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.
