Netflix Bends To Warner Bros., Won't Rent DVDs For 28 Days After They Go On Sale
This will please the movie industry: Netflix has agreed to a 28-day window before it rents Warner Bros. DVDs and Blu-ray discs after they go on sale. The idea is that this will allow Warner Bros. to sell more discs, which is more lucrative than rentals.
According to the announcement, 75% of DVD sellthrough occurs in the first four weeks of sales, so that's what the movie companies are hoping to boost.
How much will it hurt Netflix?
Maybe only a little, because Netflix does not rely on new releases as much as movie stores like Blockbuster and kiosks like Redbox. But it's still probably not a direction that Netflix boss Reed Hastings is crazy about.
On the other hand, Netflix will also get more streaming content from Warner Bros., as part of the deal. So Hastings has to be happy about that.
If the movie industry has it their way, we anticipate more deals with viewing windows like these in the future.
Here's the release:
WARNER BROS. HOME ENTERTAINMENT AND NETFLIX
ANNOUNCE NEW AGREEMENTS COVERING
AVAILABILITY OF DVDs, BLU-RAY AND STREAMING CONTENT
New Release DVD and Blu-ray Titles Will Be Made Available
After a 28-Day Window; Streaming License Renewed and Expanded
BURBANK and BEVERLY HILLS, Calif., January 6, 2010 – Warner Bros. Home Entertainment Group and Netflix, Inc. [Nasdaq: NFLX] today announced new agreements that will continue to make Warner Bros. new release DVD and Blu-ray titles available to Netflix members while adding to the selection of direct to video titles and Catalog movies available to be streamed instantly to TVs and computers.
New release titles on DVD and Blu-ray will be made available to Netflix members after a 28-day window, giving Warner Bros. the opportunity to maximize the sales potential of those titles and Netflix the benefits of reduced product costs and significantly more units and better in-stock levels four weeks after street date. At the same time, a renewed and expanded license for Warner Bros. streaming content will allow Netflix to offer its members more movies they can watch instantly.
“These new agreements build upon the strong relationship we have had with Netflix for nearly 10 years,” said Ron Sanders, president, Warner Home Video. “The 28-day window allows us to continue making our most popular films available to Netflix subscribers while supporting our sell-through product.”
“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.”
The agreement covering DVD and Blu-ray provides a means for Warner Bros. to continue to directly supply Netflix with new titles while establishing a schedule that allows Warner Bros. to get the most from the sales potential of those titles (75 percent of sell-through occurs in the first four weeks) and maximize VOD usage. Netflix benefits from reduced product costs and better availability of new releases. New releases from all suppliers account for about 30 percent of Netflix shipments.
Warner Bros. is currently a leader in many home video categories including total video (DVD and Blu-ray combined), Theatrical Catalog video, TV on DVD, and Blu-ray.