Netflix has no qualms holding back new DVD releases for 30 days, and is in fact negotiating deals with Hollywood studios to do so.
Movie studios like the idea of delaying new releases through certain outlets because it gives them a chance to drive up early DVD sales. If you can't go to Redbox or rent through Netflix, the logic goes, you're more likely to purchase the DVD outright, or at least go to a brick-and-mortar rental store where the studios have revenue-sharing agreements in place.
While the studios have tried to force release delays on Redbox, which rents movies for $1 per night through self-serve kiosks, Netflix is taking a proactive approach and negotiating a deal, according to Video Business.
Right now, money is the sticking point. Netflix wants to reduce its inventory payments to movie studios by as much as half, but none of the studios have agreed to come down that far. Because 70 percent of Netflix rentals are catalog titles, rather than new releases, the company believes a deal would be beneficial. Redbox, on the other hand, stocks its kiosks almost entirely with new releases, and so it has sued several Hollywood studios for trying to impose a release delay. (It's not all bad. Sony has gone against its peers and signed a distribution agreement with Redbox.)
As a Netflix subscriber, I rarely order new releases, but I wouldn't want them to go away without some tangible benefit in return. If Netflix gets a discount from studios in exchange for delaying new releases, I should get a discount too. Alternatively, I'd sacrifice new releases for better streaming selections with Netflix's Instant Watch feature.
Of course, neither scenario would compel me to purchase more DVDs, which is supposed to be the point. If Netflix and Hollywood studios ink a deal, but consumers don't make up for the lower inventory costs with more DVD purchases, then only Netflix will have gained from the arrangement. Smart company.
