Netflix Caves Again

The list of DVDs that will no longer be available to Netflix (Nasdaq: NFLX) subscribers during their first four weeks on the market is growing. News Corp.'s (NYSE: NWS) Twentieth Century Fox and General Electric's (NYSE: GE) majority-owned Universal became the latest studios to ink deals that will freeze Netflix availability in exchange for lower disc prices and broader streaming licenses.

The deals are similar to the one that Time Warner (NYSE: TWX) brokered with Netflix and Coinstar's (Nasdaq: CSTR) Redbox earlier this year.

I don't like this as a Netflix subscriber, but I appear to be in the minority. Right now, Warner's Sherlock Holmes and The Blind Side aren't available through Netflix, though they can be found through Blockbuster (NYSE: BBI) and on most cable and satellite television on demand packages.

Blockbuster has been hooping it up, with a wave of online display ads promoting how the two films are available through Blockbuster -- in-store, by mail, or streaming -- but not through Netflix and Redbox.

However, if Netflix is able to get through this month without an uptick in churn, then the coast may very well be clear for the company to strike similar deals with all of the major Hollywood studios.

Netflix appears to be weaning its users from new releases, which may be a challenge because it's also the period when studios invest in marketing their retail releases. The push is clearly on expanding its streaming library -- which is a bit of a gamble in the near-term since more than half of the service's subscribers didn't stream Netflix content (for at least 15 minutes) during its most recent quarter.

Netflix will continue to make the migration easier, though. It rolled out a streaming app for Apple's (Nasdaq: AAPL) iPad last week and a version for the iPhone and iPod touch is in the works. Hacking Netflix even unearthed a job opening at the company for an Android video playback expert, so it won't be long before most smartphones are Netflix-centric.

The digital push has helped deflect concerns that its disc-based subscribers are being sold out in these four-week freezes. As long as Netflix knows its audience -- and its data-mining prowess is committed to exactly that -- the company will be able to silence skeptics like me.

Will this policy come back to haunt Netflix and Redbox? Share your thoughts in the comment box below?