Source: Sony Agrees to 28-Day Delay to Netflix

6 Oct, 2010 By: Erik Gruenwedel

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Sony Pictures Home Entertainment and Netflix have agreed to 28-day delay on a title-by-title basis, a source familiar with the deal has confirmed to Home Media Magazine.

Netflix spokesperson Steve Swasey verified the existence of a 28-day window but declined further comment. A Sony rep declined comment.

The specter of a distribution deal between Sony and Netflix that mirrors similar agreements between the Los Gatos, Calif.-based service and Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment, arose earlier this week when Netflix disclosed to subscribers that Sony Pictures’ top box office hit in 2010, The Karate Kid, would not be available until Nov. 2 — 28 days after its Oct. 5 street date.

Eric Wold, analyst with Merriman Curhan Ford in New York, said that if the deal is per title and does not include Sony’s entire slate or streaming, it isn’t much of an arrangement. Then again, Wold believed the news was enough to spook some Coinstar shareholders who he said might believe Sony is preparing to opt out of its street-date distribution deal with subsidiary Redbox next September.

“I get the sense that people are selling [Coinstar] shares today as they believe this signals Sony’s preference towards a window,” Wold said in an email.

The analyst was surprised by the stock's minor downturn since there is nothing that can happen with Redbox’s Sony agreement until Sept. 30, 2011 at the earliest. On that date, Sony has the option to terminate its Redbox agreement after the initial two-year period. The option is on that date only and not from that date forward.

Wold doubts consumers will abandon one rental option in search of another simply to get select packaged media titles earlier.

"Given that all three studios that have implemented windows so far ... consumers are unlikely to switch," Wold wrote in an Oct. 7 note. "And with a large number of brick-and-mortar stores closing and other rental choices (e.g., digital, VOD, remaining brick-and-mortar stores) renting movies at much higher prices, we continue to believe consumers (those that actually know about DVD street dates) are unlikely to move around to other rental options during the initial window period."


 

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