Netflix Finds Allies in Unexpected Places

NCR (NYSE: NCR  ) just signed one of those 28-day delay deals with Time Warner (NYSE: TWX  ) . The release window for feature films that Netflix (Nasdaq: NFLX  ) invented is getting pretty firmly established in Hollywood.

Oh, you're not familiar with NCR? It's a leading builder of vending machines and ATMs, and not to be confused with DVD-vending operator Coinstar (Nasdaq: CSTR  ) . NCR's DVD solution carries the Blockbuster Express brand, so this deal is sure to confuse plenty of Blockbuster's customers.

The lack of 28-day waiting periods for content from Warner, Universal Studios, and 20th Century Fox is supposed to be a selling point for Blockbuster's stores. The company needs all the marketing help it can get as it struggles through a bankruptcy reorganization. Yet here's a close partner that ruins one of Blockbuster's greatest hopes -- undercutting that very advantage to gain cost-savings benefits of its own.

It's starting to look like Blockbuster stands alone in its fight for release-day rentals and could use some better friends to boot.

On the other hand, NCR's move to the 28-day camp further validates the Netflix idea. You don't need to be a big streaming specialist in order to benefit from deeper and cheaper access to leading film libraries, even if you're sacrificing that elusive first-mover advantage in order to get there. Netflix sees it, Coinstar does, too, and now even NCR. Will Blockbuster stay forever married to its quick-release tactics or should it just give up, sign the same deal as everyone else, and leave new releases on the store shelves of leading movie sellers Best Buy (NYSE: BBY  ) and Wal-Mart (NYSE: WMT  ) ?

Blockbuster might not have a choice. If it wants to still exist in five years, the company may have to jump onto this bandwagon, sticking an exclamation point on the redefinition of rental windows. NCR just underlined this distinct possibility. It's a whole new ballgame in the movie industry, and Netflix was the first to embrace it with open arms. Why? Because DVD rentals are so last decade now and the future is written in digital streams. It doesn't hurt at all to hobble the old model if it helps the new one.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. Best Buy and Wal-Mart Stores are Motley Fool Inside Value picks. Best Buy and Netflix are Motley Fool Stock Advisor choices. Wal-Mart Stores is a Motley Fool Global Gains selection. Motley Fool Options has recommended buying calls on Best Buy. The Fool owns shares of Best Buy and Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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