Netflix had paid an estimated $30 million for Starz content in 2008, which in hindsight was a steal. Three years ago, Netflix had just started appearing on set-top boxes like the Xbox 360, and Hulu was still getting off the ground. To renew the deal with Starz, Netflix had earmarked $250 million, according to the AP.

UPDATE: Here’s a story by the L.A. Times’ Ben Fritz that says Netflix offered $300 million, but Starz wanted tiered pricing, which would charge subscribers a premium to view its content. Interesting, but not surprising, that Netflix didn’t want to go that route.

Starz said it wants to “protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content.” Media companies have become nervous about Netflix’s grip on the streaming video business, and are hoping to drive up prices by shopping their content around.

This looks like a lose-lose-lose to me. Netflix users obviously lose a whole bunch of content. With less content, Netflix will have a harder time killing the DVD, which according to some pundits was the company’s true motivation for raising prices. Starz, meanwhile, just left up to $300 million on the table, with no guarantee that it’ll make that money back without Netflix.

Still, Netflix CEO Reed Hastings sees the up side: Starz content only accounted for 8 percent of Instant Watch viewing, and could account for 5 percent to 6 percent by year-end, as Netflix licenses more content. “We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.”

That promise, of course, assumes other content providers won’t think like Starz and try to take their content elsewhere.

The site tracked BitTorrent downloads for two Fox shows — Gordon Ramsay’s Hell’s Kitchen and MasterChef — over the last week, when the delay began. Sure enough, during the first five days, downloads of the latest Hell’s Kitchen episode rose by 114 percent compared to the previous three episodes. Downloads of MasterChef spiked by 189 percent, with the season’s finale likely accounting for higher demand on BitTorrent.

TorrentFreak also took note of some of the angry comments on Hulu, many of them wrongly directed at Hulu rather than Fox: “What I don’t like is up until now I have been able to watch the episode of Hell’s Kitchen the day after it airs and all of a sudden they now want me to pay for it?” one commenter writes.

Unless Fox executives are really, really dense, they had to see this coming. My guess is that an uptick in piracy was expected, but in the long run, Fox is hoping that people will feel inconvenienced enough by the delay to hang onto their cable subscriptions — or sign up for Hulu Plus. Fox is openly concerned about cord-cutting, and delaying shows by eight days is meant to discourage people from relying on free streaming.

In other words, it’s about reinforcing the idea that if you want Fox’s content in a timely manner, you’re going to have to pay for it. TorrentFreak’s findings don’t necessarily mean that Fox’s approach is doomed, but they are a reminder that workarounds are always available.

Zediva launched out of beta last March, with streaming rentals of new releases for $2 per night, or $10 for a 10-pack. It offered new movies before they became available through Netflix and Redbox, and didn’t pay a dime to movie studios. The trick was to let each individual user rent an entire DVD player, along with the disc inside, remotely over the Internet. Zediva argued that it was just like a brick-and-mortar rental store, but with a different delivery method.

Not surprisingly, movie studios disagreed. The Motion Picture Association of America sued Zediva and argued that the service’s rentals were actually performances, entitling studios to licensing fees. U.S. District Judge John Walter concurred, and has given Zediva and the MPAA a week to work out the wording of an injunction.

Even without legal troubles, Zediva had a slim chance of becoming a thriving movie service. Shortly after Zediva exited beta, it had to cut off new registrations because it couldn’t provide enough DVDs and DVD players to keep up with demand, and has remained an invite-only service ever since.

Oddly enough, these service issues played into the judge’s decision, as he noted that movies were often unavailable for rental. “The message that a particular copyrighted work is unavailable or ‘out of stock’ is totally inconsistent with the concept of ‘video on demand,’ which means it is always available, and creates a significant risk of damaging customer goodwill as customers become disillusioned, frustrated, and confused about the video on demand market in general,” Walter wrote.

Zediva insists that the fight isn’t over, and plans to appeal. It’s a long shot, but at least Zediva doesn’t have to worry about keeping its DVDs in stock and up to date in the meantime.

The app, which relaunches on August 25 according to Gizmodo, will let users watch two games at once in 720p, with the ability to pause, rewind and replay each game independently. The second viewing window will also be able to show scores from around the league and replays from the game you’re already watching.

In addition to side-by-side view, the app will have a mini-guide on bottom of the screen with highlights, previously watched games and live updates on other games in progress. Kinect voice commands will be supported as well.

