Netflix Sells Out Its Subscribers
January 7, 2010
Don’t let the chumminess distract you. Netflix (Nasdaq: NFLX) and Time Warner (NYSE: TWX) were high-fiving and fist-bumping yesterday over a deal that will give Warner Bros. four weeks to sell its Blu-ray discs and DVDs before making them available through Netflix’s service, in exchange for some sweetened conditions. But subscribers are getting hosed.
Time Warner is trying to secure a 28-day window from Netflix, Coinstar’s (Nasdaq: CSTR) Redbox, and Blockbuster (NYSE: BBI) because the movie studio thinks it will maximize its sales if it’s not competing against discounted rentals. Warner Bros. claims that 75% of its DVD sales come during the first four weeks of a film’s release.
In other words, Netflix is going to start offering you Warner Bros. DVD rentals after most of the demand has gone away.
Time Warner throws a lot of money behind its theatrical releases, only to embark on a marketing campaign several months later, when the flick is out on Blu-ray and DVD. Netflix subscribers are now going to be kept in a penalty box — for 40,320 minutes — until they get a crack.