Netflix in Negotiations to Create New DVD Rental Window

Video Business reports that Netflix is in negotiations with the major studios to create a new DVD rental window, and Netflix wants a steep discount in return for waiting a month or more for new releases.

Redbox is suing the three studios and stocking its kiosks with their titles bought at retail, but Netflix is more willing to take new releases in a later window for reduced title costs. In fact, insiders say it’s an idea Netflix pitched to studios several years ago.

“Creating a rental window is not a punitive action,” Netflix chief content officer Ted Sarandos said. “It’s a decision that the retailers and studios can make together. If the studios can entice a rentailer to create a rental window, I believe that rentailers, studios and consumers can all benefit from it.” He would not comment specifically on the pricing Netflix is looking for, but did confirm it is seeking discounts in exchange for the window.

via paidContent.

Comments

[dAVe]

If the discounts that Netflix would get are actually passed on to its membership, then it better be enough of a discount to remove the outlandishly stupid Blu-ray access fee. It was a dick move to begin with and increased the number of reasons for me to keep my BBonline account from 1 to 2.

[banter]

quite possibly the only thing that could make me go back to BB

[Gran]

It was a dick move to begin with

Why is it wrong to charge more for something that costs them more?

This new release rental window has nothing to do with Blu-ray, so until blu-ray discs cost the same as DVD, the Blu-ray access fee will remain.

[banter]

yeah I don't mind them charging more for BR...just waiting a month for new releases makes NF kinda pointless unless I am getting a cheaper sub rate. I don't only watch new releases but its half my rentals.

[CJ]

Hope Netflix gets enough of a discount to make up for the revenue lost from subscribers leaving or cutting back on their plans. Also look for an upsurge in those Xvid DL sites. Some will then make a DVD and not wait a month for the rental.

Apparently the Studios haven't gotten the message yet to figure out most people just want to see a movie once, either at a theater or as a DVD rental. They don't pay attention to the "Buy the DVD" sales pitches.

[Mike]

I'm okay with it as long as it affects RedBox and BlockBuster. If I have to start going to BB or RB in order to get the new releases long before I can get them through NetFlix, I am not going to be a happy customer.

[Hmm...]

So, how does this affect illegal downloads?

The way I see it. It's another reason for someone to download the movie.

Most people don't need to own movies, they however still want to watch them. I'm someone that already has a hard time waiting til the release day for a DVD, and frankly still can't believe they wait as long as they do to release popular titles on dvd in the first place

An inability to watch a movie when it's released without having to purchasing it is just more reason to illegally download it.

The studios should be focusing on more ways to allow the consumer to get to their media by paying for it. Not continuing to tie it up making it harder to get.

[deviationer]

If this new dvd rental window is for netflix only than I will be switching to blockbuster. The extra Blu-ray disc fees are bad enough.

[kevin]

"...the outlandishly stupid Blu-ray access fee. It was a dick move to begin with..."

Yeah. Why should I have to pay more to lease an Audi than a Kia? Paying higher prices for more expensive products is so dumb!

Er....no. Grow up and quit your whining.

[mndtrp]

Seems to be a non-issue, for the most part. If I wasn't going to buy the movie, it makes no difference to me if I have to wait another month or two. As far as I'm concerned, the release date will just be extended out a bit. I've got such a backlog of new releases that an extra couple of months will make no difference.

[dAVe]

BBonline makes no differential pricing between DVD & Blu-ray. I'd rather have NetFlix get back to the "kick BB's teeth in" attitude that once inspired Hastings to create the DVD-by-mail business. I merely suggest that any monetary discounts received from this proposed deal be put to use to return NetFlix to the fight rather than nickle-dime its membership. I'd hate to see NetFlix become "meet the new boss, same as the old boss."

I've been a member of Netflix for over 6 years and other than the well known throttling policies the current, blanket implementation of Blu-ray Access Fee feels cheap. If NetFlix had actually put in a per disc surcharge on any Blu-ray mailed out, then the comparison of Audi vs Kia might apply.

