Angry tirades from disappointed Netflix customers followed just about every article written on the subject. Did Netflix sell out its customers?
In an interview today with enthusiast site Hacking Netflix, the company is telling its side of the story. Chief Content Officer Ted Sarandos explained that a straight-up 28-day wait isn't very different from waiting a few weeks for a hot new release in "long wait" status. Netflix has been buying Time Warner movies on the open market so far, comparing the process to buying DVDs at retail from the local Wal-Mart
So now Netflix gets those movies at a volume discount direct from the studio, and there will be plenty of copies. If you're anxious to get your hands on the next Harry Potter movie (distributed by Warner Bros.), you can still go and buy it yourself, or order one from Amazon.com
If the movie was that great, you probably saw it in the theater already. Many Netflix customers – myself included -- don't really mind waiting a little bit longer for guaranteed, easy, cheap delivery of our movie fix. The top spot in my queue right now is held by As It Is in Heaven, a Swedish movie from 2005 that took a while to swim across the Atlantic. Would it ruin my Friday night if I had to settle for my No. 2 choice instead (There Will Be Blood)? Heck, no.
Also, the Time Warner agreement gives Netflix the ability to stream valuable Warner properties like the entire Matrix series, and the cost savings from cheaper DVD purchases go straight into buying more digital licenses from Warner and other movie studios.
All-digital entertainment is the wave of the future, and Netflix is building a solid presence in that future through deals like this one. CEO Reed Hastings should be applauded, then given a medal for Excellence in Forward-Thinking Management. Hold the jeers and rotten tomatoes, please.
Fool contributor Anders Bylund owns shares in Netflix, but he holds no other position in any of the companies discussed here. Wal-Mart Stores is a Motley Fool Inside Value recommendation. Amazon.com and Netflix are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.