It is not just a happy coincidence that Netflix is doing so well despite the poor economy; the company has repeatedly turned fresh and clever thinking into a successful business model.
A couple of months ago word got out that major Hollywood studios were considering the possibility of delaying the release of future new DVD or BluRay releases to rental services. The logic behind this proposal is that if consumers cannot immediately rent the new hot movie for a few measly bucks, they will go out and buy the outrageously overpriced buy-to-own copy instead.
At least this is how the studio executives envision it.
Perhaps, if these honchos stepped for a brief moment out of their cigar smoke-filled boardrooms and into the real world, they might see just how badly this plan is going to backfire. Delaying the release of new movies to rental agencies is going to amplify the illegal online sharing of movies. Big time.
Netflix’s streaming service is a huge draw because it’s easy, affordable, and convenient. You can watch a movie in the comfort of your home, and you can stop watching a movie you’re just not enjoying that much without having just wasted a bunch of money.
Who’s going to buy a movie they haven’t already seen for $25, hoping that they will like it and even want to see it a second time?
The magnitude of illegal file-sharing of movies has grown exponentially, and my personal opinion on its popularity rests on convenience rather than price. People who take the time and assume the obvious risk to illegally download movies love motion pictures, and they watch large numbers of them. They are not so much audiences as they are consumers of movies. The movie industry does not have a working business model to service this growing consumer base. They really don’t. That is why companies like Netflix and Redbox flourish; they fulfill the demands of those consumers with instant, or at least near-instant gratification.
For years I have been passing the DVD aisles at Wal-Mart with an incredulous expression on my face. Standard edition, widescreen edition, limited edition, unrated edition, special edition, director’s cut, anniversary edition, extended edition. $25 for a copy of the latest Harry Potter movie? Are you kidding me? Six months later I can find it in the $5 bin. Or perhaps $60 for one season of The Sopranos? That comes to about 5 bucks per episode. Sure it’s a great show, but… $60? Seriously?
Of course, it’s the studio that takes the financial risk of producing a movie – not Netflix. And sometimes successful movies have to cover the losses of less successful ones. It’s a business, after all. An industry. They’re trying to make money.
However, while studios seem to like to think that the big motivation of illegal downloading and uploading of movies is the lack of a price tag, I maintain that it must be convenience. If a movie is a successful one, a huge hit, it can take half a year for its DVD release to come out. If it does poorly in the theatres, it gets released considerably faster. Some movies even go straight to DVD. Meanwhile, people are not waiting around for a DVD release that’s set into the distant future. They download it now, even if all they can get is a poor-quality camcorder version shot at a movie theatre. If a movie is out, it’s out. Is it legal? No. Is it moral? No. But it is the reality.
While Hollywood may be cooking up unrealistic business models, Netflix is turning a potentially hazardous plan into something beneficial. The company is attempting to negotiate a decrease in licensing costs for movie rentals. Some rumors suggest that Netflix is seeking to cut licensing costs down as much as half. This works out great for Netflix, if this materializes, because the company does not really rely on the most recent releases for that much of their traffic.
It is good to see that at least someone is using their brain.
Mika Salakka is a Finn living in the United States. He is a nursing assistant, a creative writer, a devoted husband, and an observer of the human condition. His interests range from music and literature to psychology, sociology, medicine, technology, and spirituality.