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Hollywood film executives fear Netflix may conquer traditional broadcast services the way it did Blockbuster if someone doesn't keep them in check  (Source:
Film execs think the video-rental company is becoming too big too fast

As Netflix continues to grow in both audience and content, Hollywood film executives are feeling more and more threatened. 

In the past, studio executives have questioned whether Netflix could acquire a large audience without hit films or television shows, which is content they didn't think the video-rental service could afford. But now, Netflix has more than 20 million subscribers and has "sought-after" content available more than 200 internet-based platforms and devices like Xbox 360 and iPad. In the past year alone, the number of subscribers to Netflix has increased 66 percent. The video-rental company has even pushed competitors like Blockbuster and Movie Gallery to file for bankruptcy protection.

Netflix's ability to obtain such popularity so quickly has Hollywood executives scared, mainly because of how it influences the studio's businesses. For instance, Netflix draws sales from other areas such as airlines that offer in-flight internet access. If a person aboard the plane has Netflix, this takes a sale away from the carrier who is trying to sell movies on the plane as well.  

Film executives believe Netflix is having other impacts on the movie industry as well. For instance, movies on Netflix lose value more quickly than those that don't because "Netflix takes scarcity out of the equation" by offering movies to users anytime they want. In addition, film execs say Netflix discourages users from buying new releases. Disc sales are decreasing annually, and 30 to 50 percent of DVD's are still in their original shrink-wrap. While new releases won't appear on Netflix for years, users are okay with waiting until they do. 

According to Eric Garland, CEO of Big Champagne, which is a company that follows digital-media consumption, consumers quit collecting DVD's because it is no longer the new technology of the times.  

"The medium was creating this false impression that we had a real need to curate libraries of films," said Garland. "People built film libraries because they had never been able to own movies before. Even then, most of the movies only got watched once." 

Nevertheless, the film industry made a large profit for years off of movie sales, especially the DVD.  

"If we find out that people won't collect feature films anymore, than the business as we know it is broken beyond repair," said Garland. 

In response to Netflix's overwhelming popularity and its negative impact on the film industry, Hollywood film execs have decided to avoid Netflix completely. They will not "throw in" with the company and jeopardize conventional broadcast services. They feel it is their job to keep Netflix in check before it grows too large to handle. 

This doesn't mean that film execs are at war with Netflix or refuse to distribute films or television shows over the internet. The film industry plans to continue offering this content over the internet for attractive prices, but not through Netflix. 

Studio managers see Netflix as a company that offers the least-valuable material, and that the service will become a swap meet at best that users will become bored with eventually. 

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Don't blame Netflix
By troysavary on 3/8/2011 11:13:34 AM , Rating: 4
Hollywood is to blame for poor DVD sales. How many movies do they make that are actually worth owning and watching more than once? Hell, I find little they produce worth watching the first time.

That, coupled with format change burnout, people burned by the HD-DVD/Blu-Ray war, etc, it is easy to see why people are wary of investing in a movie library these days.

RE: Don't blame Netflix
By MrBlastman on 3/8/2011 11:28:02 AM , Rating: 5
I think these executives are hilarious. For years, they've been smoking our dollars in their suites, laughing as ticket prices in the box office skyrocket (They've gone up to 10.50 on average here, even for a 4 PM showing--10 years ago that was still matinee pricing, which now is only available for movies shown before noon).

They deserve everything they are getting right now. We as consumers are sick of it. Netflix has given us a way to more affordably watch films and they can't handle it.

To Hollywood: This is REALITY. If you don't like it, roll over and die. We'll do just fine without you, as there are PLENTY of independent films out there being made that in many ways, are superior to the crap you churn out.

The film executives can compete if they want to. They can start by cutting their own salaries and then secondly, dramatically cutting the salaries of the "actors" in their films and television shows. Wait, what? Cut their ridiculous pay?

They better, if they want to stick around. Last time I checked, America has been in a recession for a while and we're still working on the recovery.

RE: Don't blame Netflix
By ClownPuncher on 3/8/2011 1:00:17 PM , Rating: 5
Yea, it's a case of "We finally have to compete, boohoo".

