Hollywood studios are considering a “sale-only” window for new DVDs and would charge less to rental outlets that accept delayed access to titles, Netflix Inc. Chief Executive Officer Reed Hastings said.
The delayed access would be voluntary and discussions are part of an effort by movie studios to give a jolt to declining DVD sales, Hastings said yesterday in an interview. No agreement has been reached and other rental services may choose not to participate, he said.
“If they can make it economically attractive for us, and it is economically attractive for them, then we both can voluntary agree to do it,” Hastings said.
DVD sales have dropped about 10 percent this year, as more people get videos online or rent using Netflix’s mail-order service or Coinstar Inc.’s Redbox kiosks. A sales-only window would hurt retail competitors more than Los Gatos, California- based Netflix, said Edward Woo, an analyst with Wedbush Securities in Los Angeles.
“The studios aren’t happy with the money they are making right now,” Woo said.
In the European Union, there is a legal framework that allows the studios to keep movies from being rented for a short period of time, Hastings said. That statute doesn’t exist in the U.S., so the agreement would have to be mutually beneficial, he said.
Netflix may agree to a deal with the studios in exchange for better rates on DVDs and rights to stream movies through the Internet when the sale-only window lifted, Hastings said.
Relative ‘Benefit’
“It would mean less spending on DVDs, it would mean more money on streaming and it overall could be a benefit for us relative to our competitors because we’re less new-release sensitive,” Hastings said. Roughly 30 percent of Netflix rentals are new releases, according to the company.
Time Warner Inc. has discussed creating a 28-day sales-only window, Hastings said.
Warner spokesman Scott Rowe didn’t return a phone call seeking comment.
Industrywide, DVD sales have fallen by about 10 percent this year, New York-based News Corp. Chairman and Chief Executive Officer Rupert Murdoch said at an investor conference last month.
Netflix rose $1.78 to $49.63 yesterday in Nasdaq Stock Market trading, prior to reporting third-quarter results. The shares have gained 66 percent in the past year.
The company said yesterday that third-quarter profit rose 48 percent on increased subscriptions. Net income rose to $30.1 million, or 52 cents a share, from $20.4 million, or 33 cents a share.
Coinstar, the Bellevue, Washington-based parent of Redbox, rose 33 cents to $34.93 yesterday and has climbed 79 percent this year
The delayed access would be voluntary and discussions are part of an effort by movie studios to give a jolt to declining DVD sales, Hastings said yesterday in an interview. No agreement has been reached and other rental services may choose not to participate, he said.
“If they can make it economically attractive for us, and it is economically attractive for them, then we both can voluntary agree to do it,” Hastings said.
DVD sales have dropped about 10 percent this year, as more people get videos online or rent using Netflix’s mail-order service or Coinstar Inc.’s Redbox kiosks. A sales-only window would hurt retail competitors more than Los Gatos, California- based Netflix, said Edward Woo, an analyst with Wedbush Securities in Los Angeles.
“The studios aren’t happy with the money they are making right now,” Woo said.
In the European Union, there is a legal framework that allows the studios to keep movies from being rented for a short period of time, Hastings said. That statute doesn’t exist in the U.S., so the agreement would have to be mutually beneficial, he said.
Netflix may agree to a deal with the studios in exchange for better rates on DVDs and rights to stream movies through the Internet when the sale-only window lifted, Hastings said.
Relative ‘Benefit’
“It would mean less spending on DVDs, it would mean more money on streaming and it overall could be a benefit for us relative to our competitors because we’re less new-release sensitive,” Hastings said. Roughly 30 percent of Netflix rentals are new releases, according to the company.
Time Warner Inc. has discussed creating a 28-day sales-only window, Hastings said.
Warner spokesman Scott Rowe didn’t return a phone call seeking comment.
Industrywide, DVD sales have fallen by about 10 percent this year, New York-based News Corp. Chairman and Chief Executive Officer Rupert Murdoch said at an investor conference last month.
Netflix rose $1.78 to $49.63 yesterday in Nasdaq Stock Market trading, prior to reporting third-quarter results. The shares have gained 66 percent in the past year.
The company said yesterday that third-quarter profit rose 48 percent on increased subscriptions. Net income rose to $30.1 million, or 52 cents a share, from $20.4 million, or 33 cents a share.
Coinstar, the Bellevue, Washington-based parent of Redbox, rose 33 cents to $34.93 yesterday and has climbed 79 percent this year
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