Netflix can't afford a streaming content war

Beyond the prospect of a major competitor landing Hulu, Netflix has other headaches ahead.

First, the studios want more. When Netflix crept into the streaming video market years ago, it had a much smaller customer base — one that lulled content owners into a false sense of security. They cut cheap deals, like the one cable network Starz made with Netflix in 2008.

Now, as those deals expire, providers are upping the price big time for the content they’re licensing to Netflix. One analyst predicts that Netflix’s streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

And Netflix is losing some of those all-important contracts. Earlier this month, Starz ended contract renewal negotiations with Netflix and said it will pull its movies and TV shows from Netflix early next year.