MPAA whining is the worst.

RE: Don't blame Netflix
By Fracture on 3/8/2011 2:00:19 PM , Rating: 2
They really are hilarious, but its not about money. Money is just a byproduct of control, which is what the entertainment industry is really fighting for. They could offer some tangible proof or figures, but the truth is that more movies are being made now than ever before for lower prices. The cost of production continues to sink as special effects become better and cheaper themselves, and as costs of distribution vanish thanks to digital copies.

Let the middlemen die.

RE: Don't blame Netflix
By MrBlastman on 3/8/2011 2:14:25 PM , Rating: 3
That's a good point--about their control. They really are after that, it is apparent, and can not stand the thought that they might lose a fair amount of it.

From my perspective, Hollywood (and the MPAA) forgot somewhere in the last 25 years that it is us, the consumer, who truly are in control. We are--as we control the flow of money into their pockets.

It seems they need to hire an economist to set them straight.

RE: Don't blame Netflix
By FITCamaro on 3/8/11, Rating: -1
RE: Don't blame Netflix
By Gzus666 on 3/8/2011 3:34:38 PM , Rating: 4
Do you have to be a knob in every article? You must be horrendous to be around in person for any reasonable amount of time, constantly sticking political stupidity into every conversation possible. We get it, you blindly wave your right wing nut job flag.

Is it really that hard to just be a normal person and accept that right or left, they are both wrong in some way?

RE: Don't blame Netflix
By EricMartello on 3/8/11, Rating: -1
RE: Don't blame Netflix
By Spuke on 3/8/2011 5:49:08 PM , Rating: 2
it's a matter of there being too many self-serving pigs in Washington whose only real agenda is what they can do for themselves.
I agree but you're off topic. Sorry.

RE: Don't blame Netflix
By EricMartello on 3/9/2011 2:41:26 PM , Rating: 2
Hardly off topic. If it involves the MPAA/RIAA it is tied to may not be able to see the connection but it is there.

RE: Don't blame Netflix
By FITCamaro on 3/8/11, Rating: -1
RE: Don't blame Netflix
By Spuke on 3/8/2011 5:54:26 PM , Rating: 1
Yeah I guess I should be a moron like everyone who just says "F*ck it" and let whatever happens happen.
Sure but we're talking about Netflix and the MPAA here not politics.

RE: Don't blame Netflix
By Gzus666 on 3/8/2011 11:15:47 PM , Rating: 1
Right, cause you will change the world on a blog. Good job you go getter. No one was ever swayed by snarky comments in any medium. If you want to change things, go run for office and quit being a tool. Fix government instead of pissing and moaning about it. Oh, I forgot, it is easier to just whine about it.

RE: Don't blame Netflix
By FITCamaro on 3/8/11, Rating: 0
RE: Don't blame Netflix
By retrospooty on 3/9/2011 7:15:38 AM , Rating: 3

"Do you have to be a knob in every article?

Answer = Yes

You must be horrendous to be around in person for any reasonable amount of time, constantly sticking political stupidity into every conversation possible. We get it, you blindly wave your right wing nut job flag.


RE: Don't blame Netflix
By djc208 on 3/9/2011 7:02:09 AM , Rating: 2
They didn't learn from the music industry that people want the content to fit their life and are willing to pay for that. We've been living with the old model because we had no other option.

If you tell me I can own the BD but not the content on it then why buy the disk if I can rent the content from Netflix for less and access it more easily from any device that supports it?

Add in that fact that there is so much content out there in various price formats and it becomes easy to go without the latest movie for a little while longer.

RE: Don't blame Netflix
By Jeffk464 on 3/8/2011 6:43:56 PM , Rating: 1
What I love to see is their crappy expensive to make blockbuster movies with no stories get their asses kicked by non-special effect story driven. Especially when these movies are made for a fraction of the cost and half the time by English companies.

RE: Don't blame Netflix
By callmeroy on 3/8/2011 11:34:06 AM , Rating: 2
Though I do think the sentiment of 'well if you made stuff worth buying...' is a bit of a cop-out answer... its just too easy of an excuse since if something is good or bad to YOU is purely your own opinion. How can anyone force you to like something -- its up to you and your tastes.

