14 DAY TRIAL // The content industry is fighting tooth and nail to protect its precious revenue stream while doing everything it can to stop anyone coming up with newer models. Netflix, one of the big exponents of a new way of getting content to people, has agreed to delay rentals of Warner Brothers new releases 28 days to help the studio "maximize the sales potential of those titles," which translates into 'squeeze every penny from movie fans' by, essentially, creating artificial barriers.
Netflix doesn't walk empty handed out of the deal, but it still doesn't look like it had too much choice in the matter. The DVD mail rental service gets cheaper prices after the waiting period and it also gets more titles for its online streaming service. No financial details have been revealed and it's not clear how substantial the said savings will be for Netflix.
“We’ve been discussing new approaches with Warner Bros. for some time now and believe we’ve come up with a creative solution that is a ‘win-win’ all around,” said Ted Sarandos, chief content officer for Netflix.
“We’re able to help an important business partner meet its objectives while improving service levels for our members by acquiring substantially more units than in the past after a relatively short sell-through window. At the same time, we’re able to extend the range of choices available to be streamed to our members,” he added.
The deal has been in the making for a few months now, ever since Warner Brothers had the brilliant idea of forcing even more restrictions on its paying customers by making them wait longer before they can rent a new movie, to reward them for their loyalty. By imposing yet another "window," the studio believes it can get even more people to buy the DVDs in the crucial first four weeks when it says 75 percent of sales are made.
Studios already employ a number of windows to maximize their revenue. DVDs of a new release don't come out until at least a few months after the theater release. Moving forward, cable networks don't get to broadcast a movie several months, yet again after the DVD and so on. The fact that, in reality, these windows only make pirated content, usually available from day one from the comfort of your PC, even more appealing doesn't seem to phase the studios.
When Warner came up with the new plan, Netflix kept quiet but new-comer in the DVD rentals business Redox responded with a lawsuit. The difference in response has to do with the fact that Netflix doesn't really rely on new releases and makes the bulk of its revenue from back catalogue. Redox on the other hand depends on the latest movies as its DVD rental kiosks have a limited inventory space. Expect the other studios to follow with similar plans soon.