It has now been a couple of months since Netflix
This has been a controversial move to some and a non-event to others. The stakes were raised earlier this month when News Corp.'s
I've decided to interview Netflix's policy, at least in my head. The only problem is that the policy's responses are limited to the movies that have been subjected to the 28-day release window this year.
Let's see how it goes.
Rick: I'm seeing a lot of ads for this DVD that hits stores tomorrow. It's a romantic comedy starring Meryl Streep, Alec Baldwin, and Steve Martin. I can buy it in stores. Blockbuster
Netflix: It's Complicated
Rick: Yes, but I can't imagine the studio will still be advertising this release when Netflix subscribers have access to it later next month. Netflix and Coinstar's
Netflix: Crazy Heart
Rick: That's harsh, though I admit that I'm passionate about my distaste for the 28-day window. You claim that less than a third of your rental shipments are for new releases, though I argue that tight supply of new releases forces a lot of older catalog titles to be shipped out instead. In a recent Consumerist interview, Blockbuster CEO Jim Keyes estimates that 60% to 80% of his chain's rental demand is for new releases. There may be benefits to not being Blockbuster these days, but don't you need new releases to matter to the mainstream market you're now reaching out to? Who will your market be in a few years? Fans of classic flicks? Antiques collectors?
Netflix: The Time Traveler's Wife?
Rick: Exactly. Many of my fellow subscribers don't seem to care. I mean, you actually added 1.7 million subscribers during your first quarter under this policy. Great quarter, by the way. However, subscriber counts have popped 35% over the past year, yet revenue is up just 25%. Everyone's seeing the great numbers in last week's report, but I'm seeing folks trading down to cheaper Netflix plans. Could it be that Netflix -- trying to be all things to all people, including playing nice with the studios -- may actually be forcing movie buffs into relying on at least two movie sources for folks who crave DVDs when they come out?
Netflix: The Blind Side
Rick: That's it! Time Warner made the original deal, publicizing that 75% of its sales occur during the first four weeks of a movie's release. It means that your flicks won't be available for rental until only a quarter of the eventual buyers are left. There's a void there. And if this is truly your long-term plan, there's also an opportunity. Wouldn't it make sense to cut a deal with Amazon.com
Netflix: Avatar
Rick: I guess. Be honest about it, though. It's a delicate balance. After all, I have a couple of bones to pick with how you are communicating this policy to subscribers. I've been a member since 2002 and I have yet to see this 28-day window explained in any member communique. Even if a subscriber looks up the affected films through your site, it's not spelled out. Avatar came out on Earth Day last week, but Netflix.com's page simply spits out "DVD and Blu-ray available 5/20/2010" without explaining why.
Netflix: The Invention of Lying
Rick: No. Netflix isn't lying. However, it certainly can afford to be a bit more upfront about these things. After all, I remember a big selling point for the deal was the ramped-up availability of affected titles. Well, I waited four weeks for The Time Traveler's Wife to be made available, yet it spent more than a week in my queue after that as "long wait" in terms of availability.
Netflix: Sherlock Holmes
Rick: Well, I have to look around. I'm not just a subscriber, but a shareholder as well. I see you're doing so many things right, and along comes this policy which is wrong on so many different levels. Why not publish hard data about the extra copies? Why not spell out the additions to the digital library as a result of these deals? Why lead us to wonder if we're being had as subscribers when we see widening net margins like this past quarter, when we used to cheer as investors?
Netflix: It's Complicated
Rick: Tell me about it.
Will this policy come back to bite Netflix, or is it a great move? Share your thoughts in the comments box below.