Movie studios think cheap DVD rentals are a major factor in DVD sales that have been on the decline for some time. And now one of those studios, Warner Bros., may have the ability to prove the theory right or wrong.
That’s because rental giant Netflix has inked a deal with Warner Bros. under which Netflix won’t rent new Warner Bros. releases until they’ve been on sale for 28 days.
The deal doesn’t come as a surprise. Netflix has been in negotiations with the major studios about such a deal, as we’ve detailed before.
The deal makes a lot of sense for Netflix as much of its business is attributed to catalog titles. In fact, new releases only account for 30% of Netflix shipments. But even so, the deal is important since it may help answer a simple question: just how much are cheap rentals hurting DVD sales?
If, a year after the deal goes into effect, DVD sales are still declining and there’s no sign that a 28-day delay at one of the largest low-cost rental services is stemming the tide, studio execs will need to reconsider their assumptions about why people are buying — and not buying — their DVDs.
As I’ve stated before, it’s all about value. While it’s possible that studio execs will be proven right, the most likely source of the DVD sales slump is the fact that many consumers just don’t see as much value in purchasing DVDs as they may have in the past. If that’s the case, studios will need to be far more creative than keeping consumers from renting their content for a month.
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