Netflix bends over for Warner Bros.

[Broken]

http://www.businessinsider.com/netflix-bends-to-warner-bros-wont-re...

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.

[mark czerkiewicz]

I've noticed recently(within the last month) that fewer rentals are becoming available earlier (as compared to availability of rentals prior to WB's agreement with Netlix/28 day rental waiting period); I have a large movie queue, but it does seem that more titles are "sitting" in my saved section & unknown dates seem to be the standard rule; maybe this is just a cycle but it doesn't seem coincidental.

[Cheryl]

That could also be the result of studios waiting until closer to the gift-giving part of the year to release stuff. I have a lot of titles in save that are releasing in October. I just noticed that today.

[spiderpig]

Time Warner CFO: Windows Up Disc Sellthrough 15%

Warner Bros. Home Entertainment’s 28-day delay of new-release movies to Redbox and Netflix has helped increase packaged-media sales 15% since implementation of the strategy earlier this year, Time Warner Inc. CFO Martin said.

Well, I guess it's here to stay. I wonder how many other companies will follow suit.

[Pihk]

Really surprising. Guess I'm gonna have to eat my words because I was sure this wasn't going to work.

[Slappy]

Guess I'm gonna have to eat my words because I was sure this wasn't going to work.
I really didn't think it would work either although 15% isn't all that much to brag about, but still much more successful than I thought it would be.

Well, I guess it's here to stay. I wonder how many other companies will follow suit.
All of them.

[Knaldskalle]

Guess I'm gonna have to eat my words because I was sure this wasn't going to work.

Me too. Once again I overestimated the collective intelligence of people. When will I learn?

[Microwaved]

You guys got to quit thinking that the general populace is teh smart. Cause they ain't.

[Ed8r]

I for one don't believe it.

It's much more likely that they twiddled the books to make it look good. They've got to prove to their stockholders that such an unpopular move was worth it.

Anyone who's been in the corporate world knows that they can simply fiddle with the budget columns to make it "look like" they've accomplished something.

*Phaugh*

[Aces]

Well, I guess it's here to stay. I wonder how many other companies will follow suit.

Netflix & Sony Sign Deal to Delay New Releases 28 Days

[Ed8r]

It's just like any other new corporate fad. The first one may actually make a little extra profit, but as everyone else tags along, the returns diminish.