As part of the agreement, starting this month, Netflix will wait 28 days before offering Warner Bros. DVDs and Blu-ray discs to its customers.
The waiting period is an attempt for the studio to cash in on DVD sales. If Netflix customers can't rent the hottest Warner Bros. titles, perhaps they'll be willing to buy them. As the Associated Press points out, nearly three-fourths of DVD sales are made during the first four weeks the discs are in the stores.
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Other studios are expected to follow, signing similar deals with Netflix this year.
In exchange for the waiting period, Warners has agreed to offer Netflix hundreds of additional movies for its online streaming service. In addition, Netflix will get a discount on Warners titles. The savings will be used to acquire even more instant-viewing titles, the AP reported.
This could be a win-win-win situation. Studios can keep cashing in on retail sales, Netflix will continue its quest to eventually stream every piece of content ever made and viewers can still get movies without leaving the couch.
The deal sacrifices just enough convenience for customers to keep them from pirating movies -- or at least that's what the powers that be are banking on.
Netflix customers -- by definition -- have already given up on immediacy. That's the whole business model. Pick a bunch of movies and eventually they'll get to your house. And even with online streaming, Netflix users aren't accustomed to new releases. Other than the Starz deal, the instant viewing option is mostly filled with older movies.
As an asterisk to the deal, Blockbuster may actually come out ahead. The brick-and-mortar giant will be able to rent new DVDs without a waiting period.
Turns out, this deal really does have something for everyone.