It sounds like a more practical approach to watching sports than the existing ESPN app, whose extra features include voting on favorite teams and milling around with other Xbox Live avatars. I assume it’ll be free, like the current app, to anyone with an Xbox Live Gold account and an Internet service provider that offers ESPN3.

I’m hoping this is the start of something greater. During E3, Microsoft talked about its plans to turn the Xbox into a home for live television, but it hasn’t announced any new content partners besides UFC. Live thumbnails, side-by-side playback and Kinect support, along with the “NuAds” that Microsoft is working on, could help show other networks what’s possible with Internet TV.

But in the short term, I’m just excited to root for Michigan and against Ohio State in separate games at the same time.

An app for Hulu’s premium streaming video service, which costs $8 per month, is now available from the Android Market, but only for the Nexus One, Nexus S, HTC Inspire 4G, Motorola Droid II, Motorola Droid X, and the Motorola Atrix. “We expect to add to the number of Android smartphones and will be making additional device announcements throughout the year,” Rob Wong, Hulu’s director of product management, wrote in a blog post.

The limited launch is reminiscent of Netflix’s partial Android app release last month. At the time, Netflix said that Android lacked a standard set of playback features across all Android devices, although the company previously blamed platform security issues.

Hulu’s not saying why its own Android app rollout begins with only a half-dozen devices. Except for the Nexus One and Nexus S, the devices that Hulu supports are different from the ones that Netflix supports at this time.

I guess that’s an argument for going pure Google. But with Netflix and Hulu both launching in limited fashion, it’s clear that Android needs a standard solution to make media companies happy, especially as the number of Android tablets grow. If they can’t stream media from major sources like Netflix and Hulu, they’ll have a tougher time answer the question of why you’d buy one instead of an iPad.

Users can choose from three quality settings by visiting the “Your Account” page on Netflix’s website and looking for the “Manage Video Quality” link. “Good quality” consumes up to 0.3 GB per hour, “Better quality” burns up to 0.7 GB per hour, and “Best quality” consumes up to 1 GB per hour for standard definition or 2.3 GB per hour for HD. The settings apparently apply to computers and televisions.

Netflix isn’t hiding its reason for offering the quality options: “We know that some of you have Internet data caps and we want to make it easier for you to manage how much data you use,” the quality management web page says. Most recently, AT&T instituted a 150 GB cap for DSL subscribers and a 250 GB cap for U-Verse subscribers.

What’s somewhat surprising to me is that Netflix isn’t publicizing the feature. As DSL Reports’ Karl Bode points out, Netflix added the quality management tool quietly, burying it on an account management page with no announcement. Netflix isn’t above shaming Internet service providers — the company publishes a chart of who streams the service fastest — so the fact that Netflix was driven to this point would seem like another way to paint itself as the consumers’ champion.

But Rich Karpinski at Connected Planet has a different take: Netflix “gets and keeps subscribers by delivering a high quality streaming video service,” he writes. “Limiting bandwidth limits its service.” So Netflix doesn’t want to let on that its streaming is anything less than high quality. If your service provider is putting a limit on usage, however, lower quality is a reality you might have to face.

To defend itself from the Motion Picture Association of America, Zediva has retained a trio of laywers from Durie Tangri, a high-profile intellectual property law firm. The team includes Michael Page, who defended music-sharing service Grokster through to its loss in the Supreme Court; Joe Gratz, who won a case that allowed consumers to sell promotional CDs; and Mark Lemley, a Stanford University professor and IP expert.

The Motion Picture Association of America is bringing its own heavyweights from the law firm Munger, Tolles & Olson. The team played a role in bringing down the music-sharing service Limewire, killing the music search engine Seeqpod and nixing RealNetworks’ RealDVD copying software. As PaidContent’s Joe Mullin puts it, this will be “quite the legal battle.”

Zediva streams new releases for cheaper than iTunes, Amazon and other on-demand movie services because it doesn’t pay any licensing fees to Hollywood studios. The service works like Slingbox, renting a dedicated DVD and movie disc to the user and streaming the content to any Flash-equipped web browser for $2 per movie or $10 for a 10-pack. Because Zediva isn’t duplicating any of the content, it argues that there’s nothing illegal about the service. Movie studios obviously disagree.

But whether Zediva stands a chance in court may not be its biggest concern. Immediately after launching in March, Zediva had to cut off new registrations due to overwhelming demand. The service is physically and financially constrained by the number of DVDs and DVD players it can fit in a server room, and letting too many people in would make the act of renting a movie nearly impossible. It also means that Zediva can never offer a huge movie library, due to the logistics of storing so many DVDs.

