Will Netflix go to tier structure to keep Starz?

Netflix's dependence on content from Liberty Media's Starz unit was a topic of discussion among attendees at this weeks OTTCon in San Jose who collectively believed that any renewal deal would cost considerably more than the estimated $30 million the company paid back in 2008, and that, as a result, the service would either look else where for content or create new content tiers to help defray its cost of content acquisition.

Turns out the tiering option is one that a number of other pundits, including Collins Stewart analyst Tom Eagan, share. Eagan, according to a published report, says a new tier of Starz original programming, above Netflix's current $8 per month offering, provides one acceptable path for a new deal.

"A separate, incrementally priced tier, could start to bring price parity to Starz content bridging the gap between the $8 per month Netflix subscriber pay and the higher premium pricing by cable and satellite operators," he said.

Eagan's plan would see Netflix subscribers still having access to Starz movies for $8, but would have to pay more-perhaps $10 a month--for shows like Spartacus: Blood and Sand and the upcoming Torchwood.

Starz CEO Chris Albrecht recently emphasized Starz is "seeking agreements that specifically price and package our content in ways on par with that of our traditional distributors."

Last year, Netflix CEO Netflix Reed Hastings said the company could "live without" Starz if it had to, but implied he didn't believe that would happen: "They have content, we have money," he said. "Unless we're idiots we ought to be able to find some way to make it work over the next couple years."

In January, Liberty Media's Greg Maffei said the current deal--which runs to 2012--has "plenty of time" to go, and said there would be ample time to "extend and create a new deal or not." Starz also has the online distribution rights to Walt Disney Co. and Sony Pictures.

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