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It seems the studios have figured out one way to ease the pain of declining DVD revenues: putting the screws to Netflix.

Netflix

It seems the studios have figured out one way to ease the pain of declining DVD revenues: putting the screws to Netflix.

That’s just one of the methods that came out of Blu-Con, an industry conference for the Blu-Ray disc business held Tuesday in Los Angeles. In panel discussions that brought together the top-ranking DVD executives for Warner Bros. (NYSE: TWX), Sony (NYSE: SNE) Pictures, 20th Century Fox, Universal Pictures and Lionsgate (NYSE: LGF), there was clear consensus they were not happy with current deal terms with Netflix (NSDQ: NFLX). Craig Kornblau, president of home entertainment at Universal, indicated they’ll look to extract more from the streaming service upon renegotiation.

“While there are things in the Netflix system that are clearly cannibalistic, there are things we can change,” said Kornblau, as quoted in The Los Angeles Times. “They can pay us more or we can reduce the quality of what we give them.”

The “pay us more” part is fait accompli at this point; Netflix has been giving its checkbook a workout all over Hollywood in recent months and isn’t shy about that. But “reducing the quality” is a shot across the bow given Netflix will likely be in the hunt for bigger and better titles, and in the nicest resolution U.S. broadband can carry.

Though recent stats released by Digital Entertainment Group showed a 14% decrease among standard-definition DVDs in the first three quarters of the year, there was near-unanimity among the DVD deans that the 28-day rental delay imposed on Netflix and Redbox for select titles has kept that number from being even higher. It’s worked so well that Warner Home Video president Ron Sanders said he’ll look to increase the 28-day total, which Home Media Magazine indicated has boosted VOD rentals as well.

“To be honest, 28 days is a little shorter than what we really need, but there will be a chance for this to get looked at again later,” he said.

Not that squeezing Netflix is the only tactic the studios will look to on the DVD front. They were all bullish about more growth coming from Blu-Ray in the coming year, particularly once library titles start to adopt the format. And then there is the much ballyhood “premium VOD” window, which Time Warner chairman Jeff Bewkes tipped his hat to Wednesday in the the conglomerate’s Q3 earnings call.

Netflix wouldn’t address any specific comments made by the studios chiefs, but a spokesman did tell PaidContent on Wednesday, “We’re clearly interested in negotiating with the studio and network partners, but we’ll continue to do that in private.”

By Andrew Wallenstein

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  1. Surprisingly, neither the studios nor NetFlix seems eager to provide a medium that would help filmmakers to connect directly with viewers and potential viewers. At least until they do, filmmakers are going to need upstart services like http://www.fargotube.com.

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  2. That’s the spirit Kornblau:”They can pay us more or we can reduce the quality of what we give them.”

    1) If you treat the internet as just another distribution channel you will get what you are getting right now. Cannibalization of DVD revenues.

    2) If you treat Netflix, your partner, like an adversary, you will get exactly what has happened in the past – they will get into the production business and become a competitor.

    3) There is an alternative: Collaborate with your partner to take this streaming “experiment” to a higher level of quality and customer experience so Netflix delivers more, meriting a premium price vs. DVD’s, and gives you a platform that creates new possibilities to create customer value and new revenue streams.

    If communication technology is going to grow the entertainment market, start thinking about “What the Customer Wants to Pay For”: http://www.huffingtonpost.com/katherine-warman-kern/what-customers-want-to-pa_b_777281.html

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  3. isn’t this bordering on collusion if the studios are working on this together?

    “While there are things in the Netflix system that are clearly cannibalistic, there are things we can change,” said Kornblau, as quoted in The Los Angeles Times. “They can pay us more or we can reduce the quality of what we give them.”

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  4. Miguel Angel Friday, March 18, 2011

    Either Americans are very cheap or this is really absurd. for 7US$ you get a subcription, among others, to the best 1,000 films of all times (Source: New York Times) and for just 2US$ more you get a new recently released DVD per day!!! If you want to watch it on your PC then you don’t like movies. Get a real LED TV such as Pionner, or Samsung plus a great 5.1 or 7.1 surround systems fro those recomended by Aboslute Sound, or Stereophile Magazine. Get real about cinema (movies for those ewho don’t like movies much) and about NETFLIX.

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