Netflix CEO: Users Don’t Know When DVDs are Released

Netflix CEO Reed Hastings at NewTeeVee Live

When Netflix (s NFLX) first announced that it would delay rentals of Warner Bros. (s TWX) new release titles by four weeks to help the studio increase DVD sales, we argued that the subscription rental firm was making the deal to focus more on the long tail. But there’s one more reason Netflix thinks that delaying new releases makes sense: Most subscribers have no idea when movies actually hit the DVD release window, CEO Reed Hastings said during the company’s fourth quarter earnings call earlier this week.

“For us, most consumers are not sure if DVDs come out 90 days after the theatrical release, 120 days, 150 days, 180 — it is all over the map. It constantly changes, not only between studios but also between specific releases. So there is not a high expectation of any perfect day when it is supposed to be out,” Hastings said. “Subscribers are just not that aware of when DVDs come out relative to [their theatrical release].”

The first title to be affected by the Warner Bros. deal is The Invention of Lying, which just became available on DVD. As a result, Hastings said the company hadn’t received many complaints about the title not being available. Of course, subscriber apathy could also be a result of little interest in the Ricky Gervais vehicle, which was rated only “57 percent fresh” by Rotten Tomatoes. That said, Hastings reiterated that the company was “happy with the decision.”

According to Netflix, only about a quarter of its DVD rentals are “new releases,” a trend that seems to be borne out by the most popular 100 films shipped nationwide, according to an interactive map that appeared in the NY Times a few weeks ago. While some of the most popular films, like The Curious Case of Benjamin Button, were relatively new, a number of the most popular titles were those that had fallen out of the new release window.

A study released earlier this year found that marketing movies long before they’re actually available for sale on DVDs created “confusing market signals.” In some cases that led to offline piracy, because consumers notice that a title hasn’t been released yet, despite the marketing. In Netflix’s case, however, those confusing market signals actually seem to benefit the company.