Starz has announced that it will not renew its contract to stream its content on Netflix, opting to let the deal lapse when it expires on February 12, 2012. This is a huge blow to Netflix's Watch Instantly feature, which as we've noted before, relies heavily on Starz for new release movies and other quality content to balance out the endless sea of junk films that currently populate the service.
The departure of Starz means Netflix will not only lose its primary source of new release movies, but also its catalog of Disney and Pixar films, which were licensed through Starz. This follows the departure of Sony Pictures and its 1,000+ movies and the Criterion Collection, which bolted for Hulu earlier this year, all of which leaves the company in a very precarious position. In after hours trading alone, Netflix stock dropped 9 percent yesterday following the announcement.
There's still time for Netflix to find a replacement for Starz (and, hopefully, the other content providers who have walked away) but it will have to make some incredibly bold moves if it wants to save its once-great streaming business from irrelevancy.
