Netflix has recently announced a deal with Warner Bros. which will see new movie releases on the service delayed until a month after the DVD/Blu-ray release. But that isn’t a very big deal, and Netflix has, in return, secured its future as a prime video streaming business.
Netflix’s Core Business
Netflix’s core business has always been movie rentals by post, and it still, at least for the time being.
However, Netflix is a forward-thinking company and knows that the world is moving away from physical media and towards a future where digital media rules supreme. Both digital downloads and streaming will likely be the norm within a decade.
Netflix has offered a streaming service to subscribers, named ‘Watch Instantly’ for a few years now. But it has recently started promoting it quite heavily, and seems to be heading for a time when a streaming-only subscription will be available both in the U.S. and beyond.
Netflix’s Warner Bros Deal
Netflix yesterday announced a new deal with Warner Bros. that has mixed implications for its customers.
In a compromise on both sides, Netflix loses the right to rent out Warners movies on the same day as the DVD release, instead having to wait 28 days. In exchange, Netflix has secured a lower per-unit price on discs, meaning it will be able to spend more money on the new releases, securing more copies of each film.
Even more importantly, Netflix has managed to squeeze three times as many titles out of Warners for its streaming ‘Watch Instantly’ service. Which is going to become more important to the company as each year passes.
Bad For The Company, Customers?
Some commentators, most notably MG Siegler of TechCrunch, have intimated that this is a bad deal, both for Netflix and its customers. But I disagree, as do many of the commenters on the article, and other people in the video business.
Pure and simply, Netflix has taken the path of least resistance. It has chosen a long-term relationship with Hollywood which will ensure a healthy streaming business in years to come, and only given a very insignificant thing away.
What About Piracy?
Some people have argued this will increase the rate of piracy. But I can’t see it. Will waiting a month for a movie really mean people cancel their Netflix subscriptions and turn to less legal means of acquiring content? I doubt it very much.
