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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RE: Dumbass Movie Industry...
By kusala on 1/6/2010 8:59:35 PM , Rating: 3
Can we get a 6 here. This is right on the button. They just created more piracy lol!!! Dumbass move indeed

RE: Dumbass Movie Industry...
By mcnabney on 1/6/2010 10:06:33 PM , Rating: 5
Pretty clever comment.

However, I think the target is regular people who don't download torrents, but who will rent movies and make copies of them illegally.

But I don't see how this is going to change much because someone who intends to rent and copy to save money is 99.99% likely to just wait the extra month. Or worse, start downloading. Than there wouldn't even be a rental income for the studio/Netflix to share.

For my personal renting I have found Redbox to be much better for new releases. If I get too annoyed with Netflix and this new policy I might drop down from 3-at-a-time to 1-at-a-time and start reserving titles at Redbox more proactively instead of waiting patiently on Netflix.

I just came home with Half Blood Prince, Paranormal Activity, and District 9 from Redbox because we are expecting a blizzard tonight. I deleted them from my Netflix queue a few minutes ago. They were all in the 'long wait' category... This new policy might cause a lot of Netflix customers to re-evaluate their plan.

RE: Dumbass Movie Industry...
By Ryanman on 1/6/2010 11:59:13 PM , Rating: 5
How many people know how to download codecs, rip DVD's, and format them correctly, but don't know how to double click a .torrent file and leave their computer?

I really do think this does absolutely NOTHING to discourage piracy. Pirates that saw Netflix as a low-cost solution to stealing are gonna jump right back on the bandwagon. Warner is disgustingly stupid.

RE: Dumbass Movie Industry...
By antimatter3009 on 1/7/2010 9:05:55 AM , Rating: 2
I think this is more about trying to get renters to buy than it is about piracy. By having rentals start a month after a movie is available for purchase, they might get some portion of the people who want to watch the movie to just go ahead and buy it instead of wait. However, I don't see how this could ever work unless they can convince every rental operation to agree to it, and I don't see why they would. Netflix has been leading the rental business for awhile now, and they've just dropped an advertising campaign into the laps of every one of their competitors. I can't see this ending well for anyone.

RE: Dumbass Movie Industry...
By Redwin on 1/7/2010 10:17:11 AM , Rating: 2
I think this is spot on. We all know it only takes *ONE* copy of a movie to be ripped and uploaded to enable piracy. That one copy is almost ALWAYS available well before the movie goes on sale, and in MANY cases well before its even in theaters. Hell you could download a workprint of Xmen origins before it was even finished post production!

I refuse to believe everyone at the movie studios is too dumb to know this, so the only thing that makes sense is they are trying to push NetFlix customers who DON'T pirate, but want to see the film at home, to buy a copy by making it impossible to rent it from NetFlix.

NetFlix is kind of gambling that people won't just leave their service and go elsewhere, but I guess we'll have to see how that shakes out.

RE: Dumbass Movie Industry...
By grampaw on 1/7/2010 3:38:11 PM , Rating: 2
"...the only thing that makes sense is they are trying to push NetFlix customers who DON'T pirate, but want to see the film at home, to buy a copy by making it impossible to rent it from NetFlix."

BINGO! Netflix/Studios know only about 5% of the Netflix customers know how to download a movie and make a DVD out of it. They figure that everyone who's going to pirate, is already pirating... so its a win-win proposition for studios and Netflix. It's actually a win situation for the people who do pirate - more titles will be probably be available to pirate as more titles will be available before the Netflix rental release date.

Sounds to me like Studios, Netflix, Pirates all make out at the expense of the typical Netflix customer...

"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes

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