Warner Bros. Will Bring More Content to Netflix…28 Days Later

     January 6, 2010

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Warner Bros. has made a deal with Netflix to increase their stock of WB DVD and Blu-rays, but only after the film has been available to consumers to purchase for 28 days after its street date.  In exchange, not only will Netflix be able to offer the availability of these new releases to their customers.  But the best part of the deal for Netflix consumers is that WB will also be expanding Netflix’s “Watch Instantly” selection of movies.  This is a massive boon to Netflix’s VOD service where recent new VOD movies include Zac Efron: The Ultimate Idol and The Gamers: Dorkness Rising.  However, it’s not all bad.  I did just add Spymate to my queue (and you should too).

Hit the jump for my thoughts on the deal along with the full press release.

netflix_watch_instantly_screenshot_01.jpgWhile I am a little disappointed about the move to delay rentals in order to sell movies, I do understand it from a business perspective and a 28-day wait seems reasonable (unlike Summit’s six-month wait for The Brothers Bloom to move from rental to on sale, which is on Tuesday).  Also, I’m all for expanding Netflix’s selection of VOD movies, especially since my queue was decimated on January 1st.  And since we’re talking about Netflix, I strongly suggest the company should allow a way for users to organize their queue into folders.  This way, you’re not scrolling through hundreds of movies looking for what you want to watch next.

Here’s the full press release:

WARNER BROS. HOME ENTERTAINMENT AND NETFLIX

ANNOUNCE NEW AGREEMENTS COVERING

AVAILABILITY OF DVDs, BLU-RAY AND STREAMING CONTENT

New Release DVD and Blu-ray Titles Will Be Made Available

After a 28-Day Window; Streaming License Renewed and Expanded

BURBANK and BEVERLY HILLS, Calif., January 6, 2010 – Warner Bros. Home Entertainment Group and Netflix, Inc. [Nasdaq: NFLX] today announced new agreements that will continue to make Warner Bros. new release DVD and Blu-ray titles available to Netflix members while adding to the selection of direct to video titles and Catalog movies available to be streamed instantly to TVs and computers.

New release titles on DVD and Blu-ray will be made available to Netflix members after a 28-day window, giving Warner Bros. the opportunity to maximize the sales potential of those titles and Netflix the benefits of reduced product costs and significantly more units and better in-stock levels four weeks after street date.  At the same time, a renewed and expanded license for Warner Bros. streaming content will allow Netflix to offer its members more movies they can watch instantly.

“These new agreements build upon the strong relationship we have had with Netflix for nearly 10 years,” said Ron Sanders, president, Warner Home Video. “The 28-day window allows us to continue making our most popular films available to Netflix subscribers while supporting our sell-through product.”

“We’ve been discussing new approaches with Warner Bros. for some time now and believe we’ve come up with a creative solution that is a ‘win-win’ all around,” said Ted Sarandos, chief content officer for Netflix.  “We’re able to help an important business partner meet its objectives while improving service levels for our members by acquiring substantially more units than in the past after a relatively short sell-through window.  At the same time, we’re able to extend the range of choices available to be streamed to our members.”

The agreement covering DVD and Blu-ray provides a means for Warner Bros. to continue to directly supply Netflix with new titles while establishing a schedule that allows Warner Bros. to get the most from the sales potential of those titles (75 percent of sell-through occurs in the first four weeks) and maximize VOD usage.  Netflix benefits from reduced product costs and better availability of new releases.  New releases from all suppliers account for about 30 percent of Netflix shipments.

Warner Bros. is currently a leader in many home video categories including total video (DVD and Blu-ray combined), Theatrical Catalog video, TV on DVD, and Blu-ray.

About Warner Bros. Home Entertainment Group

Warner Bros. Home Entertainment Group brings together Warner Bros. Entertainment’s home video, digital distribution, interactive entertainment/videogames, direct-to-DVD production, technical operations and anti-piracy businesses in order to maximize current and next-generation distribution scenarios. WBHEG is responsible for the global distribution of content through DVD, electronic sell-through and transactional VOD, and delivery of theatrical content to wireless and online channels, and is also a significant worldwide publisher for both internal and third party videogame titles.

About Netflix, Inc.

Netflix, Inc. is the world’s largest online movie rental service, with more than 11 million subscribers. For only $8.99 a month, Netflix members can instantly watch unlimited movies and TV episodes streamed to their TVs and computers and can receive unlimited DVDs delivered quickly to their homes. There are never any due dates or late fees. Netflix members can exchange DVDs as often as they want using a postage-paid return envelope. Members can choose from a vast selection of DVD titles and a growing library of movies and TV episodes that can be watched instantly. Netflix is partnering with leaders in consumer electronics to bring to market a range of devices that can instantly stream movies and TV episodes from Netflix directly to members’ TVs. These devices currently include Blu-ray disc players and Internet TVs from LG Electronics; Blu-ray disc players from Samsung, Sony and Best Buy’s Insignia brand; the Roku digital video player; Microsoft’s Xbox 360 game console; Sony’s PS3 computer entertainment system; TiVo digital video recorders; and Internet TVs from Sony and, soon, VIZIO.

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