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money20stacks1-300x273Chutzpah. It’s a great Yiddish word that implies daring, audacity and even arrogance. It also perfectly describes the actions of three major Hollywood studios lately. Universal, Warner Brothers and Fox, while still deeply mired in a messy lawsuit with Redbox, are now starting to put the squeeze on Netflix. The reason is the same: the studios aren’t happy with their end of the deal and want more money.

According to BusinessWeek’s sources,  Warner has given Netflix a “‘take it or leave it’ style offer: pay the studio more or pay a lesser amount and receive DVDs sometime after they are shipped out to retailers like Wal-Mart, Best Buy or Blockbuster.” Universal and Fox are also alleged to be involved in other, similar negotiations. The studios clearly feel threatened by the much-discussed decline in DVD sales, and are attempting to gain a larger share of rental market profit to compensate.

This is a complicated issue that has burned up a lot of pixels on this website and many others, and has supporters on both sides of the fence. I’m fully aware that studios are in business to make money first and foremost—quality products and customer relations are ancillary to the bottom line. That being said, consumers vote with their wallets, and being perceived as bullying, out-of-touch and greedy doesn’t do a company any favors, a fact Redbox is attempting to leverage.

Are the big bad studio execs just trying to grind a few more shekels out of poor, innocent Redbox and Netflix? Or is this a reasonable, long-overdue correction to a flawed pricing arrangement? As always, Insiders, we want your thoughts on the matter.

[via BusinessWeek]

17 Responses to ““You’re Next!” Studios Tell Netflix”

  1. Visitor [Join Now]
    infrared [visitor]

    I don’t know why the studios do not perceive Redbox and Netflix as doing them a favor. I am much more likely to take a chance on a $1 rental than a $5 one. If I love the movie, I very well might buy it. There must be thousands of people with the same mindset.

    Declining DVD sales are likely due to lack of non-essential consumer spending and hundreds of “crank-’em-out” films. Get with it, Studios. Update your corporate thinking and respond to current market conditions. While you’re at it, produce on average a higher-quality product. There have been some fantastic, original, creative movies made in the current and past few years, but they are far outnumbered by the duds. Why not focus on the gems and produce fewer movies?

    The 30-day proposed waiting period for new releases seems like pure greed and chutzpah. (I agree, Shane, great word.) However, I can also see it as a potential compromise that might mitigate this complex situation. We can wait 30 days if we have to.

  2. Member [Join Now]
    lakrow [jbromert]

    It’s been mentioned before that the movie studios, like the music industry before them, don’t want to change with the times but, like the music industry, will likely have to at some point. What I find really funny (even ridiculous) is that people seem to have forgotten that even before the music industry gave the movie studios a good example of how NOT to change with the times, the movie studios were their own example. It was about 30 years ago now (I think) that the movie studios were SURE that video tapes were going to destroy their industry. They sure were right about that – NOT! They had to be dragged kicking and screaming to change with the times AND to greater profits.

    So, yeah I think the studios are greedy, but what’s funny is they don’t need to be. If they made it a point to continuously change with the times/market instead of fighting it like they did with video tapes, I think they would raise their profits and make customers happy. Anyone remember the phrase, “The customer is always right”? If the customers are unhappy they won’t be your customers for long.

  3. Visitor [Join Now]
    John Small [visitor]

    Do the studios need Redbox and Netflix more than Redbox and Netflix need the studios?

    The answer is no. Without the studios, Redbox and Netflix do not have a business model.

    This happened to Blockbuster multiple times over the years. The studios want a bigger piece of the action. Netflix and Redbox will have no choice but to give it to them just like Blockbuster did.

  4. Member [Join Now]

    As someone mentioned above, the studios aren’t putting out as good of movies as they have in years past. Look at how the films do at the box office…they rake in the cash in week 1 and then the revenue falls off a cliff, then on to the next big hit. It seems like the QUANTITY of GOOD films is far outpaced by the poor QUALITY of films anymore. I see more movies now than I have ever seen-thanks to RB and their $1 rentals-but I will admit that most of them I could barely stand to watch once, let alone go out and buy a copy to watch over and over again.
    Here’s a good response to “Joey”…Last March, when “Twilight” was released on DVD, NO ONE was renting one at the Redbox but buying a copy. I was the lone person at the RB kiosk renting a copy. So yes, there are occasions when the sale of DVDs outpaces the rentals…and this is a good case of that happening.
    Also…I’m sure a blind person saw the Netflix backlash from the studios coming. I’m not against a fair deal for BOTH sides, but a sweetheart deal that the studios want, like they have had with the naive BB, is a thing of the past.

