Thursday, January 07, 2010


I was an early adopter of Netflix when it debuted in the late 90s. Too early: at the time it had just one distribution center, in California, and the DVDs took forever to arrive. I unadopted.

But I've been back in the fold for years now, and with a distribution center in nearby Flushing I sometimes get a new disc the day after I send one in. Trouble is, it can take me weeks to get to the DVDs I already have.

But Netflix has solved that problem for me. It's cut a deal with Warner Bros. that will keep its releases out of the familiar red envelopes for a 28-day window, to encourage DVD sales and other more profitable ancillary revenues. I can see how that benefits WB (and, inevitably, the other studios that will no doubt clamor for similar arrangements) but as a Netflix subscriber, even a slovenly one like me, why would I want to wait to see today's hot DVD a month later?

The official story is, "The new Netflix deal terms represent a bet by both sides that consumers will be willing to spend about $20 to buy what they want right away or otherwise wait nearly a month to get it as part of their subscription.

"This deal uniquely works for Netflix because our subscribers are desensitized to street dates and more interested in being matched to the perfect movie," said Ted Sarandos, Netflix's chief content officer, who handles studio relationships. "Some subscribers will so passionately want to see it in the first 28 days they may go out and buy it, just as some people want to see Avatar so badly they pay to watch it in 3D."

I'm slow to watch some of my Netflix pickups, but I'm not "desensitized." Due to the power of advertising, who doesn't know that the new Harry Potter is on DVD now? If I want him, I wave my magic cursor around my queue and get him ASAP; I don't want to twiddle my thumbs and wait a month for him to turn up, as I would on say pay per view. What business is Netflix in? Encouraging renters to buy, or stream movies through their computers rather than their home theaters, doesn't seem like an ideal model for growth. But what can one expect from a content officer who thinks that just a handful of viewers are seeing the billion-dollar earning Avatar in 3D?

No comments: