We’ve already heard about at least one major studio putting the squeeze on Netflix to obtain more favorable terms. Now it appears that something more wide-reaching is afoot. According to the Los Angeles Times, several unnamed major studios are considering a new policy that would impose a moratorium on ALL DVD rentals for the first few weeks a title is available for sale. The plan’s obvious aim would be to push more consumers into purchasing titles, a transaction that is much more profitable for studios than a rental. Studio sources consulted for the story stated that “such plans were under consideration and probably would take effect next year.”
According to the Times, “Under the plan, new DVD releases would be available on a purchase-only basis for a few weeks, after which time companies such as Blockbuster Inc. and Netflix Inc. would be allowed to rent the DVDs to their customers. The move comes as the studios are grappling with sharply declining DVD revenue, which has long propped up the movie business.”
Reed Hastings, CEO of Netflix, is quoted in the story saying that he has already discussed such delays with several of his suppliers. Said Hastings:
“The studios are wrestling with declines in DVD sales while the DVD rental market has been modestly growing. . . One of the mitigating steps some are considering is introducing a DVD retail sales-only window for a few weeks.”
Hastings went on to add that depending on the details of the arrangement, the delays could have a positive impact, as studios may have to offer rental companies lower wholesale pricing to obtain their acquiescence.
“If we can agree on low-enough pricing,” observed Hastings, “delayed rental could potentially increase profits for everyone.”
Interestingly, a Redbox spokesman consulted by the Times gave the impression that Redbox would go along with a sales-only window if it wasn’t the only company placed under such stipulations, since a blanket rental delay would level the playing field.
Would an inability to rent a title the first month or so it was available push you into buying more movies, Insiders? Could this be a canny move by studios, or is it just one more example of Hollywood’s insular thinking and devotion to an obsolete business model?
[via The L.A. Times]