Red Envelope Madness!

Wednesday, August 04, 2004

Why the long wait for new releases?

They're more expensive to Netflix, therefore it's not as profitable for them to have alot of copies of new releases (defined as less than a year old).

From the San Jose Mercury News via Siliconvalley.com
By Mary Anne Ostrom

Netflix is a hit with consumers, but as its subscriber base grows, the most common complaint is the wait for the hottest movies.

Under revenue-sharing agreements with most of the top studios, Netflix pays on average $1.40 to the studios each time a new release is mailed to a Netflix user. But those deals typically expire after a year, which means Netflix enjoys a much higher profit margin when users request older films or those released through independent studios with less expensive sharing arrangements. Netflix said new releases are seldom recommended for fear of disappointing users if there is a wait. Hastings says, ``Creating the demand gets a better margin. This is integral to the formula.''




6 Comments:

  • At 8/05/2004 11:23 AM, Blogger a boring person said…

    Just because Netflix doesn't reccomend new movies, doesn't mean I don't know what they are. TV adds show before the movie is released to theaters and I place them in my queue then.

    If I didn't want to wait to see a movie, then I would go
    to the movie theater. I could go to the video store and be disappointed that the new release was already rented.

    On netflix, I can move new releases to the top of my queue and know that if it is not available, the first available movie will be shipped.

    I may spend more money at netflix then I would at the video store, but I see many more movies than I would ever find at a video store.

    Netflix is a very good deal and has become a much better deal since they have added distribution center near me.

     
  • At 8/05/2004 2:41 PM, Blogger Becky said…

    I agree that Netflix is an excellent value. I love older movies, so I don't care about new releases on DVD. I try to see the ones I'm interested in while they're still on the big screen. However, I'd like people to know what to expect from Netflix. They should expect to face an occasional wait if they want to rent nothing but new releases.

     
  • At 8/05/2004 5:35 PM, Anonymous Anonymous said…

    But, Netflix is going down if they don't work this out. I have been a subscriber for a couple of years and I'm about to call it quits. I tried walmart's cheaper service and NO WAITS EVER for new releases. So, why should I bother with Netflix? I am giving them another month or two and then I'm saying SAYONARA!

     
  • At 8/07/2004 2:01 AM, Blogger StudioGlyphic said…

    This article is over two years old... are they still having issues with new releases? I got Return of the King w/o any delay problems.

     
  • At 8/07/2004 8:00 PM, Anonymous Anonymous said…

    I find it hard to believe they don't have enough copies of certain new releases. I have been on long wait status for bad santa for 1 1/2 months. Cold mountain for 1 month. Lost in translation took 5 months. I guess the key is to not expect some new releases for a least 3 months after release.

     
  • At 8/09/2004 8:15 AM, Blogger Becky said…

    I'm assuming they still have a problem based on comments I've read here and in newsgroups. I have never had a problem getting a new release from Netflix.

     

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