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The beginning of a beautiful friendship?

This week’s big news, the Warner/Netflix deal, was the result of major compromises by both sides, and may or may not be a positive development for Netflix customers. So says the New York Times, which recently interviewed Kevin Tsujihara, president of the Warner Bros. Home Entertainment Group and Netflix CEO Reed Hastings.

When asked about Warner’s side of the deal, Tsujihara was quite forthcoming about his company’s margin-based motives, saying that “[Warner] didn’t want the availability of its films on Netflix to prevent people from paying full price to buy DVDs at retail.”

Warner was willing to seduce Netflix into the deal by compromising on per-unit prices of its titles after the 28-day delay, as well as opening more of its catalog for Netflix to stream.

Hastings referred to the situation in Europe, which has no First-Sale Doctrine and allows studios to have iron-fisted control over DVD rental windows, as something Hollywood lusts after for the domestic market. He went on to say that his company was willing to compromise because “our number one objective now is expanding the digital catalog.”  Hastings reiterated that Netflix’s streaming service won’t be obtaining new releases from Warner, but rather more of its back catalog.
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“It’s not that much of a breakthrough,” Hastings concluded, referring to the lack of new release streaming titles.

The deal should, however, have a positive benefit for Netflix subscribers when it comes to the much-maligned “throttling” more frequent renters have to deal with on popular titles.
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Once the waiting period is over, Netflix will be getting a better price on DVD and BD discs and will theoretically be able to have more copies of the most desirable Warner titles in stock.

Insiders, we know many of you are Netflix subscribers in addition to being Redbox fans. Is this deal in the best interest of Netflix’s customers? Did the company compromise too much in its pact with one of the Hollywood Three?

[via The New York Times]

12 Responses to “Netflix CEO: Warner Deal Not a Breakthrough”

  1. Member [Join Now]

    I think the deal stinks for the consumers. The greedy content suppliers are trying to grab as much $$ as they can for as long as they can. New streaming titles will be movies no one wants to see (i.e. they can’t sell them any other way)…

  2. Visitor [Join Now]
    Volcanicast [visitor]

    For me personally, this is great. Other than a few movies that I’m willing to wait months for, I don’t care at ALL about new releases. Netflix: Make this deal with every studio and I’ll be one of your happiest customers.

  3. Member [Join Now]

    This only affects the netflix users who want to rent newer films, and Hastings says that’s only 30% (but that’s 3-5 million customers!) of the Netflix user base. How many of these people buy? How many rent from netflix before buying?

    Netflix will probably not suffer much from this, but Warner could see sales decline anyway as customers refuse to buy without renting and repeatedly continue to decide “well I waited 4 weeks to buy this movie, what’s another 4 weeks?”

  4. Visitor [Join Now]
    Dave [visitor]

    I think this will help REDBOX tremendously if they could get their hands on those new titles before that 28-delay. Even if they buy retail.
    Another possibility is that this will increase movie pirating. As people that know how will look at other places to get the new releases.

  5. Visitor [Join Now]
    David [visitor]

    I don’t care waiting months for new releases. Way to go Netflix.

  6. Visitor [Join Now]
    Turtle wins [visitor]

    I doubt Warner wil see an uptick in sales. No one I know of buys DVDs anymore unless it’s a children’s title or a classic. There’s so much competition for entertainment dollars these days that people have plenty of other things to watch during that 28 days. So for most people it’s a non-issue. Warner is just delaying the inevitable, and it may even backfire. I subscribe to Netflix, but mostly for the streaming content that I watch (in Dvd quality) on my Internet-connected Blu Ray player. I rarely use the “one DVD at a time” feature. But I like independent and foreign films that haven’t been dumbed down.

  7. Visitor [Join Now]
    HP [visitor]

    If I can wait months for a dvd release, then I can wait 28 more days for Netflix to deliver. I really want more streaming titles and Netflix made the smart choice to keep me as a customer.

  8. Member [Join Now]

    I think it sucks….I want new releases and could care less about streaming old movies I’ve already seen! Screw Warner Bros.!!! At least Warner Bros. doesn’t make as many good movies that I actually WANT to see as some of the other studios–if Netflix made this deal with every studio I would have to reconsider my subscription (I am on the 6 at a time plan and have been a customer for 5 years now). Thumbs way down!!!

  9. Visitor [Join Now]
    Jack [visitor]

    I won’t be purchasing any more than I already do (which is very LITTLE). I rent about evenly from netflix & redbox (getting new titles from redbox when netflix shows a long wait). Redbox needs to do their best to get new releases as quickly as possible. I think do think netflix caved in too early though.

  10. Visitor [Join Now]
    Adam [visitor]

    These people don’t understand that DVD “Sales” are dead. Streaming is the future and it’s here now. If your ordering from Netflix (which has anemic streaming selection) or getting pay per view from Comcast (which has a much better selection of just released content) your no longer out at Blockbuster renting DVD’s and certainly not buying for that matter.

    Have they been to a Blockbuster lately???? Dead on a saturday night. all titles are available and no one’s there.

    Wake up!

  11. Visitor [Join Now]
    Branden Sedberry [visitor]

    Nice one! If I could write like this I would be well happpy. The more I see articles of such quality as this (which is rare), the more I think there could be a future for the Web. Keep it up, as it were.