There was a time when Netflix had a great business model: instead of having to get in your car, schlep to the nearest video rental store, pay late fees, and compete with others for the latest blockbuster movie (because, as the name Blockbuster Video implied, there wasn't a lot of anything else), you could, from the comfort of your home order movies to be mailed to your house. For a monthly subscription fee, you could keep them without paying late fees (this helped Netflix too, by cutting down on its postage costs), and the selection was also long-tail. As a result, I rented watched many, many more movies than I would have. However, in the wake of its deal with Warner, in which Netflix agreed to a 28 day embargo on renting the latest movies, in exchange for reduced DVD purchase costs, I have cancelled my subscription. Netflix's new business model is, apparently, the old business model of businesses first, consumers last.
I expect the new business model will also be bad for Netflix and the studios. Instead of watching movies, I will do something else. Nor does the business model make sense now: it assumes that consumers want something -- to rent -- but that the studios, by depriving consumers of what they want, will be able to force them to do something they don't want to do: buy. I doubt it. I rented movies to watch them once. If I couldn't rent them, I didn't buy them. Why not? Because movies are just not important in the larger scheme of life or even the smaller scheme of consumer behavior: movies are merely entertainment, and usually trivial entertainment that doesn't warrant going out of your way to accommodate a scheme set up to frustrate your desires.
If I couldn't rent a movie I did something else, and usually did that something else first anyway. Picking up a book, practicing clarinet, reading the New Yorker, are all perfectly fine, and usually better, alternatives. And if I did want to buy a movie, I would do it regardless of whether I could rent it, so the idea that the studios and Netflix can get consumers to buy when they only want to rent, doesn't make sense to me. What does make sense to me is to not give money to those who don't care about offering me what I want, and that's what I have done by cancelling my Netflix subscription; not out of spite or anger (its too trivial to get upset about anyway), but because its the wrong business model.
