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Warner CEO Jeff Bewkes has made several dismissive comments about Netflix over the last few weeks. At a recent investor conference, for example, Bewkes laughed off the rise of Netflix, comparing it to the “Albanian army taking over the world.”

David Pakman, a partner with venerable venture capital firm Venrock, thinks that Bewkes and other Hollywood content owners are being short-sighted and anti-consumer with their current policies. Pakman’s entire interview on the subject, found on TechCrunch, is fascinating and worth watching. Some highlights are after the jump.

Bewkes (and Hollywood’s) Closed-mindedness

“[Bewkes and others’] anti-new distribution platform point of view is very typical of content owners—we saw this with the music industry . . .  [Warner and other rightsholders] act irrationally and not in their own economic self-interest.”

Netflix and Piracy

“You need services that are delighting consumers and which consumers are paying for content so that they aren’t stealing. And Netflix is proven to help ward off a lot of piracy because it’s easier to stream from Netflix than it is to use one of the crazy torrent sites.
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Why Hollywood is Anti-Consumer

“What you want to do as a content owner is to lower the friction in people getting and buying your stuff. All [of Hollywood’s] licensing barriers and usage rule barriers stand in the way of you doing it  . . . The reason Netflix exists is because the Blockbuster pricing policies were inconvenient and a problem for people.
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Late fees suck.”

(via TechCrunch)

12 Responses to “Venture Capitalist: Warner’s Bewkes & Other Execs Acting “Irrationally””

  1. Member [Join Now]

    This guy is an idiot. Comparing Netflix to the Albanian Army taking over the world? NF is here to stay you big dummy!

  2. Member [Join Now]

    This guy actually seems to get it – unlike a lot of the analysts that are quoted here.

    Imagine that – entertainment content providers being anti-consumer!

  3. Visitor [Join Now]
    Firstlawofnature [visitor]

    Make no mistake about it, what Bewkes is really saying is that consumers are not paying enough for content. The battle is therefore between consumers and content owners. Good luck to Bewkes in trying to turn those single dollars back into $15.

    • Member [Join Now]

      The days of people shelling out $10-$15 for DVDs are gone as are the days of paying $5 for a DVD rental. In a battle between consumers and Hollywood, consumers will win. End of story.

  4. Member [Join Now]
    Alan Smithee [8traxrule]

    I still laugh at people who consider $10-15 for a DVD to be ‘high’. They obviously weren’t around when laserdiscs were out, those sold for $35-50!

    • Visitor [Join Now]
      Joe Schmuck [visitor]

      Or, how about paying $80.00 or more for a VHS tape.

      • Member [Join Now]

        I’m in my late 30’s, but even I can remember looking at VHS tapes and wondering why they were priced so damn high. $99.95 was the base price, if I recall correctly. But then, as time passed, the base price dropped to $24.95. This is when my mom said “Okay, we can buy Star Wars”.

    • Member [Join Now]

      I remember those prices for the $35-40 price tags for lasrerdisks and remember the $70-80 pricetags for VHS when they first came out. I also remember that very few people bought either of those media at those prices.
      You had to belong to one of those movie clubs in order to actaully be able to afford a decent number of movies. Rental store would pay the VHS price tags because they could eventually make a profit by renting a number of times. Laserdisks on the other hand were never really mainstream and were only a niche market.

      I didn’t actually say that $10-15 per DVD is too high, but the idea that you want to own a large collection of originals and shell out $10 for each one is gone. Over time, people’s perception of the value of a movie has continually dropped. In 1980, the idea that you could actually own video content was amazing and people valued it accordingly. Now people will cherry pick a few movies to buy and then only if the price is around $10. The trend will not go the other way especially with the general state of the economy these days.

  5. Member [Join Now]

    Awesome interview! Down with gatekeepers and “consumer unfriendly” practices. As always, follow the money trail… Netflix is succeeding because they came up with a business plan that allows for buffet style viewing at an affordable price as opposed to tons of a la carte charges, fees, etc.

    As for Bewkes specifically, it should be noted that he was addressing a group of investors and/or stockholders so it makes sense that he’d be blowing some smoke up their rears. This is his “job” after all.

  6. Visitor [Join Now]
    russ [visitor]

    Intellectual Property controllers have been anti-consumer since the printing press was invented. Congress keeps extending copyright protection beyond reasonable limits and then there’s shock that piracy is going on. The industry and Congress creates the problem themselves.

    The original 14 + 14 protection was fine for two centuries, then greed set it. The funny part is the pace of technological change is faster than 14 years at this point so Congress is essentially enabling anti-consumer behavior because the IP extensions merely enable laziness and incompetence.

  7. Visitor [Join Now]
    Jon [visitor]

    I am a theater owner so I think all of this is interesting. The most interesting part, is the idea that Hollywood spends an average of $60M to make a movie and the “consumer” feels entitled to determine the price of that content. The stick is that if the “consumer” doesn’t like the price they will just steal it? Why? Because they won’t get caught.

    This will not continue as the government will step in and end the wild west atmosphere on the internet. If content providers want to do stupid things than it is their right. They have invested and taken the risk to create a product. They are the ones entitled to do what they want with that product. If the “consumer” determines that they do not see the value than they do not need to pay for it. However, stealing is not a valid argument EVER.

    There is too much supply of content to meet the even crazy demand. We are spoiled. However, the pirates and consumers have so de-valued content that we are in for a violent change. Why would anyone risk in investing in content today? Let me see, I can spend $60M to have two weeks of $25 premium video on demand? Then I can make bubkus on netflix and itunes? I can make money in the theaters global, but once I shorten the theatrical window than I make nothing on any window? Eventually, I just don’t make movies…not worth it.

    Thank goodness I own theaters. I am part of an 11B market. Someone will always be happy to make content exclusively for theaters as long as I provide quality venues. My home theater is better than yours. Just like the old playhouses, the theaters will find a business model that works. You may have to pay more, but who knows, you may get a foot massage while you watch your movie.

    I just hope one day I can charge one price for movie, popcorn, and drink. The silly studios don’t get that bundling would increase movie attendance by 10%.



    • Member [Join Now]

      I love how you lump pirates and consumers in the same category. (Not!) What I don’t understand is if you are a movie theater owner, how can you have such contempt for consumers? Aren’t they your customers? Don’t they allow your business to succeed? I want your business to succeed. I like movie theaters. But what you and every other business owner need to understand (I think most already get it) is that consumers only have so much disposable income. You can rant all you want about pirates and the government cracking down on internet piracy, but at the end of the day, if we can’t afford your product, it is doomed to fail. The music companies complained about how internet piracy was taking away large amounts of revenue. They went after the ‘pirates’ but their sales volume did not go up. They had to accept that most people were only interesting in buying individual songs off the internet. Times change, business models need to change with them.

      One more thing. If you seriously believe that the government should control internet activities, you should consider moving to a country like China or Venezula where they have similar beliefs. I know that the FCC would agree with you, but there is still a majority of Americans that don’t want a nanny state controlling our every move.