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Starz says Netflix deal is over after streaming services hikes its prices

By Sean Hollister,

Today, Netflix’s new prices take effect, adding a hefty premium if you want both streaming movies and physical DVDs delivered to your door. Starting today — or at the beginning of your next billing cycle if you’re already a customer — you’ll pay $7.99 for streaming, $7.99 for one DVD, and $15.98 for both. Here’s more bad news: Netflix just lost Starz, arguably its most important streaming video partner. If you’ve watched a recent motion picture on Netflix Watch Instantly anytime in the past three years, it was likely via Starz, but Starz says the deal is over: “When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform.”

Subscribers will still have Paramount, MGM and Lionsgate movies, as Netflix hammered out partnerships with their joint venture Epix last year. Netflix and Starz had actually been working toward a new deal for months, but apparently it was all for naught, as Starz says it took this action to ensure its content wasn’t undervalued. Netflix stock is already taking a hit of eight percent on the news, at least in after-hours trading, and  from what we can tell, Netflix hasn’t yet commented publicly on the failed negotiations.

Update: Netflix CEO Reed Hastings gave a statement to Business Insider, All Things D and otherswith additional context; according to Hastings, Starz content accounted for only eight percent of the time U.S. viewers spent on Netflix, and the company intends to re-use the money it was planning to spend on Starz in procuring alternate sources of content. Find the full statement below.

Update 2: According to anonymous sources for the LA Times, Netflix offered over $300 million to license Starz content, but Starz didn’t merely want cash up front — it wanted the Starz Play service to be a premium Netflix tier, and have Netflix charge more than the existing $7.99 a month for access.

This article originally appeared on thisismynext.com as Netflix loses Starz Play deal on the eve of controversial price hike.

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