Warner Bros. now adding restrictions to your Netflix DVD queue
Giant media company Warner Brothers might be taking further steps to ensure that its updated distribution strategy for newly released DVD movies has the maximum effect — regardless of how petty the company may seem as a result.
Context & Ripple Effects
Warner Bros. has been rebuilding its home-video window for years: a 2008 tactic to revive DVD sales evolved into the 28-day rental window Redbox accepted in 2010, and earlier this month the studio confirmed it would make Netflix, Redbox and Blockbuster wait even longer for new titles. The new report goes a step further, claiming — still unconfirmed — that Warner may restrict how newly released discs even appear in Netflix's DVD queue.
The timing matters because Netflix is vulnerable: its subscriber base has fallen from more than 25 million to 20 million, customer satisfaction plummeted through a dismal 2011, and the company is counting on renewed growth in 2012 after streaming topped two billion hours in Q4. A studio squeezing the disc side of the business hits exactly where Netflix is weakest.
First-order effects
- Netflix's DVD-by-mail subscribers face delayed or restricted access to Warner's new releases, devaluing the very plan the company is leaning on to stabilize its post-2011 member base.
- Redbox and Blockbuster operate under the same extended wait, so all three disc renters lose the new-release traffic that drives their rental volume.
Second-order effects
- With new Warner titles scarce at rental price points, consumers are pushed toward purchase or early digital options — shifting revenue toward Warner's own sell-through channel and away from the rental intermediaries.
- Rivals without a studio backer must either accept Warner's terms wholesale, as Redbox did with its 2010 window deal, or find negotiating leverage elsewhere; Blockbuster's weakened position makes resistance least plausible there.
Third-order effects
- If the pattern holds, release windows become a standing lever of supplier power over rental platforms rather than a one-off negotiation — the same dynamic later visible when Amazon halted preorders of forthcoming Warner movies in 2014.
- Studios treating disc renters as a cannibalization threat accelerates the split between physical rental and digital distribution, forcing Netflix to justify its DVD business on catalog depth rather than day-one availability.
The trend: Studios are lengthening and tightening home-video release windows to protect disc sales, steadily eroding the new-release advantage of rental intermediaries like Netflix, Redbox and Blockbuster.