Uh oh…when the Wall Street Journal thinks you’ve made a stupid decision business-wise, folks, it’s generally a good idea to take a step back and listen. These guys have at least some idea of what they’re talking about.
And the crew out at the Wall Street Journal thinks Netflix just shot itself in the foot by agreeing to Warner Brothers’ embargo demand.
The Wall Street Journal’s line of reasoning here is that, basically, by getting into streaming, they’re taking on LOTS of new competitors like Apple and Amazon and even HBO. They can do this because of the massive capitalization they’re getting from legions of subscribers who cheerfully hand over thirty bucks a month or so, give or take, for all the movies they can watch in certain intervals. By annoying the subscribers with new release lag, they effectively cut off a very profitable arm while entering a hotly contested field.
We all know that this isn’t going to KILL Netflix. About seventy percent of Netflix’s subscribers couldn’t care less about “new” and want “what we can’t find anywhere else”. But going into a fight without thirty percent of your ammo is never a smart idea, ESPECIALLY when you’ll be taking on much bigger crowds.
So the Journal has a point here…how much of one, however, remains to be seen.