NY Times: What Netflix Could Teach Hollywood

The NY Times is running a story about the success of Netflix, What Netflix Could Teach Hollywood.

The problem is that the studios have sold the exclusive digital rights for most movies (which don't apply to physical DVD's) to a television channel, like HBO. The agreements last for years and, since they bring in millions of dollars, the studios aren't about to stop signing them.

So what's saving Netflix — allowing it to thrive when the technology to obliterate it already exists — is yet another attempt by Hollywood to hold onto a fading business model. Remember, this is the industry that filed lawsuits in the 1970's to prevent people from watching movies at home.

Thanks to Joe for sending this in, and DVDDossier has posted an interesting analysis of the story.

Comments

[Hunter McDaniel]

This article re-iterates a point I've made before. The genius of Netflix is that it piggybacks on a pre-existing licensing model (for physical DVDs) that is too firmly established for the studios to renege on. If Netflix had needed permission from the studios to setup its business, it could never have come into being.

[NetflixShill]

Netflix would need their permission if they started stamping all DVDs "not for rental", like many other countries do. Laws can also change at any time to prevent Netflix from renting DVDs without permission. In fact, I have heard that this is why they don't rent other region titles. Not because people do not want them, but just the legal risk this would expose them to.

Nicheflix skirts the law on this issue, but the studios could easily crack down on them if they wanted to. See, you don't own DVDs. You just own a license to watch the content on the discs. The license can be changed at any time. It doesn't stand still. The major studios want you to pay for each viewing or lock the content to a given player: iTunes, DIVX DVDs, etc. They don't like rentals or libraries, because it costs them potential (a.k.a. imaginary) sales.

[Jon Levant]

> They don't like rentals or libraries, because it costs them potential (a.k.a. imaginary) sales.

HAHA. Typical brainwashed pirate/slashdot reader blather..

Libraries AND rentals cost studios DVD sales. That's a fact jack. It might just be that not ALL rentals cost a sale.

You seem to have a problem with concepts that are not binary.

[NetflixShill]

"Libraries AND rentals cost studios DVD sales. That's a fact jack. It might just be that not ALL rentals cost a sale."

You can't prove this. I say they sell more. People rent things they wouldn't buy in the first place. Many then buy it later. That's also true with music. Studios claim the p2p downloads hurt them. I say it only hurts the crappy artists like Britney Spears and such drivel. The independent acts sell more. The industry sells more, because of rentals and downloads and libraries.

You are thinking in binary terms. The issue is more complex than potential lost sales. Sharing reduces SOME sales and it increases other sales. You are a pessimist, like the studios. You accuse everyone who dis-agrees of piracy and other straw man arguments.

Most people buy the music/movies they want. But we're getting wary of buying anything as studios put ROOT-KITS onto CDs to take over our PCs. Sorry, but my computer shouldn't be changed in any way buy listening to a CD or watching a movie. Any companies that try to pull that crap have permanently lost sales.