Netflix is going to fall

For the last two years, Netflix was almost untouchable since no companies could compete with their service.  However, all good things must come to an end.  This is the saddest day for Netflix since they are going to be parted with Starz.

Starz is the company that provides movies from both Disney, and Sony Pictures to Netflix.  Thursday, the company announces that they are going to part ways with Netflix.  The agreement between the two companies is going to end on February 28, 2012.  After the said date, Starz is not going to provide anymore Disney and Sony Pictures movies to Netfilx.

So anyone, who has a Netflix account, should watch all the Disney and Sony Pictures that they could watch before the contract ends.  That will be the final movie that is going to be available for subscribing to Netflix.

Chief executive of Netflix, Reed Hastings said in an interview that nothing will change since Starz only contributed around 5 – 6 percent of the movies on Netflix.  He added  they are planning to use the money, which they earned from the partnership with Starz to spend on other providers.

Janney Montgomery Scott Analyst, Tony Wible says that Netflix stock is already taking the downfall as it falls to 9.32 percent or $21.74 per share.   Wall Street did not agree with what Netflix believes.

Wible added that the lost of Starz content could be devastating for Netflix. The loss of content may become the signal for a loss of subs that will damage its ability to buy new content. More notably a loss of subs, could leave Netflix having a hard time to pay the over $2.4 billion in off balance sheet content contracts.

UBS Analyst Brian Pitz, also noted that the move might have a long-term impact for Netflix. He sees the market’s prices constantly increasing with more competitors, who want to enter the game such as

Pitz claims that their analysis demonstrated that 22 of the 100 presently most well-liked streaming titles on Netflix come from Starz. Given the still earlier state of the torrent library, Pitz and his associates believe that the loss of Starz is significant – potentially pushing Netflix deeper into the long tail and/or requires them to bid for replacement content in a market with increasing prices.

Caris & Co analyst, David Miller believes that the future is not that bad for Netflix since the company has financial discipline.  BTIG Analyst, Richard Greenfield thinks that this is not the end for both companies.