With the Oscars behind us, we can now look forward to a whole new set of movies to wow us in 2012. However, Netflix has learned that TV shows are becoming more popular than feature films among its customers. The New York Times reported that “TV series now account for more than half of all Netflix viewing.” As Netflix continues to focus more on TV series as its core business, its current agreement with Starz will not be renewed. This means that starting today, the streaming service will no longer offer movies like “Scarface” and “Toy Story 3.” It can be totally devastating for someone either absorbed in a TV series or looking to watch their favorite movie tonight that they just watched last week, and they eventually find that it has vanished from the streaming service. My coworker was up in arms when this happened to her while watching “Lost” which led her to sign up with Hulu only to find that “Lost” reappeared the week later. I can’t recall the reason why the TV series vanished for a week, but I digress. I guess I wanted to share the only connection I have ever had to Netflix as I am not a subscriber. If I were to subscribe though, I probably would do so mainly to watch old TV reruns. And that same reasoning is why Netflix did not renew its 3.5 year old deal with Starz. The irony of it all is the fact that Netflix’s deal with Starz is what helped Netflix gain Internet streaming subscribers.

About a year ago, Netflix determined that the deal would not be renewed. Many were concerned it would be “doomsday” but Netflix strengthened its TV offering and the end of the Starz deal is not the end of Netflix or the world after all. “Analysts say the prioritizing of television partly explains why the company has been able to retain about 21.7 million streaming subscribers in the United States.” In fact, The New York Times article goes on to share that “the new-release movies provided by Starz account for just 2 percent of all viewing, Netflix says, down from 8 percent a year ago.”

Netflix didn't start broadening its TV offering just to prepare for the end of the Starz agreement. Another reason they worked to strengthen their TV programs were the rising prices charged by major movie studies for films and shows. Studios are fearful that Netflix might become too powerful and who can blame them? Check out the Strategic Sourceror’s post yesterday about DreamWorks who appears to be struggling partly because of Netflix's success.

The New York Times also discusses where the future of Netflix should go from here. Its next challenge should be to become a direct competitor to HBO and create original shows of its own rather than reruns. In fact, “a show from Norway, “Lilyhammer,” had its American debut on Netflix earlier this month, and an ambitious drama made just for Netflix, “House of Cards,” will have its debut later in the year. A revival of the Fox sitcom “Arrested Development” will also come out sometime next year.” It will be interesting to see how this next phase of Netflix pans out.

In the meantime, for those “Toy Story 3” and “Scarface” fans, this is a heads up that you need to find another favorite movie to watch next week. If you wait about six months, you’ll be able to view “The Artist,” the winner of best picture at the Oscars.
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Kathleen Jordan

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  1. I don’t think Netflix will suffer too badly without the Starz movies on there, but they are already taking hits for having lame content. They will only receive more criticism when Starz movies go away, as they have many Disney movies and shows. When Netflix increased their prices last year, I wasn’t too worried since price increases are part of business and I understand. What I didn’t like was they increased prices with the knowledge that they were going to lose the Starz programming at the end of February. I dropped them and started using Blockbuster @Home, and I haven’t been happier. In addition to being able to rent DVDs and blu-Rays, I can still stream movies to my TV, computer or iPad with Starz programs included and for $10 a month. I stream everywhere, like while I’m on lunch at DISH where I work or at school waiting for class to start. Netflix was convenient, but they weren’t smart about their actions, and besides I’ve moved on to better.