I'll sheepishly admit that I adamantly opposed this strategy when Netflix began striking similar deals earlier this year.
"Netflix Sells Out Its Subscribers," read my January headline, after the company brokered a trendsetting pact with Time Warner
Despite the cost advantages and the desire to build up its digital catalog, I felt Netflix was cheating subscribers by accepting the four-week window. If local video stores were stocking a new release, and cable providers were renting it on demand, why was Netflix holding out? I felt that Netflix was turning into a second-run cinema house, and I wasn't alone. Two-thirds of the more than 1,700 respondents of the poll at the end of the column agreed with me.
Well, I don't know if the other 1,131 voters have had a change of heart, but I can now say I was wrong. Sure, I get steamed when I see television ads for an upcoming DVD, or see the titles being released come Tuesday in an ad circular -- only to find that I'm four weeks away from having a shot at that flick through Netflix.
However, the masses have responded. They're cool with the 28-day window. Netflix shares have nearly tripled over the past nine months. Churn is low. Subscriber growth is through the roof.
Would things have played out differently if Redbox parent Coinstar
We can't definitively say that Netflix has these deals unharmed. Subscribers continue to downgrade to cheaper plans since the move, indicating that folks are either gravitating to the streaming model, or turning to just one-disc-out-at-a-time to budget for the newest releases elsewhere.
However, as long as earnings, subscriber counts, and share prices point higher, Netflix's gutsy strategy at the beginning of the year clearly seems validated.
How do you feel about the 28-day window, now in place with four of the major studios? Share your thoughts in the comment box below.
Netflix is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.
Longtime Fool contributor Rick Munarriz has been a Netflix shareholder -- and subscriber -- since 2002. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.