CONSUMED BY MEDIA

Studios playing with fire: Why a DVD rental window is a bad idea

Posted in Netflix, Redbox, rentals, studios, VOD by Diane on October 23, 2009

netflixApparently studios are considering a sales-only window for DVD releases as a way to combat sliding sales and fight back against cheap Redbox rentals.

There are many reasons why this is a bad idea.

1. Rental stores will be able to buy discs and rent them, just like they did in the early days of home video. According to Netflix CEO Reed Hastings, who disclosed the plan during yesterday’s earnings call, retailers might be willing to wait if studios price rental discs cheap enough.

2. But consumers eager to watch the movies will just do so other ways — through pirated versions or VOD. How much will it increase or protect sales? Hard to say.

3. They risk pissing off consumers who are used to renting the movies right away. Pissed off consumers might then feel justified viewing contraband.

4. They can’t stop retailers from renting movies under the sales window due to a little thing called the First Sale Doctrine.

Hastings interest in this scheme should not be overlooked. At least one studio — that would be Warners — is trying to impose a later rental window on Netflix, arguing that its subscription based business should not be considered the same as video stores than rent on a disc by disc basis. Also not to be forgotten: Hastings really wants to focus on streaming movies; that’s been his goal since he founded the company. The technology wasn’t there yet then.

But it sure is now.

For more on studio plans, read Ben Fritz’s LAT story.

Earlier stories on the subject collected here and here.

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