But I am glad that Hollywood is a bit "nervous" -- in fact it warms my heart a bit to read this I think it does make sense now though -- why Netflix does not have a more modern and up to date seems its intentional by the studios. That part kind of stinks, since I am a netflix subscriber.

The movie industry is no different that the music industry when it comes to trying to sell their "works" in whatever form ...CD/DVD/Blu-ray/on-line.....Greed.

RE: Don't blame Netflix
By Solandri on 3/8/2011 6:38:34 PM , Rating: 5
Geeze. Everyone including probably my grandmother knew this day was coming. Music going digital was the first step. The Studios killed off DATs (digital audio tapes for those of you too young to remember) because they were afraid of perfect copies. CDs snuck under their radar because they didn't have the foresight to see CD-Rs nor MP3s. The entire MP3 industry took off because the Studios refused to put out a digital music format of their own. After they grudgingly gave in to MP3s, they still refused to sell music online. They clung to their almost fanatical belief that somehow, some way, DRM would allow them to continue selling music online while using the exact same business model they used when music was sold on discs or tapes. That resulted in Apple's iTunes store basically taking over the market for digital music sales and distribution.

The movie Studios (often the very same companies as the record Studios) saw all of this unfolding. They knew from the first CD and DVD sales that the only difference between movies and music was the size of the file. And at the rate computing and network technology improved, it was only a matter of years before what happened with music would happen to movies. They've had over 15 years to get their act together and put out a viable digital product which leverages the primary power of network streaming - not having to store and take a music/movie library with you.

Instead of embracing technology and experimenting with/coming up with a viable product, they've squandered away those 15 years trying to pass laws to hold back the inevitable march of technological progress, spending years and probably billions of dollars developing DRM systems for their disks which are usually broken within weeks or months, and suing their customers. By scaring people away from online movie distribution while simultaneously refusing to do it themselves (for a price), they created a huge market opportunity. An opportunity Netflix scooped up like free manna from heaven. It's too late for the Studios to complain about it - Netflix's dominance today was entirely a consequence of their own choices. Refuse to fill a market demand, and someone else will come along and fill it for you.

If anything, they should be thanking Netflix. If Netflix hadn't brought a viable streaming/disk rental service to market, the Studios would be losing eyeballs to user-generated content on YouTube, blogs, and the sites like this one. By making their movies and shows available to a wide online audience, Netflix is allowing them to hold onto the last shreds of their glory days when they were the sole providers of mass-produced media entertainment in the world.

RE: Don't blame Netflix
By jamesjwb on 3/9/2011 9:29:28 AM , Rating: 1
Good post, and this is in no way directed at you btw, more at the draining ignorant views i see posted here every day on any topic, which is starting to do my head in.

I don't wish to go too off topic like that right wing guy somewhere above, but it does make sense that these industries did what they did. Corporations at the very core behave this way. They try to stifle competition and genuine progress, maintain a monopoly, and not take risks. It's in their design.

If you map typical corporate behaviour to how they have handled this entire issues, it's pretty text book. Perhaps when the number one defining, all-encompassing goal of a corporation isn't to make money for anonymous shareholders, we'll see some dynamism, but it will take some bold thinking. And let's face it, there's a huge chunk of people who think they are upper middle class elites simply because they own their house and have a nice car who will defend the idea of no government intervention, and a ‘free market’ because they believe they are having a fabulous, lucrative life, and so can you! And if you don’t, it’s because you suck, idiot! Natural selection, man!

Well, two points. The first is, with governments we can intervene and if we do (but rarely do) we have legal rights to change things, drastically – that’s democracy. If you don't like it, try to change it, don't just decide it's a redundant avenue to change and rely on a bloody tyrannical replacement. We do not have anything remotely like this in corporations, which yield dramatic power, in some ways above and beyond governments and compared to some countries, more wealth. They should be dramatically restructured, not protected, and not seen as some special separate thing in life. They yield absolutely enormous influence in how our lives now play out, they do not deserve special protection outside of the democratic processes people have struggled and died for over hundreds of years to give us the freedoms we have today. Why any single person would defend corporate rights and tell governments to butt out is pure lunacy, and i feel sorry for those who believe it's a good thing for them. If you are a billionaire, I exclude you of course.

