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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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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.

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

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