28-Day Waiting Period for New Netflix and Redbox DVDs

If you are a Netflix or Redbox customer, you may already be aware of the policy which forces you to wait 28 days to rent so-called "new DVD" movie releases from Warner Brothers movies.This may seem not seem like such a big deal, especially if you don't rent DVD movies from Netflix or RedBox. After all, you could simply walk into Blockbuster and rent the same movie, probably for a higher price. But wait....

Warner Brothers isn't the Only Studio Trying these Tactics: Could Other Movie Rental Companies be at Risk?

Twentieth Century Fox and Universal Pictures joined Warner Brothers in blocking Redbox, perhaps due to the rock bottom rental prices through Redbox.Think about the possibilities. Redbox rentals are downright cheap, costing $1 a night and the company has been so successful that its doubled revenue from the previous year. That is a lot of money, indicating that some movie viewers prefer rentals over the purchase of brand new DVD movie releaes. What if every new DVD went straight to a kind of movie "holding tank" and couldn't be rented for at least 28 days? Would you wait it out or would you become impatient and shell out the price of a new DVD?

Warner Bros seem to be betting that movie buffs will start buying their DVDs again, stop renting them so often and put more dollars back into Warner Brothers. Netflix has been downright cordial about this development, cutting discount deals with Warner Brothers on their huge collection of older movies. But Redbox hasn't been as cooperative. They've filed lawsuits again all of the studios.

Will Netflix and Redbox Customers Stop Renting Warner Brothers Movies or Will They Wait - and Save Dollars?

Warner Brothers is taking a gamble by keeping their newest releases away from Netflix and Redbox for nearly a month. In the recession, rentals of DVDs from Redbox and Netflix as well as video on demand movies have soared while sales of brand new DVDs have suffered. According to one source, Rentrak, December was particularly popular, with orders rising 19 percent over November, as seen here. Warner Brothers movies were among the top ten rentals. Top titles included Terminator Salvation, Four Christmases, Harry and the Half Blood Prince and The Hangover. Fox Studios had the number 2 title, All About Steve but The Hangover was the clearly in the top spot, being the most-viewed title. If Warner Brothers' bet pays off, sales of their DVDs could rise.

Why Warner Brothers Strategy Might Work - and Why it Could Backfire

Imagine family and friends, together for the holidays, eager to watch The Hangover or Harry and the Half Blood Prince. Would they shrug off the rental delay for these DVDs and simply wait weeks longer or would they find some other way of seeing the movie, perhaps even turning to pirated copies? Would they buy a couple of movies, brand new ones, rather than endure the wait? The trouble with making a business decision which shuts off DVD rentals to certain groups of customers is the one variable that isn't totally predictable: the economy and whether consumers can wait for that hot new DVD release or if 28 days will test their patience to the breaking point.

Sources:

Rentrak announces Top Ten Movies-on-Demand Titles for Two-Week Holiday Period Ending January 3, 2010, Fox Business, January 8 here
Defending a Red Menace, Wall Street Journal, here
CES: Netflix Friends Hollywood, WSJ, January 8, here