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Old January 8 2010, 07:28 PM   #49
Jptrekker's Avatar
Location: the marketing dept. of the Sirius Cybernetics Corporation
Re: Netflix and Warner Brothers Reach Deal

It looks like the wave of the future for disc based media is going to be a sell-thru release followed by a rental release a month later--the opposite of the VHS model.

Back in the VHS days, new release videos cost around $80 each (which the rental stores gladly paid) so that that studios could make a profit from the release being sold to rental outlets, there were very few "sell-through" titles (i.e. Titanic, which was a huge sell through title on VHS, compared to Four Weddings and a Funeral was initally a rental-only release). Sometimes, on major releases, the studios would have a 2nd release on video which was at a sell-through price after they had made their money off of the rental market (which was the case for "Four Weddings"). (Back then, for many, if you wanted to purchase new releases you owned a Laserdisc player, new releases on this format were genrally sell-through priced.)

Today, on the other hand, most disc based movies are priced for sell through at release and the studios probably feel that the rental market cuts into that sell through market. Don't be surprised if in the near future most new releases come out first to sell through then a month later to rental, the studios will introduce some carrot to the brick and mortar rental chains to encourage this. The carrot to the online retailers is making their library of titles available for streaming, the carrot for brick and mortar stores might be some type of profit sharing agreement similar to the old rentrak system for VHS where the stores actually rented the tapes from the studio for a low price and then returned them (or sold them as used, sharing the profit--the rentrak system was the beginning of Hollywood and Blockbuster's making dozens of copies of a new release available for rent, you never really saw this before profit sharing, a store might have ten copies at most, in a large store, because the movies were just too expensive).

The new model may have new releases on day of release for a premium price (which will be more than today's rental price, this will encourage purchase instead), then 30 days later for less (probably today's price).

As for Netflix, I don't care about new releases either, we use streaming through our network Blu-Ray player almost exclusively. It has replaced cable in our household and the $17/month is a much better investment than the $50/month bill for cable tv. Our kids don't know that a movie is a new-release or not, they just know if they like it or not. I don't think I have any new releases in my disc queue, mostly TV shows and kids movies.
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