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: So, to clarify
By Samus on 1/7/2010 2:01:05 AM , Rating: 5
That's what I'm saying! Seriously, in the torrent community, almost everything is sourced from retail. Do they actually think pirates are going to wait 3 days for the DVD in the mail?

And if you're going to argue the pirates they're after are just the home users that rip for their own collection, go ahead and argue. Because as stated above, if they don't want to buy it, they'll just get it from Blockbuster.

This is amazingly stupid of Netflix. Who's going to wait a month for a DVD release when the video stores have it? Basically, we're going backwards. As in, we're going back to the video store domination.

RE: So, to clarify
By frobizzle on 1/7/2010 8:38:11 AM , Rating: 2
If this wasn't so pathetic, it might actually be funny!

Almost any movie (worth seeing) is usually available to download weeks or months before the DVD/Blue Ray comes out. Another impotent action by the movie studios!

And as the OP pointed out, pirates do not bother getting their movies from Netflix!

RE: So, to clarify
By Cypherdude1 on 1/8/2010 7:17:01 AM , Rating: 2
When I first read this about the 28 day delay, I thought it was a joke. Apparently not:

There is no way customers who rely on rental DVD's will standby and take this delay. I have been a Netflix customer for 1.5 years and have always wanted to see new rentals ASAP. Since I can no longer do this with Netflix, I will cancel my service. I will either return to BlockBuster online or simply occasionally go to my local independent rental stores. Maybe I'll just use Redbox, especially if they put one nearby.

I can't believe Netflix will leave this policy in place. I just know that thousands of their customers will dump them now and Netflix will back down.

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