Print 98 comment(s) - last by MrPoletski.. on Jan 14 at 6:15 AM

Arrgghhh this will show those pesky pirates -- we'll cut one of our hottest items!

Netflix revolutionized the movie rental industry when it began offering unlimited movie rentals for a monthly flat rate.  Since 2007, a $16.99 (plus tax) monthly membership fee has granted you access to up to three movies at a time, with unlimited exchanges.  While Blockbuster rushed similarly priced plans to market, it was arguably too little, too late -- Netflix was already a major player and owned many key patents.

Despite that resounding success, all is not rosy for Netflix.  Netflix has been under fire from movie industry, which claims its unlimited deliveries of new rentals is fueling rampant piracy of films.

Under pressure, Netflix just announced that it has incredibly consented to enter a deal with Warner Bros. that will essentially begin to kill its new release program under the premise of fighting piracy.  Under the agreement, Netflix agrees to not offer new releases until 28 days after the DVD/Blu-Ray release goes on sale in stores.

Netflix COO Ted Sarandos appears to have wholeheartedly embraced the idea, which he originally suggested to studios in 2007.  Netflix likely gets a major kick back from the deal, though; if the terms of Mr. Sarandos's original pitch hold true, Warner Bros. will cut its inventory costs with Netflix (the amount it charges the company for its movie stockpile) by 50 percent.

Describes Mr. Sarandos enthusiastically, "Creating a rental window is not a punitive action. It’s a decision that the retailers and studios can make together. If the studios can entice a rentailer to create a rental window, I believe that rentailers, studios and consumers can all benefit from it."

With that attitude and the mutually positive reaction from Warner Bros., it seems likely that other movie studios will follow in suit, signing agreements to cut inventory cost in exchange for no more new rentals.  Netflix is reportedly in advanced talks with Fox and Universal as well.  Other unnamed studios are also discussing similar plans with the rentailer.

For both Netflix and the movie studios the plan is a risky gamble.  Without new rentals, Netflix risks being undercut by Blockbuster.  While the inventory cost cuts ultimately result in a greater monetary gain on paper (as 70 percent of Netflix rentals are from older catalog titles, with approximately 30 percent coming from new releases), whether customers will stomach the change is questionable.

Likewise for movie studios, if customers do accept the deal, but it does not significantly affect buying rates/piracy, the studios stand to lose a great deal of money offering movies to Netflix at greatly reduced rates.  In all likelihood, the biggest loser, though, will be Netflix customers who may soon lose access to the hottest new rentals, which Blockbuster will continue to provide.

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Good for netflix bad for consumers
By ira176 on 1/6/2010 8:12:18 PM , Rating: 5
There are two reasons that I got netflix.
1. Not having to drive to block buster.
2. Watching new releases.

I like to stream the movies too, but it seems like the new popular releases take longer to make it to streaming.

I may have to re-evaluate the need for netflix.

RE: Good for netflix bad for consumers
By micksh on 1/6/2010 9:11:08 PM , Rating: 3
Netflix has been horrible with new blu-ray releases recently. I could not get Terminator 4 for more than a month. I haven't got Inglorious Basterds and Hangover yet. These have been on top of my queue since release date became known.

I know that Netflix prioritizes customers and since I always return disks next day I'm not the best customer but having to wait for a month for any hot new movie is not fair either.

This will extend the delay even more. I need blu-rays and there is no blu-ray red box nearby. Will switch to Blockbuster total access. I don't have Netflix streaming device, only HTPC and their streaming quality sucks on PC so I will not miss it.

Article here says that even now Blockbuster ships new releases faster.

RE: Good for netflix bad for consumers
By DCstewieG on 1/6/2010 11:41:27 PM , Rating: 2
Now I certainly don't return discs the next day (not any more anyway), but I've gotten the Blu-rays I wanted on release day 100% of the time by mailing a disc in on Monday. Then they get it on Tuesday when they begin sending the new releases out.

By micksh on 1/7/2010 1:27:24 PM , Rating: 2
They ship new releases on Monday so you could get it on Tuesday. The fact that by Tuesday they still have new releases left tells that your local shipping center has very good disk/customer ratio. Here, in San Jose, CA it's pretty bad.

By aapocketz on 1/7/2010 3:27:09 PM , Rating: 2
I already wait over a month for new releases it seems, especially now that I have added blu-ray access. The backlog is long enough that usually I get movies that are in the 'teens in my queue. Sometimes by the time they actually send me some new release I have managed to watch it at a friends house or something, and I have to send it right back.

I noticed that Amazon is starting renting newer movies (like the hangover) streaming online, and I have like $20 of free video on demand credit. I may check that out.

By bupkus on 1/7/2010 1:00:34 AM , Rating: 2
I just decided; now that I get HBO I have enough to watch. Maybe I'll drop to the Instant download only package.

By Hiawa23 on 1/7/2010 3:04:01 PM , Rating: 2
There are two reasons that I got netflix.
1. Not having to drive to block buster.
2. Watching new releases.

I like to stream the movies too, but it seems like the new popular releases take longer to make it to streaming.

I may have to re-evaluate the need for netflix.

yep, I think many of us will re-evaluate our subscription.

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