Netflix Drops on "Streamageddon" Day

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NEW YORK (TheStreet) - In addition to being May Day, today should also be called "Streamageddon". That's because today is the day that Netflix loses more than 1,700 movies from it's online streaming library.

As of today, all Warner Brothers, MGM, RKO and Allied Artists programming that was available on Netflix yesterday is now the basis for Time Warner's instant video service called Warner Archive Classic. The new service will cost subscribers $10/month compared to Netflix's $8 per month for similar offerings.

Netflix was dropping 1.4% to $213.01.

The difference between Netflix and Time Warner's service is more than two dollars each month. While the new Time Warner service will be able to boast programming such as the 1921 classic "The Scarlet Letter" also with 1990's features "The Sheltering Sky" and "Hurricane Smith," the company initially won't be offering blockbusters such as the Harry Potter films. Same goes for popular new series such as Netflix's "House of Cards", "Arrested Development" and "Lilyhammer".

Established media companies are worried about losing revenue to Netflix, and for good reason. Compared to broadcast TV, Netflix offers better programming. Compared to cable/satellite they offer new programming at much lower monthly prices. Netflix also has to compete with other modern providers such as Hulu in the hunt for new programming.

And, other online services are giving broadcasters and cable services fits. Don't forget Aereo. So far the courts have ruled for Aereo's "antenna rental" scheme and against any possible injunctions favored by the old-line broadcasters. If you're keeping track, CBS boss Les Moonves has joined with Fox management stating that if Aereo is allowed to continue he'll move his programming exclusively to cable.

Just a thought, if either company ever pulls the plug on over-the-air distribution of their wares I'm sure there'll be others who will ask the FCC for those same broadcast frequencies.

The stakes are huge.

Written by Gary Krakow in New York