And second, wealth and prosperity cannot be for everyone, it's obvious. The current world model would come to an absolute end if everybody could have access to a prosperous life. So when you defend 'free trade', and talk about how the government is a corrupt, dangerous entity that needs to keep it's butt out of things as i have a right to own a gun, and leave us poor businessmen to make a living, just remember who is the number one corrupter of government (who are the lobbyists), and who 99% of the representative are in governments and who they represent, and then realize your method of thinking is highly hypocritical and full of denial.

So please, right wing (i mean the extreme right-wingers, not the rational ones), selfish disgraces of Dailytech, use the brains you clearly have and have a deep think about other people and reality, not just yourself, and realise you currently stink as human beings. Please? Thanks.

RE: Don't blame Netflix
By jamesjwb on 3/9/2011 9:37:47 AM , Rating: 1
BTW, i meant to address my post to the draining, annoying right wing political views that sneak their way into any topic no matter what, that's what i meant. Those are really getting on my nerves lately, that's why i had to rebut.

RE: Don't blame Netflix
By Mitch101 on 3/8/2011 1:03:33 PM , Rating: 1
I blame Michael Bay, Format war, Price, and DRM.

1- I didnt buy the DVD because of the HD versions coming out.

2- It took forever for the hardware to come down to a point where I would accept it and when it finally did (HD-DVD player was about $100-$120.00) and I was ready to jump back in Michael Bay shot his mouth off and the last movie studio sided with BLU-RAY at the time they were $200.00+ Back out of my budget.

3- All I read about was DRM problems with each player. I cant play this movie and they wont update my bios I have to buy a newer BLU-RAY player with the revised BLU-RAY spec.

4- It took BLU-RAY another year to come down in price to a point where I would buy one. But then my kids were at an age were if I bought the BLU-RAY I couldn't play it in the car without spending even more money on hardware.

5- Movies are finally coming down to decent prices in BLU-RAY format but since Ive been off buying them the impulse to buy is gone.

I do own a BLU-RAY player now but its still in the box over 6 months now. Haven't bought a single movie for it. When the time comes and I unbox it and the studios keep messing around I think I will get a group of friends together to start sharing movies we purchase. Otherwise the DVR is serving me fine and my media center offloads shows for when we travel.

RE: Don't blame Netflix
By SSDMaster on 3/8/2011 2:20:29 PM , Rating: 2

We get it, you're not that into movies.

RE: Don't blame Netflix
By Mitch101 on 3/8/2011 2:54:13 PM , Rating: 2
Im into movies I actually go to the theater a lot and only see movies with an IMDB rating of 7+ about things that interests me or defiantly 8+ movies.

I have a 120" projected image in the living room and in my office a 110" projected image and a 65" in my bedroom.

I have a ROKU, HAVA, 2 Media Center PCs, Dual HD Tuner Silicon Dust, 4 dual tuner DVR's, a Popcorn Hour, and another media player I can never remember the name of. I can record 12 TV channels at a time. 4-OTA and 8 through DVR and pipe them to my two Media Center TV's which can wireless sync to my Zune player which I keep in my car or watch my main DVR and anything recorded on my Media centers on my blackberry/Laptop/Nook Color wherever I have a wifi signal.

Direct TV has an option where you can watch any show on one DVR on another that allows me to get the stream to my HAVA and that can stream to my PC or to myself through the web on any of my portable devices. My portable devices have small screens so I can cope with the DVD like quality of the HAVA on them. Anything larger I watch in HD at home.

I can say over the last year all the movies I went to see I really wasn't impressed with and the movies I got psyched about were a real let down. Inception and How to train your dragon would be the only movies I saw last year I would buy. I just saw Rango and thought it was ok I was more impressed with the details of the characters than the movie as a whole. Pixar movies are about the only kids movies that have replay value and they come out about once a year.

