So the word is now semi-officially out that Netflix plans to delay its offering of new releases by fully a month in exchange for a huge sack of free loot from the studios. Well, not DIRECTLY–the studios will just lower the price of the DVDs sold to Netflix in exchange for the opportunity to SELL them to us first. Now, this apparently won’t affect anybody but Netflix, so it only sounds like Netflix is screwing itself over…or are they?
See, only about a third of Netflix’s business–roughly thirty percent–is new release titles. The REST of Netflix’s business, almost three quarters of it, is on so-called “Catalog titles” or movies that aren’t new releases, that have been out in circulation for a while or on an earlier version. There isn’t, that I know of, a specific date cutoff when something stops being a “new release” and becomes a “catalog title”.
So if most of Netflix’s business doesn’t hinge on when new releases come out, and Netflix can get a deal on new releases (word is that the price cut will HALVE Netflix’s operating expense) it sounds like it’s the studios that just shot themselves in the foot.