CBS and the Disney Channel are bringing their TV shows to Netflix’ streaming video service, which has proven to be surprisingly popular: Wedbush Morgan analyst Michael Pachter guess that as many as 20% of NFLX subs stream video regularly.
This is a nice add for Netflix, because it makes its monthly subscription fee incrementally more valuable for its subs. But let’s not overplay this: CBS and Disney are already letting just about anyone watch any of their shows on the Web once they’ve aired on broadcast. So this isn’t revolutionary. Meanwhile, note what Hollywood still isn’t doing for Netflix: Letting it stream most of the movies it already rents to its customers.
By Netflix’s own count, it offers up 12,000 movies for on-demand streaming, compared to its physical catalogue of more than 100,000 titles. There are plenty of good titles in Netflix’s digital offering, but you’ll have to look hard to find them. Meanwhile just about every mainstream title is AWOL.
Don’t expect that to change anytime soon. Why? Because while you won’t get a Hollywood executive to say this out loud, the industry hates Netflix: The studios make most of their money selling DVDs to consumers. But Netflix buys a single disc and rents them out multiple times, and Hollywood makes very little from that. It can’t prevent it, either. But it doesn’t have to help the company transition to the digital future.
Wait a minute: Doesn’t Hollywood already let people rent its best stuff digitally, either online (AAPL) or via VOD (CMCSA)? Yes, but only when it can command the lion’s share of an a la carte rental price — a model that Netflix, with its all-you-can-eat monthly fee, doesn’t support. But if Reed Hastings and co. want to get Hollywood to play along, they may have to have to think about a different offering altogether.
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