I subscribe to HBO when True-Blood is on and Showtime when Dexter is on. Between the two movie channels I record a ton of movies that takes us some time to get through. They overplay those movies and if a movie is worth a second watch I catch it on there.

We do get the occasional redbox every now and then when we miss one in the theater.

RE: Don't blame Netflix
By Gzus666 on 3/8/2011 3:07:13 PM , Rating: 2
I'm confused, you have 10s of thousands of dollars worth of electronics, yet you complain about a few hundred extra for a player to play movies in high def with high quality sound. Honestly it sounds like you are just complaining about a new video format and you are bitter over HD-DVD losing. It is over, please just let it go.

Also, you rely on IMDB to provide ratings for movies you watch? Awesome, no wonder really good movies fade out into the darkness. Half the movies I end up watching based on random suggestions from Netflix are so obscure, they aren't formally reviewed, but I have been delighted by what I have found. I don't get the Inception reference, I thought that movie was pretty marginal at best. Maybe if you swayed away from Hollywood a bit, you would find some real gems. I have to put up with subtitles at times, but it has been well worth it.

RE: Don't blame Netflix
By Mitch101 on 3/8/2011 3:48:00 PM , Rating: 2
Didn't purchase everything at once did it over time and it wasn't just $200.00 for the player but the movies were $17-$24.00 when the DVD was $8-$12. Its one of those technologies you wait and the players become $30.00 and the movies on special for $6.00 - $8.00. Ive seen some movies in their HD version and they aren't much better in HD from their DVD so a lot of movies I wont be rebuying for the HD versions and how many a year later will be remastered in HD. So you have the initial HD release and then a year later they pull the digitally remastered HD re-release.

HD DVR's are FREE from Direct TV just renegotiate every year and replace one receiver every year in the process.

Projector Epson HC-8100 $1250.00 0% finance over 12 months.
Second Projector I made for about $400.00 720P
65" HDTV that I paid a lot for a long time ago its 8 years old?

For the projectors I use a painted wall $50.00 google for black widow screen paint you mix it. On par with very expensive screens.

$100.00 Silicon Dust HD Tuner
$100.00 Roku - I wanted the top end. I figure this will be cheaper than Direct TV's sports packages like MLB the savings will make the Roku a free device compared to direct tv.
$80.00 Actually Chinese knockoff flashed with popcorn hour bios.
$60.00 other media streamer. Argosy just added an older hard drive.
$80.00 Hava from monsoon multimedia they always have a special.

My Stereo is 5.1 audio sounds great with JBL speakers I use the optical inputs.

I would say in the last 3 years Ive invested $1,800 in equipment or $50.00 a month. A bulb should last me 3 more years before I need to upgrade anything soon.

RE: Don't blame Netflix
By Gzus666 on 3/8/2011 4:23:22 PM , Rating: 1
I guess this begs the question then from the obvious desire to save money, why not just get Netflix with Bluray so you can get all the movies you want?

RE: Don't blame Netflix
By SSDMaster on 3/8/2011 3:08:20 PM , Rating: 2
Wow. With all that equipment I can't believe a $200 blue-ray player was out of your budget. It seems like you've spent quite a bit more $$$ on your current setup.

But you're obviously into movies...

RE: Don't blame Netflix
By bug77 on 3/8/2011 1:46:38 PM , Rating: 3
My stomach turns every single time those guys bring up the "high value content" argument, whenever discussing piracy. It may be high-value for them, but it's still crap.

RE: Don't blame Netflix
By judasmachine on 3/8/2011 1:51:58 PM , Rating: 2
I fear $9+$5+$5+$7x2=$52's impact on my wallet. Screw Hollywood. The last move I went to see in the theater was Watchmen. They will not get anymore money from me until they produce a product worthy of it. $52 for my g/f and I to see a POS movie, no thanks.

The DVD/Blu-Rays don't even cost near that. Nor does soda, popcorn, and candy combined with the disk price.

RE: Don't blame Netflix
By MrBlastman on 3/8/2011 2:12:17 PM , Rating: 2
I'm confused. Just how much in concessions are the two of you consuming?

