Netflix and Warner Brothers Studios recently revised their movie distribution partnership, and both sides have agreed to suspend new release WB movies rented through Netflix for 28 days from initial DVD release.
“Consumers wanting to rent a Warner Bros. movie day-and-date with the DVD release will be able to rent at a Blockbuster store or digitally through a-la-carte digital models that are significantly more profitable to studios than Netflix or kiosk operator Redbox,” said Ralph Schackart, William Blair & Co. analyst, in a statement.
This could force consumers interested in watching a newly-released movie to purchase it on DVD or Blu-ray. It could also open the door to online streaming models ranging from Roku to CinemaNow — with physical DVD rentals and online rentals more profitable to the movie studio than rental kiosks.
Redbox, the No. 1 movie rental kiosk service, has come under fire from movie studios angry with declining revenue and lowered movie sales.
“The 28-day window allows us to continue making our most popular films available to Netflix subscribers while supporting our sell-through product,” said Rob Sanders, Warner Home Video President, in a statement.
I expect other movie studios to alter their agreements with Netflix by the end of the year, which will give them additional time to market new release DVD’s for sale. Movie studios are beginning to realize that they can’t simply try and shrug off Redbox and Netflix — but need to learn how to work with them and better adapt to the changing content distribution model.
Expect streaming movies via Microsoft Xbox 360, Roku Netflix player, Sony PlayStation 3, and other devices in the living room to continue to rise in popularity in 2010.