Netflix, Warner Bros. rejigger movie renting

From CNET News.com: Netflix subscribers who stream films over the Web will soon be getting access to a greater number of movies from Warner Bros.

In a groundbreaking deal for online movie rentals, Netflix and Warner Bros. Home Entertainment announced Wednesday that they have expanded their licensing arrangement for streaming movies, and Netflix now has licensing rights to more of the studio's catalog content. In exchange, Netflix agreed to do something it has never done before. The movie-by-mail service won't offer new releases from the studio on DVD or Blu-ray discs until 28 days after they go on sale.

Before you new-movie fans go berserk, listen to what the deal means for the studio and the Web's No. 1 film-rental service. Let's start with Netflix.

Netflix needs content for the company's streaming service and must obtain that content in a difficult market.

CEO Reed Hastings has proved he can obtain plenty of physical film discs, even when the studios have tried to stop him. But to stream movies, Netflix needs licensing rights and those are much tougher to come by than discs. With the Warner Bros. contract, Hastings has obtained those rights from one of the major Hollywood film studios. In addition, Warner Bros. has promised to provide Netflix with a greater number of DVD and Blu-ray discs to rent once the "sales-only" period for a film runs out.

"We're able to help an important business partner meet its objectives while improving service levels for our members by acquiring substantially more units...after a relatively short sell-through window," said Ted Sarandos, chief content officer at Netflix. "At the same time, we're able to extend the range of choices available to be streamed to our members."

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