Netflix/Warner Brothers deal is a de facto price increase

by Paul William Tenny

NetflixThe LA Times is reporting that Warner Brothers has cut a deal with Netflix to make their new DVD releases unavailable to Netflix customers for the first month or so after they are available in stores for purchase, and from brick and mortar franchises like Blockbuster for rental. The deal was in exchange for financial considerations, "higher inventory levels and increased access to content for its online streaming service".

This amounts to a de facto price increase because Netflix customers are still paying the same monthly fees as before, but are now receiving degraded service for a significant number of new titles.
Some might say more than slightly, given this:

It's likely that some or all [studios] will follow Warner Bros.' lead and strike similar agreements soon. 20th Century Fox and Universal Pictures are the most likely candidates, as they have imposed windows on Redbox.

Netflix escapes these artificial limitations (with the other studios, and previously with Warner Brothers) by purchasing DVDs from third party vendors instead of having them manufactured in bulk specifically for their use. In the former case, DVDs from Netflix will have commercial retail markings on the top of the disc, usually inked artwork of some kind, and are usually the DVDs with the longest wait. Bulk manufactured discs have a mostly gray background.

Buying the discs via retail channels is more costly and time consuming, but serves the business interests of Netflix. Now it seems as if Netflix is more interested in serving the business interests of the studios, rather than its own customers.

Photo: Flickr/billday, (CC)
in Business, Digital Media


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