said Brazil, the biggest Latin American Internet market, has about ten million households with broadband connectionsabout the same as Canada, the first country Netflix expanded to outside the U.S. The Brazilian Internet market is growing much more quickly than Canada though, he added. Broadband connections tend to be relatively slow in Brazil so Netflix will automatically default to delivering video with lower picture quality than in other territories. Its system can adapt to show better video if consumers have faster connections, Hastings said.
Hastings declined to name when Netflix will launch in two other big markets, Europe and Asia. We hope to become global over the next two to four years, he said. That will somewhat depend on how successful we are in Latin America.
Netflix and the pay-television channel Starz are very unlikely to resume discussions about a movie distribution deal, Netflix CEO Reed Hastings said in an interview.
Hastings spoke by telephone on Monday from Sao Paulo, Brazil, where he inaugurated Netflixs launch of its online streaming service in Latin America. The streaming service became operational on Monday in Brazil where it costs the equivalent of about $9 a month and will spread to more than 40 other countries in Latin America and the Caribbean by Sept. 12.
Netflix
Netflix CEO Reed Hastings
While its international expansion is a critical piece of Netflixs effort to keep up growth, the collapse of its discussions with Starz raised the troubling question of whether it can retain enough good content to keep its audience happy. On Thursday evening, Starz issued a press release saying it was cutting off talks with Netflix to which Starz has licensed rights for the past several years to movies and television shows from Hollywood studios after the gap between the two camps appeared too great to bridge.
There has been speculation that Netflix and Starz might still hammer out a deal, partly because their existing agreement doesnt expire until the end of February and its unclear whether other Internet partners will be willing to spend as much as Netflix for rights to Starz content, which includes movies from the studios of Walt Disney and Sony.
Hastings said people shouldnt hold their breath for such an outcome. He said Netflix and Starz may talk about small licensing deals for individual shows, like the Starz original series Camelot, but the chances of resuming conversations about a much broader agreement are very unlikely on both sides.
Even though there are months before their current agreement expires, Hastings said Netflix is looking for partnerships with other content producers to deepen its selection of movies and television shows so there likely wont be a budget left for a Starz deal. By the time that rolls around, that money will be spent and committed, Hastings said.
Its worth noting, of course, that Hastings pessimism around the Starz deal could simply be a way of getting the pay channel back to the bargaining table.
Netflix and Starz were discussing a deal that would have boosted by nearly ten times the $30 million Netflix has paid annually to Starz under their current pact. The main sticking point for Starz in the discussions was that Netflix refused to include Starz content as part of a premium tier for Netflixs service a move that could have limited the loss of traditional cable subscribers from Starz to Netflixs $7.99-a-month streaming service.
We would have liked to renew but their view was the low price that we have is very challenging for them, Hastings said.
Netflixs performance in overseas markets like Latin America will be closely watched by investors rattled by the loss of the Starz deal (Netflixs shares fell 9% on Friday). Hastings said Brazil, the biggest Latin American Internet market, has about ten million households with broadband connectionsabout the same as Canada, the first country Netflix expanded to outside the U.S. The Brazilian Internet market is growing much more quickly than Canada though, he added. Broadband connections tend to be relatively slow in Brazil so Netflix will automatically default to delivering video with lower picture quality than in other territories. Its system can adapt to show better video if consumers have faster connections, Hastings said.
Hastings declined to name when Netflix will launch in two other big markets, Europe and Asia. We hope to become global over the next two to four years, he said. That will somewhat depend on how successful we are in Latin America.