Oh sigh. We'd been hearing that
Warner Brothers would be pushing for month-long rental delays for mail-order services in order to boost sales, and it looks like Netflix has been pushed into submission: under an agreement announced today, Warner Brother DVDs and Blu-rays won't be available to Netflix subscribers for 28 days after they're released for sale. What's worse, Netflix says it expects to reach similar deals with the other major studios as time goes on. Why would Reed Hastings agree to a clear imposition on his company's rights under the first-sale doctrine? We're guessing this is the only way the studios would open up and allow more movies to hit Watch Instantly -- and the AP says Netflix is also getting a discount on the actual discs. Yeah, it's lame, but honestly we'd rather take more streaming content over new releases in the mail straight away, so let's hope all this wheeling and dealing pays off.
posted January 6th 2010 6:10PM
This isn't that big of a deal for Netflix, and if anything plays into Netflix's current M,O. Netflix has a great deal of features that drive users to older titles in order modulate demand for any particular title. These features gets people to put off requesting hot new titles. Fewer requests at any given time for a title mean that Netflix doesn't need to buy as many copies (we're talking thousands, if not tens of thousands, of copies of a hot title) and still satisfy its user base's desire to watch a particular movie. Netflix has to buy a very large quantity of copies of every hot new title that comes out, Nost of these titles are sold off at a steep loss not that long afterwards when the demand dries up.
Relative to current demand for freshly released DVD's, I suspect that titles that are a month old yet new to Netflix will have a smaller initial demand, meaning that Netflix can purchase fewer copies of a title and still satisfy its customers' interest in a title. When you're talking about thousands of copies of a particular DVD multiplied by dozens of titles, you're talking about a lot of money that Netflix could be saving under this agreement.
This doesn't bother me, as my netflix queue is 99% movies 15 years old or more. I usually redbox new releases anyway.