Hurray for heavy-handed (and not data-based) tactics from the movie industry once again. If you have been reading all of Caryl Z’s excellent ebook posts recently you have seen how the industry is trying to limit consumer choice and delay the move to new technology in order to maximize profits. The same is true with the movie industry – they estimate that that sell 75% of their DVD’s during the first four weeks after release, and want to make sure that the rush during that time is for sales rather than rentals or streaming views.

In order to do this they have been withholding parts of their catalog, not offering ‘watch it now’ features to sites like Netflix, and so on. In the end, Netflix has succumbed to the pressure, likely because they see the benefit of a larger library and an expansion of their ‘Watch Now’ offerings having a greater impact to consumers than having to wait a few weeks for a new release.

My concern is how it will impact places like Blockbuster and RedBox that depend on new releases for a large portion of their revenues. Blockbuster has struggled against Netflix, and Redbox has been a great way for folks to see the latest releases at a reasonable price. But now if they have to wait a month (or perhaps more if other movie companies get their way), many folks will simply buy the DVD at the ridiculous discounts offered at some stores for major releases.

Of course, it will be interesting to see how piracy will impact things. In the music industry CD and MP3 versions get released at the same time – and also with PC video games. That offers choice to consumers based on how they want to spend their entertainment dollars. As history has shown, if you tell a consumer they cannot have something unless they do it the way the industry dictates, they will find a way that completely shuts out the industry.

And that would be bad for all involved, from Netflix to Blockbuster to RedBox to the movie companies.

Here is the full text of the press release:

WARNER BROS. HOME ENTERTAINMENT AND NETFLIX
ANNOUNCE NEW AGREEMENTS COVERING
AVAILABILITY OF DVDs, BLU-RAY AND STREAMING CONTENT

New Release DVD and Blu-ray Titles Will Be Made Available
After a 28-Day Window; Streaming License Renewed and Expanded

BURBANK and BEVERLY HILLS, Calif., January 6, 2010 – Warner Bros. Home Entertainment Group and Netflix, Inc. [Nasdaq: NFLX] today announced new agreements that will continue to make Warner Bros. new release DVD and Blu-ray titles available to Netflix members while adding to the selection of direct to video titles and Catalog movies available to be streamed instantly to TVs and computers.

New release titles on DVD and Blu-ray will be made available to Netflix members after a 28-day window, giving Warner Bros. the opportunity to maximize the sales potential of those titles and Netflix the benefits of reduced product costs and significantly more units and better in-stock levels four weeks after street date. At the same time, a renewed and expanded license for Warner Bros. streaming content will allow Netflix to offer its members more movies they can watch instantly.

“These new agreements build upon the strong relationship we have had with Netflix for nearly 10 years,” said Ron Sanders, president, Warner Home Video. “The 28-day window allows us to continue making our most popular films available to Netflix subscribers while supporting our sell-through product.”

“We’ve been discussing new approaches with Warner Bros. for some time now and believe we’ve come up with a creative solution that is a ‘win-win’ all around,” said Ted Sarandos, chief content officer for Netflix. “We’re able to help an important business partner meet its objectives while improving service levels for our members by acquiring substantially more units than in the past after a relatively short sell-through window. At the same time, we’re able to extend the range of choices available to be streamed to our members.”

The agreement covering DVD and Blu-ray provides a means for Warner Bros. to continue to directly supply Netflix with new titles while establishing a schedule that allows Warner Bros. to get the most from the sales potential of those titles (75 percent of sell-through occurs in the first four weeks) and maximize VOD usage. Netflix benefits from reduced product costs and better availability of new releases. New releases from all suppliers account for about 30 percent of Netflix shipments.

Warner Bros. is currently a leader in many home video categories including total video (DVD and Blu-ray combined), Theatrical Catalog video, TV on DVD, and Blu-ray.

So what are your thoughts?

Source (and image): BusinessInsider