Posted on Wednesday, January 6th, 2010 by Russ Fischer
The slumping DVD business has caused a lot of consternation at film studios, which rely on DVD revenue to buoy profit margins. Now Warner Bros. has restructured the deal under which Netflix offers the studio’s discs to subscribers. Starting this month, Netflix will wait 28 days after the release of new Warner Bros. DVD titles before offering them to subscribers.(This probably isn’t the sequel to 28 Days Later you were hoping for.)
This is the same deal that Warner Bros. has with Redbox, and while the Redbox terms led to a lawsuit, Netflix has accepted the new structure in exchange for other terms favorable to the rental company.
An inkling of this deal was first heard in August, and the LA Times reports that Netflix has agreed to the 28-day “sell-through” window in exchange for “improved financial terms, higher inventory levels and increased access to content for its online streaming service.” In other words, the studio is betting that taking less money from Netflix for DVDs after a 28 day delay will be more than offset by retail performance of each DVD.
The latter point is also interesting. Netflix has really been pushing the streaming service by highlighting it on the website and offering access via set-top boxes, connected Blu-Ray players and video game consoles. Given that streaming content eliminates many of the issues inherent to distributing rental DVDs by mail, the new priority given to the service isn’t a surprise. WB has a massive film catalog, and if more of that is made available to stream, it will help the service quite a bit.
The question now is how long other studios will wait to follow WB’s lead, and what terms Netflix will accept in exchange for delayed rental windows. Universal and Fox have already waged campaigns against Redbox, so expect to hear soon that they’re following in WB’s footsteps.