HBO discontinues discounting discs
Hollywood is pushing back Netflix again.Warner Bros. is expected to announce at next week’s Consumer Electronics Show, in Las Vegas, that it’s among the first of the major studios to hold Netflix off from making new rentals of movies available until 56 days after they become available for purchase at retail. The studio was able to double its previous 28-day window with Netflix, as part of a new contract renegotiation with the rental firm this month, sources told Variety. Other studios are expected to ask for a similar longer window when their own deals come up. Warner Bros. wasn’t the only Time Warner subsidiary hitting back at Netflix this week. HBO decided to discontinue making DVDs of its programming available via wholesale distributors that could offer volume discounts, as first reported by The New York Times. An HBO spokesman confirmed the policy change. Netflix can still offer HBO programming for rent via mail, but it’s going to cost the Los Gatos, Calif.-based company an unspecified extra amount. The wholesale ban went into effect Jan. 1. Perhaps the move was to be expected given Netflix CEO Reed Hastings recently compared his business directly to HBO, heightening a competitive tension that has been building for some time. In February, Netflix is making the distinctly HBO-like move of introducing the first of its original programming slate, series “Lilyhammer” starring Steve Van Zandt, who had a role on the HBO drama “The Sopranos.” Last year, HBO opted to make its entire library off-limits to Netflix for streaming purposes. HBO can’t issue a similar blackout on the disc side because the first-sale doctrine entitles Netflix to buy them for distribution purposes. The news of the new window was first reported by AllThingsD, which also cited Redbox and Blockbuster as agreeing to the new 56-day window. Warner Bros. declined to discuss the situation. But the move wouldn’t come as a surprise, given that the studio hasn’t been shy in wanting to extend the window. Nearly a year ago, Time Warner chief Jeff Bewkes said that the 28-day window supported “higher-priced DVD sales, electronic sell-through, and rentals and VOD. But it’s getting kind of clear that the acceleration of the consumer usage of [subscription] services, including Netflix, makes it a good time for us to reevaluate the terms.” Bewkes made the comments to analysts during an earnings call last February. Since the delay, Warner Bros. has also found that the 28-day window has also helped boost sales for DVDs and Blu-rays by as much as 32% at retailers like Best Buy, especially during the first four weeks after it’s gone on sale. Warner Bros. was able to negotiate for the 28-day window in January 2010, when it also got Coinstar’s Redbox to agree to the delay, in return for discounts on discs it rents, as a way to protect the sale of its physical sales.
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