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5 Netflix Screw-Ups

Stocks in this article: NFLX

Streaming Limitations

Netflix ignited some confusion over the Labor Day weekend when it began sending out error messages stating some users cannot play more than one streaming movie at a time.

That means that if a subscriber was in one room watching The Expendables on an iPad, someone else couldn't sit in another room and watch Tangled via the Xbox.

But Netflix clarified the confusion.

"No Netflix member is limited to less than two concurrent streams," said Netflix spokesperson Steve Swasey. "A few Netflix members have heard differently from us, which is an error that we are correcting. "

But if you wish to stream content simultaneously on more than two devices, you will need to invest in a more expensive plan. Two discs out at a time ($19.98 a month), the three-disc plan ($23.98) and four disc plan allow for additional concurrent streams.

"On the heels of a price increase and with content quality declining in six months when the Starz deal expires, this is a pretty bold move," Pachter says. "It doesn't make a lot of sense to give subscribers less at the same time that they are charging more."

Starz Fallout

Netflix will have less content come February 2012, after talks to renew its contract with Liberty Starz (LSTZA) ended.

Starz, which includes Walt Disney (DIS), and up until recently, Sony (SNE), makes up about 1,000 of Netflix's 22,000 streaming titles. While Netflix claims that Starz is only 8% of its subscriber viewing, it represents some of the most valuable content and has been credited with jump-starting the Netflix's streaming operations.

>Netflix: We Don't Need New Releases

Netflix already lost Sony content in June due to a dispute between Sony and Starz, which analysts say accounted for another 8% of subscriber viewing.

Starz provides a large chunk of Netflix's newer content, making up half of the streaming titles from the top 50 movies in 2009 and 2010. Current Starz movies on Netflix include Toy Story 3, Secretariat, Johnny Depp's Alice in Wonderland and You Again, starring Betty White.

It's difficult to come by new content these days, and even though Netflix may be saving a big chunk of change from the Starz deal, there's not many other vehicles for the company to invest the money in content. Most new content is wrapped up in exclusive deals until 2015, leaving non-exclusive content, which tends to be older movies and television shows that are readily available.

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