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Here, workers sort DVDs at a Netflix distribution center. Soon, they'll be taking a break before sending you those new releases.
News broke yesterday that Netflix had made a deal with Warner Brothers in which, among other things, it would agree to a 28-day delay in renting out the studio's new releases. What that means is that for the first 28 days the movie is out on DVD, you will be able to buy it (or possibly rent it in some more expensive way), but you won't get it from Netflix.
This, of course, is not going to make Netflix users happy. Other studios seem awfully likely to want similar terms, so the ability to snag a newly released DVD from your mailbox looks to be endangered.
The possible upside and whether this will work, after the jump.
It may not be all bad news, however. Among the things Netflix got in the deal is supposed to be greatly increased offerings for its live streaming service — which is the way I primarily use Netflix myself these days. You never know what that's going to include until they tell you, and it could certainly turn out to be access to a junkyard full of movies nobody cares about. But if this were to actually pan out, a user like me could potentially come out ahead, because I'd much rather have a larger selection than immediate access to new releases.
Studios will undoubtedly watch closely to see whether, as they hope it will, this actually bumps up DVD sales (which have been dropping). I have to say, while the theory behind the strategy is obvious, and while I'm sure they have market research that suggests this is going to work, the logic escapes me somewhat. I can't personally imagine buying an entire DVD just because I otherwise have to wait 28 days to rent it. If I cared so much about it that I could not wait 28 days to rent it, I'd presumably have seen it in a theater, and if I saw it in a theater and still am anticipating it so much that I can't wait four weeks for my opportunity to see it again, I probably like it enough to buy it anyway, no?
I can more easily imagine a bump in on-demand purchases on cable, I guess, but are people already paying for Netflix going to buy a lot of on-demand movies — again — strictly because of a four-week waiting period when they've already waited five months or so since the theatrical release?
The question will come down to the market value of avoiding a 28-day delay on a movie that the consumer would otherwise not buy, so let me ask you this: Assuming we are talking about movies you would not buy anyway, what would you pay to get hold of a movie 28 days sooner?