Despite some well-publicized missteps and setbacks, Netflix remains one of the power players in the movie rental business. Their streaming content library continues to grow, and at least some of the company’s attention remains fixed on its shrinking but still robust DVD business. But is Netflix missing an opportunity?
Netflix currently offers a streaming catalog that is largely focused on older, catalog titles. A smattering of new, original content is in the offing, but the company readily admits that new releases don’t drive its business. On the DVD side of things, Netflix faces new release delays on some of the discs it buys. With its streaming service, Netflix has faced steep cost increases for content, especially newer titles. These factors all contribute to Netflix’s current state of being, which is firmly rooted in older content.
What would happen, however, if Netflix decided to go after the new release market with its streaming service? How could the company satisfy Hollywood’s demands for profit and still offer an appealing value to its customers?
One option that might produce the best results would be going the Amazon/iTunes route in which the company would charge a one-time fee for a streaming rental of a new release. To assuage the studios, the pricing and expiration period on the rental could be similar or identical to those of Netflix’s competitors. For example, Meryl Streep’s The Iron Lady is currently available on iTunes and Amazon as a standard-definition rental for $3.99. Both services offer a 30-day period for you to begin viewing your rental, with the iTunes rental expiring 24 hours after viewing begins and the Amazon rental lasting for 48 hours.
Netflix’s large, relatively loyal customer base could be presented with this new release rental option with the same type of prompt employed by VOD services, and it makes sense that many customers would make a quick “impulse buy” that adds just a few bucks to their monthly bill.
By offering new releases alongside older catalog titles, Netflix’s streaming service could finally feature a content set that appeals to renters regardless of their film preferences. By employing a similar model to that of iTunes and Amazon for new releases, Netflix could keep the studios happy and fill a large gap in its content offering.
Time for you to weigh in, Insiders. Can you picture Netflix ever making such a move? Would doing so increase the company’s revenue and market share? Or should Netflix stick to doing what it does best and leave the ephemeral new release market to its competition?
I hope NetFlix can keep things as they are..
I don’t use Amazon. I understand the price will go up a bit in the next few years. But really 95% of the new movies are trash.. I use NetFlix online for the Old Good Movies..
And have Block Buster two out at a time for any DVD I want to watch on my great set up here at home..
And I can hit RedBox.. If I like.
I really don’t care about the delay bit.. It can be 90 days for all I care! ..
NetFlix is a great company. I would love to be able to watch newer movies with the family and not have to run out and get the movie. I would pay extra for the convience of staying at home and not having to run out to get the new movie releases.
I’m surprised Netflix hasn’t done this, yet. I don’t rent movies for $3.99, but it would be an option that I might one day use. I wait for the movies to reach Redbox.
I prefer to get the movies for the $1.20 from RedBox. I can’t see paying $3.99 to watch VOD. BUT… I can’t say I won’t eventually do that. With the price of gas like it is, I might consider it if the price of RedBox rentals go up.
I don’t rent from Block Buster Express any more due to them going up to $3.00 & $2.00 for new releases. Not worth it to me.
I realize everyone has to be able to make some sort of a profit on their business,
BUT lets think about the people who can no longer afford to go to the movies things like this become their only form of entertainment. Why can’t companies try to consider that during times like this, and keep the prices as low as possible.
Couldn’t some studios just *bypass* the middlemen [like Netflix, Amazon and ITunes] altogether?
Certainly Disney and Pixar could stream *directly* to viewers. There currently is no legal restrictions prohibiting direct-distribution.
I like your idea of direct distribution and it could translate into products as well. I can envision Disney and Pixar themed streaming consoles, special content available only through their service, discounts to the amusement parks for certain service levels, and so on. When you have a child that is Disney and Pixar “mad” such a service would be tolerated, even at a less than likely low cost.
“Their streaming content library continues to grow…”
When I read this, I spat out my soup. I finished my netflix trial and they pretty much stopped getting movies. They have some good tv shows but after that, netflix is pretty useless. It is more about tv shows with them nowadays. Compare the netflix of 2 years ago and today’s netflix. HUGE DIFFERENCE…. And I think it would be a bad decision for netflix to stream new releases. So they want us to subscribe for their monthly fee and then charge us $3.99 for movies that they really should have had for free to begin with?
I just won’t pay $4 for a home rental movie, period. If I feel a movie is worth that much I will pay the $2 more and see it during one of the first show times of the day for $6 at the cinema.
Perhaps if movies were well written, acted, and supported magical escapes I could justify a high cost for the experience. Every now and again something will come out that I feel is worth the cost of the cinema experience and I pay it.
Maybe I am an odd duck in that I just can’t justify the cost for a $4 rental. I see movies in markdown bins all the time that are only 6-12 months old and they are being sold, brand new for $3 – $5 dollars. I will wait to see a film and save a dollar or two. Netflix changing its offers would not earn me as a customer again.
Netflix could do this but charge less than Amazon and iTunes due to the subscriber base they have. There is no reason they could not offer streaming of new releases at the same price one can get a disk at Redbox. Not only would that allow Netflix to compete against itunes and Amazon but it would all but eliminate Redbox as a competitor.
I will never pay $3.99 for any movie new or old. Netflix has the best variety of movies, documentaries and tv shows.
I have been with Netflix for 6 years and use Redbox sporadically.
Netflix is clearly leaving money on the table in more ways than one. BUT, I don’t mind since I’m a CSTR investor, not a NFLX investor. CSTR is going to pick up that extra $1 in ARPU that NFLX is not capturing.
I can see “has run” movies at a local cinema on a hi-def projection system for $3. No way will I ever pay the same to stream a “rental”. I have a 20 mb connection to the internet but still refuse to pay for a streaming HD movie. If I want a newer movie, I use Redbox.
Part of the reason I like netflix is I pay my $8 a month and I have the buffet of whatever they have been able to acquire for streaming. If they go this route they would just be another competitor among amazon, itunes, and your cable provider. Besides, is the VOD at $4 a pop that big a market? Who rents these movies for that much when they are $1.20 at a redbox?
I will not pay the four dollars for new release when I can get at redbox and some for free if you have the right code.
with the iTunes rental expiring 24 hours after viewing begins and the Amazon rental lasting for 48 hours.
There is no reason for any this-movie-will-self-destruct-in-X-seconds crap. It was a stupid idea with Divx and it’s a stupid idea for streaming. And it’s certainly stupid when it costs MORE than Redbox for FEWER days!!
I don’t really think that’s where they should be focusing their efforts; a lot of people really like the subscription model precisely because it’s easy to fit into their budget. Seems like they should be fighting for more content for their streaming service, since it gets pretty stale pretty quickly, and that’s actually 95% of the reason why, when a coworker at DISH told me about the Blockbuster @Home service, I made the switch. I haven’t been disappointed either. Blockbuster @Home gives me a lot more options with its movie channels, streaming and movie and video game rentals through the mail, and because of that, none of the content gets stale. There’s always something to watch on movie-night now.
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