Here’s some news from Video Business. Netflix is in discussions with Fox, Universal and Warner Bros. regarding the institution of a 30-day delay on renting out new releases in exchange for being able to buy discs from the studios at as much as half the current price. The studios have been concerned with the rapid growth of online renters, like Netflix, and kiosk services, like Redbox, and the bite they’re taking out of home video purchases. The studios are already denying Redbox new releases for that time period, though this has resulted in lawsuits. For the time being Redbox is buying from retailers in order to provide their stock.
“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.
While Netflix claims 70% of its business is in catalogue titles, I don’t see any indication for why consumers should be happy with this. Would some of Netflix’s savings be passed on to its customers in the form of cheaper subscription rates? Or would they perhaps buy more stock of those new releases so those who want them can get them sooner? Of course, a healthy industry ultimately helps keep this content coming, but if Netflix subscribers, like myself, saw nothing out of a potential deal like this, that would be a tough pill to swallow.
“The economics with Netflix don’t work for us,” said another studio source. “There are several ways to change the outcome, one way is windowing, rev-share or acquisition price. But the economics need to change.”
There’s little doubt change is coming, but my cynical side says consumers are going to get screwed.
