In an attempt to steal a few morsels off of Netflix’s plate, satellite TV vendor DirecTV is launching a new service called DirecTV Cinema. In an agreement similar to the one recently reached by Blockbuster with some of the major Hollywood studios, DirecTV will be able to offer movies on demand nearly a month before they become available on Netflix.
The new deal will make as many as 400 new movies from Universal Studios, Twentieth Century Fox and Warner Bros. available on a pay-per-rental basis. DirecTV currently has 19 million subscribers, and the hope is that the new feature will increase the revenue stream from the existing client base, and also attract new subscribers to the fold.
Netflix, of course, now offers a certain portion of their library in streaming, on-demand format to their subscribers. They recently struck a deal with studios that will allow them to increase their streaming selection, although they will have access to these titles nearly a month after the DVDs go on sale. This seems to be a compromise that the studios have worked out with both Netflix and Blockbuster to maximize profits from DVD sales when revenue from that niche continues to decline.
Paul Guyardo, DirecTV’s chief sales and marketing officer, recently told BusinessWeek, “Research tells us that 15 to 20 percent of our customers also subscribe to Netflix, so that’s where the genesis of this idea came from.” According to Guyardo, the movies will be of Blue-Ray grade, which is superior to the streaming quality currently offered by Netflix.
While DirecTV might be taking aim at Netflix, however, a more likely target might actually be cable provider Comcast, who also has an on-demand library. While DirecTV’s new feature might exceed Comcast’s in terms of visual quality and title selection, their pricing model will be similar.
It should be remembered that the primary reason that many consumers are drawn to Netflix is the attractive subscription price. For $8.99 per month, they can view the entire Netflix library on disks, and a certain portion of those titles on-demand, whereas the DirecTV price points will be $4.99 and $5.99 per rental, with rental periods lasting 24 to 48 hours after the first viewing begins.
True, under the new agreements, Netflix customers might have to wait a bit longer to see the most recent titles, but for many consumers timeliness is a secondary issue. If they felt a greater urgency about seeing the latest releases, they would probably have seen them during the original theatrical run.
For most Netflix customers, convenience and economy are primary considerations. While the industry continues to evolve in leaps and bounds, until the next paradigm shift occurs, Netflix will continue to have the most attractive offering for the busy movie buff who likes to watch films frequently, with limited hassles, and a minimal bite to the pocket book.
