Warner Bros. Gets Netflix To Delay Movies; You Don't Save Your Business By Pissing Off Your Customers

from the this-is-a-mistake dept

While not a huge surprise, it's worth discussing just how bad an idea it was for Warner Bros. Studios to get Netflix to delay renting DVDs of its movies for 28 days in order to offer up more streaming content. To recap, the very, very, very confused movie studios seem to think that the way to deal with increasing competition is to just add more windows to releases -- and one way to do that is to delay when you can rent a movie. In the studios' incredibly short-sighted thinking, they believe this will make more people buy DVDs -- the one area of the movie business that has been on the decline of late. At the same time, the studios have been pissed off at Netflix for routing around them and getting rights to stream movies from Starz, and as such, have been denying requests to stream more movies.

So, the compromise is getting Netflix to delay the rentals in exchange for more streaming content.

It's hard to express just how bad an idea this is for Warner Bros., and how far out of touch with their customers they must be to think this makes any sense from a business standpoint. What they are saying is that they are not going to give in to customer demand and offer them what they want, but actually make it more difficult, more annoying and more confusing for them to get what they want -- and (at the same time!) screwing up basic marketing plans as well. Now, when movies are released on DVD and the large group of people who prefers renting to buying goes online to their Netflix account to do so, they won't be able to. Four weeks later, they'll be looking for something else. And, for those who simply want to see it right away, they're now more likely to get it in an unauthorized manner.

Under what set of logic would it ever make sense to give the customer less of what they want in an era when increased competition from other sources is causing them to already wonder if they should buy your product?

Filed Under: business models, dvds, hollywood, movies, rentals, sales, streaming, windows
Companies: netflix, warner bros.

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  1. icon
    The Anti-Mike (profile), 7 Jan 2010 @ 11:54am

    Re: Re:

    Not really.

    If Netflix gets 1000 copies of a movie to mail out, and each cycle takes 4 days (I am guessing here, I don't have the numbers at hand) then they have about 7000 or so customers they can satisfy per 1000 copies.

    What happens? Most people end up with the movie on their wanted list, and they might get it some time in the future.

    Move it to streaming, the average consumer still gets the movie in the time frame they are use to, because most of them were not getting the movie in the first 28 days anyway. If you use netflix, consider the last time a hot movie came out that you added to your list. How quickly did you actually get it?

    Meanwhile, Netflix gets exactly what it needs to move forward with it's business, licensed and approved content for their streaming service. They don't have to sneak in the back door, they don't have to play games. They have a studio signed up and willing to give them content with certain restrictions.

    As Netflix is often as much about the long tail (the time after the 28 day window) rather than just what is hot and new this minute, it helps them to expand their streaming service.

    Like I said, you can expect to see Netflix move away from their mail base systems soon enough, as they are expensive to operate, and in the long run will not complete with other online offerings, or the cable/sat PPV systems.

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