I would have loved to see if Zediva could make its quirky approach work without also fending off Hollywood lawyers, but that was never going to happen. Instead, the service will become fodder for copyright case law — not as fun to watch, but not a total waste, either.

Following the news that NBC is cancelling The Event, Deadline reported that Netflix considered picking up the serial drama. It wouldn’t be unheard of; in an interview with All Things Digital last week, Netflix CEO Reed Hastings said he could see the company paying networks to keep shows alive, provided they were popular with Netflix streaming subscribers.

The idea is great. Throughout television’s history, plenty of shows have been cancelled too soon, and working with Netflix would allow a network to make money without handing a show over to a direct competitor. Everybody wins.

The question is, what does Netflix gain by saving TV shows from cancellation? Next-day streaming? A cut of the ad revenues? This is all hypothetical, so nobody knows.

In any case, Peter Kafka of All Things Digital thinks The Event is unlikely to be saved. The show barely made it through a single season, and Netflix doesn’t stream it, so there’s no built-up fan base among Instant Watch subscribers.

Netflix could be a great savior of TV shows. It just needs the right victim. Is it too late to bring back Arrested Development?

That’s why services like mSpot Movies are trying to get a piece of the action. Although mSpot Movies isn’t new, the service is now slashing prices in hopes of landing on consumers’ radars.

mSpot rents standalone streaming movies for the same $3.99 as other on-demand services, but the main draw is a “club” package that charges a flat rate per month in exchange for credits, which can be redeemed for on demand movies. Starting at $5 per month for 20 credits, good for up to four movies, the basic service is now half as expensive as it used to be. There’s also an $8 option for 40 credits, and a $16 option for 80 credits. Throw in the promise of new and recent releases, and mSpot seems like a decent deal.

But there are caveats.

For starters, the promise of up to four movies with 20 credits rarely works out that way. A small amount of library content does cost 5 credits, but most old movies cost twice that, and all new releases cost either 10 credits or 15 credits. On the basic plan, you’re more likely to end up with two movies per month. For the mid-range plan, which costs the same as Netflix streaming, you’ll get about four movies per month.

The bigger issue is the size and scope of mSpot’s library. Of the 1,200 movies available through mSpot, only half are part of the club package, and plenty of them are throwaways. To get the really good new releases — films like The Social Network and The Fighter — you’ll have to buy a la carte. Club members get discounted rates of $3 or $3.25 for most new movies, but if the club itself doesn’t have a lot of stuff you want to watch, you’re better off with Amazon or iTunes.

On the bright side, mSpot is quite accommodating to mobile devices, with native apps available for iPhone, iPad and Android (including tablets). Other handsets can access the service through the web. That’s also a backup plan in case Apple ever requires mSpot to offer in-app subscriptions. mSpot would probably remove the app from the App Store to avoid paying Apple 30 percent of its new subscriber revenues, chief executive Daren Tsui told me.

As for set-top boxes, only Google TV is supported for now, but Tsui said mSpot is trying to get on a couple of game consoles. He wouldn’t say which ones.

The best thing I can say about mSpot Movies is that it’s not a Netflix clone. It offers a different selection of streaming movies with a different pricing structure. For a subset of movie watchers, that could make a lot of sense, but they’ll have to figure out their viewing habits and crunch some numbers to figure it out.

The Wall Street Journal’s unnamed sources say YouTube is planning a major redesign focused on “channels.” To that end, the company will reportedly spend up to $100 million to commission low-budget, professional content. Roughly 20 of the channels will host several hours of original programming per week, the Journal reports.

The goal is to turn YouTube from a workday time waster into a living room fixture. YouTube once tried to wade into premium content, with a redesign emphasizing movies and TV from big studios, but the Journal says YouTube didn’t want to spend the licensing fees to compete with Netflix. Last month, YouTube acquired Next Now Networks, a producer of small-scale, professional web video content.

But content isn’t the only thing that’s lacking when you try to rely on the Internet for video. You’ll also miss the passive viewing of television, where you can just pick a channel and get a steady stream of content without any effort. Perhaps that’s where the redesign comes in, but the Journal doesn’t say whether the “channels” will be like the passive viewing experiences you find on television or something else entirely. I’ll be disappointed if they’re just glorified categories.

YouTube’s set-top boxes may be getting an overhaul as well. In February, the company posted job ads seeking engineers for a “next-generation console-based TV experience.”

Whatever happens, the Journal says it’s not happening overnight. YouTube reportedly plans to phase in its changes over time, starting before the end of the year.