Movie Industry

by Mike Masnick

Filed Under:
content, licensing, movies, streaming, value


Will Hollywood Kill The Golden Goose By Squeezing Netflix Dry?

from the watch-those-numbers... dept

Back in December, we did a little back-of-the-envelope calculating to show how much more expensive it is for Netflix to license movies for streaming, as compared to just buying DVDs and shipping them out. The differences are staggering. And apparently it's only getting more expensive. The Hollywood Reporter has an in-depth article highlighting the love-hate affair that Hollywood has with Netflix, including details on the sorts of prices that the various players are demanding (and often getting) from Netflix. What's not surprising is that they keep asking for more and more (and some are still complaining that Netflix doesn't pay enough). But the numbers being thrown about are simply staggering. And at the rate they're going up, it will make it increasingly difficult for Netflix to actually afford all of those deals. Once again, it seems like a situation where the content providers are overvaluing their content, and undervaluing the services that make that content more valuable. That is, they look at how Netflix is succeeding (especially as they're failing to adapt themselves online), and they start to get jealous, and assume that Netflix really should be paying them more money. Basically, they don't think Netflix deserves to profit at all, since it's really all "their content." What they ignore, of course, is that (despite multiple weak attempts) they were the ones who failed to provide a compelling streaming service themselves. Either way, if Hollywood keeps pushing those numbers up, they may discover that they end up killing the golden goose.

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  1. identicon
    Anonymous Coward, 20 Jan 2011 @ 10:21am

    Re: Re: I will mourn the loss of Netflix

    like it or not, you have to compete with free from now on.

    This phrasing has always bothered me, because downloading a movie isn't really free. At least not from an economic standpoint. You have to find the thing you are looking for (time). You have to be willing to download from that source (trust). You may or may not get a finished file that works correctly or has good quality (more time). And so on ...

    Other than that, I totally agree with you. What you are really competing with online isn't price, it is quality and convenience. I find Netflix much easier to use than downloading and the quality of the movies is often as high or higher than what I would download (not interested in 3 and 4 gig HD downloads, sorry don't have the patience). Also, on Netflix I can start streaming a movie, decide it is crap and stop; I don't have to spend an hour downloading the whole thing only to decide I don't want to watch it.

    People will pay for movies and they will pay for services that make accessing those movies easier, but why would anyone pay $20, instead of spending their time and effort, when they will get an obviously inferior experience (previews, unskippable menus, DRM problems, a fixed format that will go out of date, etc.)

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