Stephanie Prange is the editor in chief of Home Media Magazine. The Yale University graduate joined what was then Video Store Magazine in 1993 and was instrumental in transitioning the publication into a tabloid newsweekly. She spearheaded the publication’s reviews section, as well as aggressive coverage of the home video sales market. She also helped launch the magazine’s Web site in 1996. In her position as editor-in-chief since 2006, she has spearheaded the launch of such projects as the daily blast, transmitted via email each day to readers, and Agent DVD, a consumer publication aimed at genre enthusiasts who attend Comic-Con International in San Diego. She has freelanced for The Hollywood Reporter, The Los Angeles Times and parenting publications. She has an M.A. in journalism from the University of Southern California.
Digital Could Shift in Studios’ Favor
3 Jun, 2011 By: Stephanie Prange
Non-exclusive deals.
That seems to be the studios’ trump card in dealing with digital players such as Netflix and Hulu.
“Sure, we’ll sell you our back catalog for a hefty price, but we reserve the right to sell the same deal to other players (read: your competitors), too,” is the studio line.
In this game, Netflix and Hulu are victims of their own success. No longer will these services be able to buy content at rock-bottom prices and offer a buffet of low-cost content to consumers at a relative bargain.
The New York Post reports Netflix’s much-discussed content license talks with Starz Entertainment could cost it about $350 million annually. That content deal — originally inked for only $30 million annually according to analysts’ estimates and scheduled to expire in 2012 — gives Netflix streaming access to movies from Disney and Sony Pictures, among other content. It has been one of the best offerings for the subscription service. The New York Post, citing comments from an executive involved in the negotiations, reported the $350 million fee would top Netflix’s recently signed $200 million annual tab for access to content from pay-TV channel Epix.
Heck, digital content is starting to cost Netflix some real money.
The company will get no sympathy from the studios, which see Netflix, in particular, as having a cheap ride so far in delivering digital content.
Determined not to get burned again, content owners have decided to squeeze as much profit out of the digital delivery services as they can. Replicating the old physical rental business, the studios plan to go to each middle man and exact the best deal possible — especially for back catalog that has exhausted its sellthrough worth in the DVD and Blu-ray Disc business.
The studios seemingly have little to lose. The DVD windfall is over on catalog releases. New-release Blu-ray Discs still sell well, but the Blu-ray catalog business will never replicate DVD.
While it was taking on the debt-laden Blockbuster Inc., Netflix was a more nimble competitor with no legacy costs to impair its rise. Now it is quickly growing into an established business that the studios plan to drain for a bigger share of the pie. Netflix — as the most important player in digital delivery of content — has a target on it, and the studios plan to take as big a share as they can.
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