[BR]

"Rentailer"?

Really?

[www.facebook.com/profile.php?id=574577800]

Bluray access fee is understandable. I was able to get many new releases day one ("Up" is on it's way, arriving Tuesday!). It was a small price to pay for the privilege.

But further delaying a month would not be nice. It completely kills this advantage.

[Cvnk]

"So, how does this affect illegal downloads?"

Don't worry. You will still be able to download a movie the week before it hits the theaters.

[Marek]

The bad thing about the Bluray fee is that it's per disk for all the disks. So if I have a separate queue for my son filled with DVDs because his TV doesn't have Bluray, I am still paying the extra fee. It was fine before when it was a flat fee.

As for the rental window, I don't care how much cheaper it would be, I want new releases quickly. Unless they would offer these movies through streaming after the month wait.

[Tom]

Well, I'm glad to see Netflix play hardball with the studios over this. Again, I'll wait the extra four to six weeks to see Paul Blart: Mall Cop through Netflix. I was never going to buy it. If that helps Netflix hold the line on subscriber rates, then the only one who loses is the studio, and they're too dumb to notice.

[Gran]

The bad thing about the Bluray fee is that it's per disk for all the disks. It was fine before when it was a flat fee

Huh?

[Seth]

This sounds like a mistake in the realm of New Coke.

Netflix is going to tell customers: Oh, yeah, I know you can buy that movie in Target but you can't rent it for another month.

What can they be thinking? Well, it will help local videostores who will just rent the movies anyway, with or without a window.

[Larry Dallas]

Remember Netflix has stated as a fact that they rent more older titles then they do new ones, this will not cause me to change my rental habits at all. When it comes to my door is when I'll watch it. In the rare case I want to buy it odds are it's something I went to see at the movies anyway and already know I really liked it enough to drop coin on it at Best Buy.

Also....no cost/price drop will be passed on to the customer. It will simply keep your fee from going up.

Don't like it, hit the cancel button.

[kevin]

"'So, how does this affect illegal downloads?'

Don't worry. You will still be able to download a movie the week before it hits the theaters."

Did you even read his post? He posed a question about piracy, and immediately answered it. Or did you stop after the first line so you could jump on your high horse?

[Patrick Sweeney]

Remember the old days when Rental had the 180day window before the retail release? Ah, those where the days.

[PCP777]

I don't want to have to wait for the new releases. This could be a deal breaker. The other thing that's annoying with the new releases is the "long wait" and "very long wait" which seems to come up more and more these days for anything remotely popular. It would be nice if they could stream the titles where they didn't get enough physical disks. As far as the BR fee, it's only $4.00 a month more.

[Tino]

I've got 200 titles in my queue, so any new releases this week should be viewed by me sometime in mid-2011. If the movie was in the theatres from January to March, why do you care if you have to see the DVD in June instead of May?

If you can't find enough titles at Netflix to keep you busy in the meantime, maybe you shouldn't be a customer in the first place.

[Gran]

@PCP
It would be nice if they could stream the titles where they didn't get enough physical disks

Netflix is limited by the studios on which titles it can stream. They are usually only given rights by the studios to stream after the movie has run through its usual release schedule (1 theater, 2 DVD, 3 pay-per-view, 4 cable, etc.)

It will likely be years and years before streaming is allowed to upset the studios' stringent release schedule.

[Bob Emmerich]

Logically, the "buy before you can rent" argument makes perfect sense for the studios, who are in business - surprise! - to make money. Now, if Netflix goes it alone on the delay, it's really bad for them, but if it's industry-wide (which I'm pretty sure is what Netflix wants, not to throw themselves on a pyre) then I don't see a problem for anyone. While I can appreciate everyone's initial response of "yuck", I don't see Netflix suffering from this in the long term.

And my 2c on the Kia vs. Audi metaphor. The problem is charging extra whether or not you actually receive any blu-rays in a month.

[Drew]

As long as the lower rates get passed down to me as a subscriber, good for you Netflix.

