osewalrus (osewalrus) wrote,

Link Harvest: Time Wafrner Bad Mouths Netflix, Starz


At some point, I will get around to blogging why these arguments are not merely self-serving, but wrong. Starz deal with Netflix was, as is generally the case in such deals, mutually beneficial. Starz helping Netflix grow a streaming business. That creates an opportunity for Starz! as well. Starz can play Netflix off against the other cable operators in negotiations in ways other programmers can only dream about.

So why is Time Warner so down on Starz? Because Time Warner has a lot of other content for which distribution through NetFlix is less profitable. Starz is premium. They do not get a per subscriber fee the way expanded basic tier programming does. Starz gets paid based on total number of subscribers to Starz. Having established the alternate distribution channel of Netflix, Starz can switch to a per sub model that replicates its existing business model, but via the more popular and more accessible Netflix. Time Warner, by contrast, has lots of basic programming and lots of pay-per-view programming. It gets a lot more money from the existing cable model, where they get paid based on the total number of subscribers to the cable system rather than the total number of subscribers to the service. So if Time Warner tried to replicate what Starz is dong, they end up potentially losing money.

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