I can read your equation two ways:


Either the 9 is the price of a ticket, or the 7 is, but the x2 is applied to the whole, better written as 2(9+5+5+7), or did you really mean... (9+5+5)+(2x7), which, wouldn't come close to 52.

So, I'm assuming the 5, 5 and 7 represent food items at the theater. That is a lot of food at the theater, moreso than I can say I've ever consumed there. Okay, I'll be truthful, I never buy food at the theater unless it is popcorn on a rare occasion (and it is once a year that I go, lately), I smuggle the rest in tucked between my pants and belt or pockets (usually a small bag of candy).

RE: Don't blame Netflix
By MozeeToby on 3/8/2011 2:34:05 PM , Rating: 3
Find a budget theater, most midsized or larger cities have at least one. Sure, you don't get to see movies the week they open, but I generally spend $16 going to a movie with the wife, and that includes 2 tickets, a large popcorn, and a large soda. Oh, and the people that run the place are actually friendly, involved, and just generally happy to see you.

RE: Don't blame Netflix
By marvdmartian on 3/8/2011 2:47:00 PM , Rating: 1
movies on Netflix lose value more quickly than those that don't because "Netflix takes scarcity out of the equation" by offering movies to users anytime they want. In addition, film execs say Netflix discourages users from buying new releases.

Yeah, the decreased sales have NOTHING to do with lousy movies that Hollywood is putting out, do they? [eye roll]

The saddest part of all this is that the Hollywood studios could have built a business along the same model long ago, when Netflix first came on the scene, and given them a run for their money. But they didn't, and instead kept their robbery of the public going as long as it would hold out.....and now that their business plan is failing, it's the fault of Netflix. Typical!

RE: Don't blame Netflix
By FITCamaro on 3/8/2011 3:06:50 PM , Rating: 2
Add in the shitty economy and its easy to see why sales are suffering. For many people its a matter of $8-15 a month for unlimited entertainment or $20 for 90-120 minutes of entertainment that might not be entertaining.

But apparently the movie execs are oblivious to this fact. But cmon. Don't you wanna see a remake of every movie from the last 50 years? Or Little Red Riding Hood mixed with The Wolfman?

Maybe I could try to dig up the short story I wrote in 8th grade of an Independence Day sequel (that my teacher thought I'd plagiarized from somewhere) and sell that to them.

RE: Don't blame Netflix
By Jeffk464 on 3/8/2011 6:34:59 PM , Rating: 2
If people are renting from netflix instead of buying movies it means the industry is charging to much for DVD's its a no brainer. The funny thing is the industry does a lot of research to figure out the price to charge for a dvd or cd to maximize profit, volume versus per unit cost ect. The funny thing is that once they set the price they never lower it when that price should be lowered due to market forces. They love to whine and try to get congress to pass laws in their favor or bully companies like netflix when what they need to do is change.

RE: Don't blame Netflix
By Jeffk464 on 3/8/2011 6:39:05 PM , Rating: 2
PS Nothing makes me smile more than blockbuster going out of business. They pushed all the ma and pa stores and smaller chains out of business through aggressive business practices and now the same thing is happening to them. I love it.

RE: Don't blame Netflix
By Hiawa23 on 3/8/2011 7:00:45 PM , Rating: 2
I don't know what kind of impact Netflix has had on the movie induestry, but they have had a great impact on my life. I have been a subscriber since day one, & I used to buy DVDs left & right only to watch em once then throw em on the shelf never to be watched again. I have over 400DVDs on my shelf so Netflix has saved me probably thousands of dollars over the years. Why waste money buying movies only to watch em once? This may not be good for the studios but Netflix has been fantastic for our wallets & that's all that matters to me.

RE: Don't blame Netflix
By RjBass on 3/9/2011 9:08:56 AM , Rating: 2
Somebody please give this guy a 6. The DVD format is near dead and has been replaced with it's modern day equivalent. The studios need to face up to that. They were all crying back in the 80's when the VHS tape got so popular. They said people shouldn't own vast collections of movies, that it took away from the theater experience etc... It seems like they never stop crying.

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