Just as Netflix is about to lose all of its Starz movie offerings, HBO has decided to stop selling its DVDs to the service. Mail order DVD subscribers will still have access to the latest True Blood, but at a higher cost to Netflix, which will now have to get the DVDs sans a wholesale discount. Netflix claims getting the discs from someone else won't be a huge financial burden. But we imagine if all of Netflix's competitors started pulling their deals, the cost would start mattering. Netflix thinks the DVD fad is on its way out, but the mail-order component is still a $1 billion business. And for people who want to finally watch The Wire or Game of Thrones, Netflix has been the go-to source. We've already seen the erosion of the streaming library (Netflix's Starz deal expires in February 2012, ie. very soon) what would be left of Netflix if the DVDs go, too?
For many, access to a seemingly unlimited library makes a Netflix subscription worthwhile. And the company hasn't altogether given up on DVDs -- even if makes it very hard to sign up -- it still thinks a big enough base of its clientele enjoys HBO catch-up. Getting DVDs is much easier than obtaining streaming content rights, as we saw in those Starz negotiations. But, Netflix has amassed its extensive DVD library via volume discount deals like the one it just lost with HBO.
The more content providers view Netflix as a competitor, rather than a partner, the harder a time Netflix will have negotiating content rights -- for both its streaming and DVD libraries. With Netflix licensing its own exclusive content, Netflix fancies itself an HBO rival. The first Netflix-only series, Lillyhammer will debut on February 6 -- a possible distraction from those missing Starz flicks? And Netflix scored the rights to the new Arrested Development season. This move shows that HBO feels the same way, especially now that it has HBO Go, a Netflix-esque service.
This article is from the archive of our partner The Wire.