28-Day NetFlix Embargo for Warner Bros. Movies

NetFlix and Warner Bros. have agreed to a new deal whereby the home video rental titan will wait 28 days to make any of the studio's films available to consumers. With news this week that RedBox almost hit $1 billion in revenue in 2009, you might think NetFlix would have doubts about this kind of arrangement, but Warner Bros. already has the same time frame in place with that retailer, too. As for the potential lost revenue, the chief content officer for NetFlix says this is a win-win. "This deal uniquely works for Netflix because our subscribers are desensitized to street dates and more interested in being matched to the perfect movie," Ted Sarandos told The Los Angeles Times. "Some subscribers will so passionately want to see it in the first 28 days they may go out and buy it, just as some people want to see Avatar so badly they pay to watch it in 3-D." The move from Warners - expected to be followed by other studios soon - is not surprising. Home video sales slumped almost 15% in 2009 from an already down 2008. The sales figures first dipped in 2007 (3%), then dropped off another 5.5% in 2008, so you can tell just by looking that with a 13.7% decline last year, the studios aren't going to sit by and let NetFlix and RedBox siphon money away from them forever. Or, more diplomatically and robotically, here's WB's home entertainment president, Kevin Tsujihara: "Within the home entertainment category, we're creating different times at which a product is available at different prices." Translation: Buy movie tickets, then pay full price for the DVDs for a month (because how big a percentage buys DVDs of new movies they've never seen when cheaper options are available?). Another way the studios are looking to nip those sales losses in the bud is by accelerating the DVD release dates from the current standard of four months to three. Imagine: Just 90 days after the movie opens in theaters, it could be available on DVD or Blu-ray. Paramount and Sony (G.I. Joe and Cloudy with a Chance of Meatballs, respectively) have already toyed with this approach.

Comments

[Ramsay]

Sarandos' definition of "win-win" must differ completely from...oh...the correct definition. True, this will not really hurt Netflix much, but it certainly does not help them either. Hence, no win-win.

Anyway, he is right about one thing. Us Netflixers are "desensitized to street dates", which sounds like we're grown accustomed to going out with hoodlums, but no matter. This will hurt Redbox way more than Netflix because Redbox is a pay per movie deal, whereas Netflix is a subscription. The netflix subscription gives you access to all their movies and only puts a limit on how many you can rent at one time.

So...yeah.

[TomAdams]

How about instead of going out and buying it in those first 28 days, I go out and pirate it. Seems like a "win-win" for me.

[Get The Big Picture]

That's bad form, TomAdams, because I can't think of why you'd deserve it for free.

[Ramsay]

Very bad form indeed! Also, when I first read the headline, I thought that NetFlix was going to stop renting the movie "28 days"...and I was going to celebrate.

[Y-it]

This is just sad. Oh boo hoo!!!!! So what Warner Bros!!! These guys really think they are going to make more money this way!! HAHAHA!!! Here is an idea for Warner Bros to make more money. Make better movies that people will go see in the theaters and then buy when they come out on DVD. I know everyone will want to see "COP OUT" right when it comes out on DVD.

The only great movie in recent years that Warner Bros has put out is The Dark Knight. Nuff Said!!!