Blog Post

Netflix CEO: Users Don’t Know When DVDs are Released

Netflix CEO Reed Hastings at NewTeeVee Live

When Netflix (s NFLX) first announced that it would delay rentals of Warner Bros. (s TWX) new release titles by four weeks to help the studio increase DVD sales, we argued that the subscription rental firm was making the deal to focus more on the long tail. But there’s one more reason Netflix thinks that delaying new releases makes sense: Most subscribers have no idea when movies actually hit the DVD release window, CEO Reed Hastings said during the company’s fourth quarter earnings call earlier this week.

“For us, most consumers are not sure if DVDs come out 90 days after the theatrical release, 120 days, 150 days, 180 — it is all over the map. It constantly changes, not only between studios but also between specific releases. So there is not a high expectation of any perfect day when it is supposed to be out,” Hastings said. “Subscribers are just not that aware of when DVDs come out relative to [their theatrical release].”

The first title to be affected by the Warner Bros. deal is The Invention of Lying, which just became available on DVD. As a result, Hastings said the company hadn’t received many complaints about the title not being available. Of course, subscriber apathy could also be a result of little interest in the Ricky Gervais vehicle, which was rated only “57 percent fresh” by Rotten Tomatoes. That said, Hastings reiterated that the company was “happy with the decision.”

According to Netflix, only about a quarter of its DVD rentals are “new releases,” a trend that seems to be borne out by the most popular 100 films shipped nationwide, according to an interactive map that appeared in the NY Times a few weeks ago. While some of the most popular films, like The Curious Case of Benjamin Button, were relatively new, a number of the most popular titles were those that had fallen out of the new release window.

A study released earlier this year found that marketing movies long before they’re actually available for sale on DVDs created “confusing market signals.” In some cases that led to offline piracy, because consumers notice that a title hasn’t been released yet, despite the marketing. In Netflix’s case, however, those confusing market signals actually seem to benefit the company.

10 Responses to “Netflix CEO: Users Don’t Know When DVDs are Released”

  1. This is so untrue! I am a consumer who knows when the new dvds are coming out. There are many online web sites which tell you when the dvd will release. I wait every Tuesday to go rent a new dvd because I have researched and been waiting for it to release. I am cancelling netflix because luckily, blockbuster releases them first now and I don’t have to wait for netflix. I have watched so many movies, I need new movies every Tuesday.

  2. There just isn’t any big demand for DVDs like there is for a movie that is premiering at theaters. If you really MUST see the movie, you have already seen it at the movie theater when it came out. I don’t know of anyone … not even my most nerdy of friends … that anxiously await any DVD release.

    Adding to this lackluster demand is the fact that some studios release DVDs of just the theater release but wait months before releasing a DVD with any special features. As far as I’ve heard, this has only angered people that would like to own the DVD but don’t buy it because it is just the theater release. The last Batman movie is a perfect example of this and the anger I heard then from Batman fans that the first DVD was just the theater release. Many people think that movie studios do this to try to make two sales off of movie fans who “just must” have the DVD when it comes out and thus end up buying it twice to get the one with the special features.

  3. I continue to think this a good idea, and shows some clever negotiation between Netflix and WB.

    I definitely fall into the camp of not knowing or particularly caring when a film is released on DVD. I am sure Netflix has enough user data on how soon users actually rent new release DVDs to know with confidence that making this compromise with Warner is not going to impact their subscriber business. On the other hand,. adding to the streamble library is a necessity for Netflix to remain the leading OTT content provider.

  4. While it is true that most consumers don’t know when a DVD is coming out, I think that this statement was a bit misleading. Typically, when studios do release films on DVD, they give it a huge push by running commercials and ads letting the world know about it. So while consumers haven’t come to expect a film on a certain date, they will go looking for it once they see the marketing push and will be disappointed with not being able to rent it.