Earlier in the year, Netflix signed deals with Twentieth Century Fox, Universal and Warner Brothers agreeing not to rent new DVDs by mail for 28 days from the date the DVD goes on sale.Yesterday, Netflix confirmed it has agreed to a similar deal with Sony and the 28-day window for their content. In exchange for Netflix agreeing to the studio’s terms, Netflix says they get access to more digital content allowing them build up their inventory of streaming titles faster.
But the problem I see with this approach by Netflix is that their inventory of streaming content hasn’t really grown by a large percentage over the past two years.
In January of 2008, Netflix confirmed it had about 12,000 titles available for streaming. In September of 2009, ads on their Web site put that number at 17,000. Today, it appears that Netflix has about 20,000 titles for streaming, although Netflix won’t confirm that number for me. If that number is accurate, it means that Netflix has only added about 4,000 movies a year for the past two years. That’s not a lot of content.
The problem I have with these deals is that neither Netflix nor any of the studios are willing to say just how much digital content Netflix gets or how new any of that content is. If this deal is so good for Netflix users, why won’t they give out any specifics? As a Netflix user, I want to know what I am getting by giving up the ability to get new movies by mail when they come out. I would think Netflix would want to reinforce that with customers by telling them that they may not be able to get new movies, but look at all this other great stuff you get in return. Netflix simply tells their customers that these deals are good for us, with no details for us to decide for ourselves.
Why should we believe that the consumer is the one that is really going to benefit from this when it appears that only the studios and Netflix benefit? Because Netflix agrees to the 28-day window, the studios charge Netflix less for the DVDs when they go to buy them. And because of the window, the studios get to try and sell more DVDs to us, even though consumers are asking for more first-run digital content. We’re not asking to buy more DVDs. So I see the benefit to Netflix and the studios, but what about the Netflix customer?
I’m sure many will point to the recent licensing deals Netflix has done with EPIX and other content owners to argue that Netflix is growing their inventory of digital content quickly, but the number of titles available for streaming don’t back that up. Netflix is spending a lot of money now on licensing digital content, yet the company doesn’t answer any questions about what their inventory looks like, the number of titles available, or any details on how old or new their digital inventory is. And while Netflix is quick to tell us about all the new licensing deals they do, they never mention when many of their older deals expire and that content is removed from the watch now inventory. The number of titles available for streaming is going up, but based on everything we have seen so far, I would argue that Netflix’s inventory of digital content simply isn’t growing fast enough.
Disclaimer: I am a long time Netflix customer and love the service.