Archive for April 9th, 2010

The online video rental giant Netflix has grown even stronger

After signing new, separate deals, Netflix will have access to more 20th Century Fox and Universal Studios‘ films. Under their new deals, Neflix will agree to wait 28 days after any of their films release on DVD to offer them through their website. Also, Universal agreed to license more of their films for streaming (online viewing) and Fox has agreed to a first-time license that will allow Netflix to stream certain Fox TV shows.

Netflix also made a similar 28 day delay deal for new releases with Warner Bros. earlier this year.

Netflix CEO Reed Hastings said in October studios were wrestling with declining DVD sales as the rental market has been modestly growing and that some studios are considering introducing a DVD retail sales-only window for a few weeks. – Hollywood Reporter

Source: Hollywood Reporter

Quick Opinion: The 28 day delay deals certainly make sense for the studios, particularly 20th Century Fox because they own the distribution rights to James Cameron’s Avatar (which in case you’ve been living under a rock has become the most successful film in history). Having that 28 day window will allow the studio to grab all the money they can from those who don’t wish to wait 28 extra days to rent the movie – and you can bet that will be a lot of people. On the flip side, Netflix’s side of the deals only make sense because they’re getting something in return, and good enough for them it’s something that will actually improve their profits. With more streaming movies and wider selections the company will have an even firmer grasp on the video renting market. And, even though they have 28 day delays for the 3 biggest Hollywood studios, they don’t have to wait that long to make every new DVD available, as they can still provide newly released DVDs from everyone else.

What is discouraging about the last bit of news is this: With the rental market slowly rising and DVD sales somewhat declining, is there any reason to assume that this is not because of the current recession? With less money to play with, of course people are going to forgo spending $20+ on a new DVD and spend $5, $6 or $7 on a rental instead. It’s smart consumerism, especially if you’re not head over heals for a particular movie or haven’t seen it before (regardless of what some people might think there are some people who have yet to see Avatar, so why should studios expect people who haven’t seen it to spend $20+ to own it?). If the studios decide to make up for their losses with DVD sales by creating a sales-only window after releases there could possibly be some serious consequences. Ma and Pa video stores, already barely getting by (as the switch from VHS to DVD nearly wiped them out as it is), would no longer be able to provide their hottest commodity, which is new releases. Most of these stores at this point get by through offering great selections and immediate service (as opposed to Netflix’s 2 to 3 days wait period), but any more hits to this small market and I fear they’ll start disappearing for good. Creating a sales-only window might help studios beat the current lull in DVD sales, but the lull is only temporary and the window’s possible effects could be permanent. It would be a step towards getting rid of all video rental stores period instead of just the one rental giant Blockbuster, which looks like it will soon file for Chapter 11.