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Pushing the Red Envelope: Netflix Agrees to Delay Renting Warner Bros. New Releases


If you missed

Where the Wild Things Are

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in theaters and are looking forward to watching it on DVD in a few months, don't count on it showing up in a Netflix envelope the week it's released. The

Los Angeles Times

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reports that Netflix and Warner Bros., which distributes

Wild Things

and other hot titles ranging from

Sherlock Holmes

to

Ninja Assassin

,

entailing that the online rental juggernaut will delay renting Warner Bros. new releases for 28 days.

The deal would be minor business news if it didn't represent a fairly significant lurch in the ongoing

. American consumers are buying fewer DVDs and renting them more often, and more cheaply (i.e. via Netflix and the $1-per-day rental kiosk Redbox), which means

. Sales of high-definition Blu-ray discs and digital downloads/video on demand rose in 2009, but not enough to make the drop in DVD revenue look minor. Considering DVD sales are where much (sometimes all) of the profit comes from for many movies, big studios are understandably nervous.

The agreement between Warner Bros. and Netflix represents a compromise between the home-entertainment business as it has been and the home-entertainment business as it is becoming. Netflix loses out on being able to offer its subscribers WB new releases for a month but, according to the

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LAT

article, gains "a more favorable percentage of rental revenue" from the studio and paves the way for streaming more Warner Bros. titles, streaming of one kind or another being the assumed future of watching movies at home. Warner Bros. runs the risk of pissing off Netflix customers who expect those red envelopes to bring them whatever they want, whenever they want, but it forces those customers to consider going ahead and buying the DVD of a much-desired WB title or getting off the couch and heading to a bricks-and-mortar rental chain such as Blockbuster, where the studio makes more money off rentals. (It's not clear how, or if, the deal will affect independent video-rental stores such as Baltimore's much-loved

.) Both sides also avoid the kind of scrap that's broken out

. How the consumer wins in all this, other than maybe more streaming titles eventually, is still unclear.

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