Netflix, Warners reach deal

Pact allows 28-day gap before DVD releases

Netflix and Warner Bros. have mended fences over access to new releases of DVDs, agreeing that Netflix subscribers will have to wait four extra weeks to rent the latest Warner titles.

The studio has become the first major to broker a 28-day window on its homevid titles with Netflix.

Under the deal announced Wednesday, Netflix’s DVD-by-mail service won’t send out Warner Bros.’ latest DVD and Blu-ray discs until that time has passed. The studio said it generates 75% of its DVD and Blu-ray sales during the first four weeks of a title’s release.

Financial terms of the pact were not disclosed, but the pact also includes direct-to-DVD releases and older catalog titles to stream instantly to TVs and computers.

In the past, Netflix paid a wholesale price to acquire Warner Bros.

DVDs and distribbed those to its subscribers.

But the studio feared an earlier release window would hurt sales of its homevid titles.

The 28-day window allows us to continue making our most popular films available to Netflix subscribers while supporting our sell-through product,” said Ron Sanders, president of Warner Home Video, in a statement.

A dispute arose in August when Warner Home Video told DVD distributors it wanted to impose delays in sales to kiosk services such as Redbox and mail-order rental services. Netflix indicated Wednesday that by agreeing to the 28-day window, it gains more inventory along with increased access to content for its online streaming service.

We’ve been discussing new approaches with Warner Bros. for some time now and believe we’ve come up with a creative solution that is a ‘win-win’ all around,” said Ted Sarandos, chief content officer for Netflix. “We’re able to help an important business partner meet its objectives while improving service levels for our members by acquiring substantially more units than in the past after a relatively short sell-through window.”

The Netflix pact is the latest digital distribution deal for Warner Bros. as it and other studios in Hollywood try to figure out the best way to monetize the online sale and rental of its library of pics while also combating piracy.

It’s one of the majors, with the exception of Disney, to back the Digital Entertainment Content Ecosystem’s (DECE’s) cloud-based digital rights locker that will store the movies and other entertainment media files consumers purchase to play on multiple devices.

We’ve got to build the foundation and put the building blocks together,” Warner Bros. Home Entertainment Group president Kevin Tsujihara told Daily Variety. “If you don’t give the consumer what they want, they will figure it out another way to get it. We have to be in front of it.”

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