  5. Visitor [Join Now]
    Pete [visitor]

    I don’t care how long I have to wait to watch a movie for a dollar. I’m not ever going to buy another DvD movie again.

  6. Visitor [Join Now]
    mike [visitor]

    Did the movie studio’s every think that maybe people can’t afford to buy dvds right now? It’s like trying to drink water from an empty bottle in a way. There comes a point where there’s no more money in your budget and spending 5 bucks on renting a dvd isn’t an option. If the movie studios believe the economy is only affecting themselves, they are greatly mistaken. It’s hurting every one and trying to get more money from consumer is more likely to detract customers. I’ll say it again, You don’t need to pay Sarah Jessica Parker and Brad Pitt 10 Million dollars to make a movie. That’s just way overpriced. Maybe if the movie studios didn’t do that they’d make more of a profit….

  7. Visitor [Join Now]
    Sean [visitor]

    About the 30 day window: I find it unnacceptable. It’s got nothing to do with impatience either. I wait patiently for months for a movie to come out on DVD in the first place. Now once it’s out they want me to wait longer just because I want the fair option of renting by the night??? I don’t think so.

  8. Visitor [Join Now]
    Steve [visitor]

    Let’s see, wait 30 days and pay $1 or wait 0 days and pay $4-5 for a rental. Gosh now you movie studio execs, do you really think 30 more days is going to kill me? You Hollyweird types need to get out into the real world amongst people who DON’T live in $10+ million dollar houses and drive $100+K cars. God forbid that you might actually have to cut A-list actor’s salaries down to only a million or so per film and cut your own salaries down to [gasp] less than a few million per year. Could it possibly get so bad that you have to give up the house in South Beach … and the girlfriend who lives there? Well stay tuned, your rude awakening is coming.

  9. Visitor [Join Now]
    Tamera Rhodes [visitor]

    It all boils down to one BIG fact! The economy is deteoriating and nobody wants to lose any $$! Regardless of where, how and why they got theirs! The unemployment rate really says it all! How many of these people [citizens of our country that make up our country, unemployed] do you think are going to be able to visit a movie theater to see a movie? How many do you think will buy a movie? How many do you think will rent a movie? Now, even more clearer, how many will rent a movie for a buck? And not even have to set an appointment to view it! The statistics says it all! And our constitution says, “We the People…..”!!

  10. Visitor [Join Now]
    angry jerry [visitor]

    if the the studios want to go to war with consumers like me….lets rumble!
    i can wait as long as i need too.there are many other entertainment options available to me.i am never doing buisness with blockbuster again so forget about that and i will continue to give redbox and netflix my full studios you know where you can stick it…

    • Visitor [Join Now]
      gomakemeasandwich [visitor]

      I agree; Blockbuster is such a joke at this point that the last time I even remember going in one was to buy a coke. If the movie studios are stupid enough to seriously choke off the only companies that are providing the movie studio garbage at a reasonable price (Redbox and Netflix), then I’ll find other entertainment options.

  11. Visitor [Join Now]
    jeannie [visitor]

    I am not a huge movie person, like so many people are, but then, I seldom see a movie that I enjoy to the extent of purchasing it. So, a $1.00 is about all anybody is going to get out of me. I agree with several of the commenters; give us something fit to watch and we’ll buy them. That probably isn’t going to happen, so, GO Redbox!!

  12. Member [Join Now]

    Hey studios – $1 for a legal rental with the possibility of buying the movie if I like it vs. $5 for a bootleg version that helps no one but criminals. If you can buy a good quality bootleg before the movie even comes out – there’s no chance of ever buying a legal DVD.

    I think Redbox & Walmart’s blue box is a great way to keep people away from bootlegs.

  13. Visitor [Join Now]
    jack [visitor]

    I for one will never pay $5.00 for a rental. I guess I have a few times (5+ years ago), but never more than $1.00 again. I am so sick and tired of these studios putting out junk movies (for the most part) and then expecting us to fork over high dollar amounts to buy or rent. I use both RB and netflix. I have only bought one movie this year (there’s been NOTHING released worth owning). Put out DECENT movies and maybe sales will improve!