[byteme]

I predict that the only customers Netflix will lose over this are the small minority of folks who have so little patience they lose their minds when waiting 3 minutes for microwave popcorn. The rest of us will barely notice the difference.

I only buy a small handful of DVDs each year because there are only a few movies I care to see more than once or twice. Those that I do buy, are usually purchased long after they are released for sale, when the price comes down to a more reasonable level.

If Hollywood wants to sell more DVDs, the lessons to take from this are:

1) Price your DVDs lower

2) Make movies that are worth seeing more than once

3) Stop being greedy; it's not attractive. Three homes, two yachts and 5 BMWs are plenty

[Jeff Chambliss]

1. If you are like me, if you are not lucky enough to get a popular New Release the first day it is out, you are stuck on Long Wait. So you are basically waiting an extra month for new releases anyway.

2. If getting the releases later means cheaper for Netflix, maybe they can get more of each title so those Long Waits go away, making it a zero-net wait for new releases.

[Gary]

Netflix has consistently said that they will expand their "Watch Instantly" library when they can afford the cost necessary to do so. If the savings that come from a delayed release date are put toward this, that's a huge benefit for customers.

[Gran]

@Bob Emmerich
The problem is charging extra whether or not you actually receive any blu-rays in a month.

That's only an issue if all you watch is new releases.And that issue crosses over to DVDs as well.

I have never had a wait on a BD.

[Scott]

Unless someone has a terminal disease, what difference does it make whether they see a DVD when it comes out, or see it a couple of months later? It's not like there's not plenty of other stuff to watch. If someone is *so* hot to see a movie, they probably saw it in the theater anyway. This doesn't seem like a "need" so much as a typical american consumer attitude of "it's there, I want it NOW" or "he has it, I want it too."

Besides, in reality, hot new releases often have waits now as it is, and many of us don't get them until a good deal later anyway.

If someone is SO in need of new releases right away -- even under the current plan -- the best thing is probably to go with a blockbuster program that comes with some included in-store rentals. You're much more likely to get the new title in-store than by either mail service anyway.

[Jack]

I'm a Netflix member AND a shareholder and I agree with many of the other posters - this is a dickish move. It's short-term gains in terms of a bottom-line, but long-term it's going to cost money.

How much does it cost to recruit a new customer after you lost one due to churn?

[Larry Dallas]

I NEVER miss getting a new title the day it comes out....ever.

Just sent back movies on Saturday that equal the number of new releases coming out that next week and BAM! Fresh, clean, crisp movies on Tuesday.

[Ramon]

All I can say is that if Netflix gets this, and they end up lowering costs, it better be passed down to us. We deserve it after all these price increases and waits. If I don'te a decrease in my fee's, then I'll just have to move on. I can find movies bootlegged here in New York for cheaper.

[Seth]

"I predict that the only customers Netflix will lose over this are the small minority of folks who have so little patience they lose their minds when waiting 3 minutes for microwave popcorn."

That's about 90 percent of their customers. Seriously.

[Mark]

Netflix should use the lower price to buy more copies of a new release, so it would be a month late but then people would be able to get it soon after that without long waits.

If they explain the 30 day window this way it will fly, otherwise many people will reject them. My suspicion is they will instead say they are putting the savings into licensing more streaming titles, which will make people happy for a little while, until they realize new releases still aren't on streaming.

[Gran]

@Ramon

and they end up lowering costs, it better be passed down to us
Rather, it might be used to keep costs from going up.

We deserve it after all these price increases
All what price increases? NF is still one of the best bargains out there. Still not good enough huh?

I can find movies bootlegged here in New York for cheaper.
Then why are you not doing that now?

[david]

the only problem i see is that the studios are making such disposable movies, that with the extra 30 days, i may no longer "get" all the pop culture references they've shoehorned in to impress the all-important tween market.

so that's a concern...

[Nicole]

I don't mind waiting a very long time to watch new movies after they are released as long as it's free. That's why I get my dvds from the public library :)