I haven't seen anyone else talking about this but i've been quite disappointed to see much of the content in my instant queue quietly disappearing lately.  I was especially upset at the lose of Dexter of which I was mid-season 2.  Found this article and patcher seems to think netflix is doomed.  if the numbers he throws out there are true i think i have to agree, netflix is largely screwed.  shame really, netflix has been a good service for me up until lately.

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Netflix's vanished Sony films are an ominous sign

NEW YORK (CNNMoney) -- In the not so distant past, Netflix was known mainly for its red envelopes. The DVD-rental-by-mail service was the company's core, and streaming video was a side perk for subscribers.

Fast forward to 2011, and online movies and TV couldn't be hotter. Google, Amazon, Hulu and others have jumped into the fray -- putting studios in the power position. They want to be paid more for the content they're providing.

That spells trouble for Netflix's streaming content costs.

"Netflix has another year or two on most of these contracts, and then the game completely changes," says Michael Pachter, analyst at Wedbush Securities.

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold.

"The content owners realize they can't give Netflix all the leverage," he says. "Netflix had the power when they were the only bidder. But you don't have as much leverage when you suddenly have competition."

Netflix expands to 43 new countries

Netflix subscribers got a taste of the studios' new hardball approach last month, when hundreds of Sony (SNE) movies -- including high-profile titles like "The Social Network" and "Salt" -- abruptly vanished from Netflix's "watch now" catalog.

In a blog post, Netflix pinned the blame on a "temporary contract issue" between Sony and Starz, a pay cable network that licenses Sony's movie catalog. Back in 2008, Netflix struck a four-year deal with Starz that gave it streaming access to Starz' offerings.

But Starz' deal with Sony included a cap on the number of subscribers who can watch Sony movies online, a source told the LA Times. Once Netflix' audience exceeded the cap, the contract was null. Starz' catalog of Disney movies available for online streaming is on the verge of triggering a similar contractual cap, the newspaper reported.

In a letter to shareholders earlier this year, Netflix called the Starz arrangement "one of our most important deals," because it's one of the few that gives Netflix access to relatively recent films. The deal runs through early 2012, but the Sony/Starz standoff could accelerate the renewal talks.

"Studios are starting to put their foot down," says ThinkEquity senior analyst Atul Bagga. "They weren't paying attention to streaming at all, but now they see an opportunity to monetize. And they're going to take it."

That's a big threat to Netflix. On the other hand, the company has the money and motivation to spend more to keep its rapidly growing subscriber base happy.

"The cost of content is going to go up, no doubt about it," Bagga says. "It's going to come down to who has the ability and the willingness to write big checks. Netflix is probably the one to do it."

Netflix (NFLX) had a $161 million profit last year on sales of $2.2 billion, and it ended last quarter with $342 million in cash on hand.

But Netflix's rivals have much larger bigger wallets. At the end of the first quarter, Amazon (AMZN, Fortune 500) had almost $7 billion in cash, and Google (GOOG, Fortune 500) had a whopping $37 billion.

In another bit of uncertainty, Netflix's most direct competitor, Hulu, is on the block. Walt Disney Co. (DIS, Fortune 500) Chief Executive Robert Iger said at a conference last week that Hulu's owners -- who include Disney -- are "committed to selling" it. The list of interested potential buyers includes Google, Microsoft (MSFT, Fortune 500), Amazon, Yahoo (YHOO, Fortune 500) and nearly every other tech giant, plus telecoms like AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500). Landing Hulu would give any of them a strong beachhead for challenging Netflix.

Right now, no one else has cracked the code. Netflix's global subscriber base grew almost 70% over the past year, to 23.6 million users. In contrast, Google's movie offerings on YouTube and Amazon's streaming catalog are still new and fairly paltry compared with Netflix's arsenal.

"Netflix is the first and the biggest," Bagga says. "In a broad sense, the rivals aren't competing with each other. Everyone is competing with Netflix."

But if this turns into a clash of titans, Netflix is still a small player battling much larger and richer giants.

"Netflix is merely a conduit," Pachter says. "Of all the people who want to be in the business -- Google, Amazon -- they're smaller by far. The big boys will take share of subscribers, or bid up the cost of content. Either way, Netflix loses."

source

Sounds more like networks and studios are just being more greedy. Netflix with it's huge customer base and decent cash reserves should be able to keep them in check. I never liked Pachter and he is usually wrong. So I highly doubt Netflix is doomed.  The way Netflix handles their customer service and the set up of their sites means I will never switch to Amazon or Google.  Netflix has a vast advantage and a very well designed system.

Pachter being doomed sounds a lot more reasonable.

i don't know ... content will go to the highest bidder and apple, google, amazon, MS, sony are all trying to get a peice of the pie.  if the cost of content ends up being netflix's entire revenue they won't be able to afford it.  i don't really make very good use of the discs anymore but i love the streaming content.  if they continue to loose content i won't think twice about canceling my subscription.  i've already losted about half of what i wanted to watch.

In one of the few times, I actually agree with him. Its really only a matter of time before the big boys take over this market, and with that prices will probably see a big increase due to the bidding wars and these companies wanting to keep a decent profit margin

Yea, I guess time will tell.   I love Netflix and hope they can continue to provide the quality of service they have in the past.  Most of my queue is filled with documentaries, Fox cartoons (Family Guy, King of the Hill, American Dad), Nova programs, and History Channel shows.  I knew about Dexter and other Showtime shows being pulled sometime in the summer so I went ahead and watched all the Dexter (1 & 2) on instant and now I am on season 4 of the discs.  For about 10 dollars a month with 1 disc out option I get my money's worth each month.  The more competition the better. However, the networks and movie studios shouldn't price their content x10 just because the other competition has deeper pockets. 

Licensing fluctuates. Things like this have happened off and on since Netflix first began. If people notice, they recently got a whole bunch of Paramount content right about the same time the Sony content disappeared. You can now watch almost all Star Trek content on Instant, for instance.

No big deal, really.

Yea, I was out of the country for a week due to one of my sisters wedding.  After I came back I was scrolling through the instant stream line up and noticed a ton of new shows/movies (mainly the Star Trek, X-men cartoons (the 90s version I plan on rewatching because I loved it back in the day), etc...  Sucks that certains shows/movies get dropped but it seems like they are always adding more than what they drop from instant stream.

I somehow doubt this because Netflix just got all the Star Trek Content. Well I hope he's wrong though cause I love Netflix!

I already have Stars so that won't bother me much and most good movies I own on Bluray anyway. I mainly watch documentaries and the occasional independent film on instant watch.

I see Netflix being forced to introduce teired pricing much like cable in order to stay profitable and continue to obtain the content people want.

$7 for basic really old stuff or $15 for new stuff and movie content from these studios. Either way its still FAR cheaper than cable/sat will ever be so I'll stick with it as my sole source for the time being. (along with a PS3/other game console connected to the internet)