[mdasen]

The problem with VOD is that Hollywood holds all the cards (as the article points out). With DVD, Netflix had leverage because the movie studios sold DVDs. Fair use and first sale offered Netflix the leverage and cover to get content at reasonable prices. With VOD, Hollywood can negotiate rates to their liking. I'm sure a part of Hollywood wouldn't mind Netflix dying with the logic being that customers would buy more DVDs if that happened (I'm not saying that would be the outcome, but that seems to be the logic that parts of Hollywood might employ).

This is one of the reasons I was saddened by Netflix de-emphasizing DVDs by mail. That part of the business offered them leverage over streaming rates. "Look at it this way: you can offer us movie X for 30 cents per viewing or we can buy a DVD of it and rent it to 200 people for that $20 purchase." It provides a compelling scenario: $20 for 200 people seeing the film vs. $60 for 200 people seeing the film. However, as Netflix's customer base moves to all-VOD and Netflix itself indicates that DVD by mail is going to become a thing of the past, studios see a Netflix without an alternative to whatever rate they set. Netflix used to have an alternative rate: the price of the DVD.

I'm not exactly sure how we should deal with this situation. I don't think VOD services can realistically thrive unless they get similar footing to what DVD-rental businesses got. Specifically, that they can get a show on equal terms to their competitors (ie. Amazon, Netflix, and my hypothetical video startup can all license movie X for 30 cents per viewing or whatnot). In the meantime, exclusives, content that disappears due to renegotiated licenses, content that won't be licensed, etc. will be the status quo. These are bad ideas (it's 1 am and I'm tired), but maybe something like "you can rent by streaming X times a DVD that you've purchased" so that they could pay the DVD's price and that price would cover a number of streaming rentals or a law saying that companies must give substantially equal access and terms on their content.