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Virtual DVDs, Revisited
This isn't a silly wish-fulfillment question like "Why doesn't Papa John's give pizzas away for free?" or "Why doesn't Gmail come with more free storage space?" This is about why Netflix and the studios won't take our money for something they could legally provide -- the exact same service that they provide for regular DVDs, but in streaming virtual-DVD form. In other words, consider Bob who wants to pay Netflix $15 a month for their standard DVD-rental service, watching up to 10-20 movies per month for the flat monthly fee -- but he only wants to watch them on a phone or tablet. A profit-seeking company, with the rights to provide the movies in any format, would offer Bob that deal. But they don't offer that option, so Netflix and the studios get nothing, and Bob probably figures out how to pirate movies for free instead. Why would a profit-maximizing company turn down the opportunity to take Bob's money? If the free market never obstructs deals which are a win-win for everybody, why doesn't that happen here?
Some quick responses: A few users said that they wouldn't want to switch from DVDs to "virtual DVDs" even if they could, since they prefer regular DVDs because they have limited bandwidth or Internet access, or their main TV was hooked up to a DVD player but not an Internet streaming device, etc. So to clarify, what I was asking is why Netflix doesn't offer the option of checking out virtual DVDs instead of real ones. So of course anyone who preferred regular DVDs could still get those, but you would have the option of having streaming "virtual DVDs" instead of (or at the same time as) the regular DVDs mailed to your house.
A couple of people argued that the real difference is because of the first sale doctrine -- once Netflix has bought a copy of the DVD, it can do whatever it wants with the DVD, including renting it to customers an unlimited number of times, without re-negotiating the rights with the studio. On the other hand, if Netflix wants to stream a movie to its users, it has to obtain the studio's permission, which could come with any number of restrictions (Netflix streaming is geographically limited to U.S. users) and could be revoked at any time. Hence, no virtual DVDs.
Unfortunately, that explanation doesn't work because Netflix generally acquires DVDs from studios as part of a cooperative agreement, not because once Netflix has the DVDs "they can do anything they want and the studios can't stop them". And any time Netflix acquires a DVD from the studio as part of a cooperative agreement, it really doesn't matter what the pricing agreement is between them, you are still left with the non-trivial question: Why don't they just add in the potential customers of "virtual DVDs", and then they would have more money to divide up all around?
Suppose the studio sells the DVD to Netflix for a flat fee of $50. Netflix pays this much because they expect enough users to check out that DVD, that the DVD will be responsible for bringing in an average of $60 worth of users' membership fees. Now, Netflix knows that if they bought the rights to a "virtual DVD" -- which could only be "checked out" to one user at a time -- they would be able to make $66 over the lifetime of a that virtual DVD, since they'd be able to make slightly more by including the users who didn't want to deal with regular DVDs. So they offer the studio $55 to acquire a single "virtual DVD", which can only be "checked out" to one user at a time, but which they have the rights to "check out" to people forever. The studio makes $55 instead of $50, Netflix makes a net profit of $11 instead of $10, and a few additional users get to check out a movie that they otherwise wouldn't have. Everybody should be happy with this change -- which makes it an interesting question as to why it doesn't happen.
Or, suppose that the studio negotiates a different royalty-based deal with Netflix: the studio gives Netflix the DVD, and Netflix pays them 50 cents each time the DVD is mailed to a user and returned. Netflix likes that deal because if the user is paying $15/month to rent an average of 20 movies per month, that's still 75 cents for Netflix for each DVD mailing, leaving them with 25 cents left over after paying the studio's royalty. But Netflix figures that if they offered a virtual DVD plan -- 20 "virtual DVD" rentals per month, for the same $15 -- they could rope in a few new paying users that they didn't have before, taking $15 per month from each user, paying $10 to the studios (50 cents royalty each time a "virtual DVD" is "checked out"), and having $5 left over. Plus of course the studios get $10 from each user that they weren't getting before. Again, win-win for everyone, so a bit of a mystery why they don't do it.
The moral of these two examples is that as long as the DVDs are provided as a cooperative agreement between Netflix and the studios, there is no simple explanation for why they don't offer virtual DVDs as an option. It doesn't matter whether the DVDs are bought by Netflix for a one-time fee, or rented by the month, or paid for in royalties based on the number of times that they are rented out, or paid for in royalties based on the number of days each user keeps them before mailing it back -- in all cases, virtual DVDs would bring in some additional money, which could be divided between Netflix and the studios so that they both come out ahead.
In rare cases the DVDs are actually not acquired as part of a cooperative agreement -- in 2012, Disney refused to provide copies of John Carter to Netflix, so Netflix simply went out and bought copies at retail and mailed those copies to their subscribers. In that case, of course, it's trivially true that Netflix could not provide "virtual DVDs" of John Carter to their users, because it would have been illegal without Disney's permission. But in the vast majority of cases where Netflix is providing DVDs to users with the studio's knowledge and cooperation, that's where it's puzzling that virtual DVDs are not an option.
In the last article I ended up concluding that the reason was price discrimination -- whereby a company provides two different tiers of service, at about the same cost to themselves, but where the cheaper version of the service comes with some inconvenience that is deliberately put in place to steer less thrifty shoppers to the more expensive version. In other words, maybe DVDs are inconvenient on purpose, to steer users towards spending $2-$5 to download a digital copy of each movie they want to watch, instead of watching 20 movies per month for $15. You can get cheap movies, but you have to be willing to deal with clunky DVDs. (The irony, of course, being that DVDs originally became popular because they were so much more convenient than their VHS tape predecessors.)
I'm not sure if my non-obvious answer is right. However I think the "obvious answers" are wrong.
Well, I'll manage. In 2013 I wrote about low-tech tablet hacks including #2, using C-clamps to mount a shelf to another bookshelf, and then attach a tablet holder to hold a tablet above my head while watching movies in bed, which is still to this day the most comfortable way I've ever found to watch a movie. It turns out it works for a portable DVD player as well, but for all the people who moaned at the last pictures going "When did Slashdot turn into Pinterest?", I didn't bother taking a picture this time. Just picture something that's such a hacky solution it looks almost steampunk, but these days, so does a portable DVD player.
Who are you, why should we care, where would we go if we WANTED to read this personal musing (not here, I'm guessing). Seriously.
I don't want to rain on your parade, but honestly Slashdot is not a "weblog". This kind of post is much better suited to your blog, but I'm guessing it doesn't get any hits when you post it there. Your amateur rendition of why the world should be your way is of no interest to me. It's not even tech-related, to be honest.
It's junk like this that TURNS PEOPLE OFF this website.
Getting the answers for the questions no one cared about, and presenting them in a fashion no one will read.
Giving his thoughts to the slashdot crowd is like giving a mule a spinning wheel. They don't care, and probably wouldn't know what to do with them even if they did.
Do you not remember CDNow, and the virtual CD service? You probably don't since it was annihilated in a legal storm of massive furor.
Why is Netflix being unable to offer "virtual CD"s any more complicated than "movie studio lawyers do not like it"??
"There is more worth loving than we have strength to love." - Brian Jay Stanley
September 2012
I think this will put it pretty plainly why.
http://news.slashdot.org/story/11/08/02/1852232/zediva-shut-down-by-federal-judge-mpaa-parties
If they sued someone over a remote DVD playback, then they would also license it differently and probably not under more favorable terms than "traditional" streaming.
I don't know everything.
I think what the author is getting at is a way for Netflix to get around streaming contracts as long as they have a physical DVD of the work. This has been tried and legally did not work.
Your "non-obvious" answer flows directly from the obvious answer that you say is wrong (and is the real answer) -- the first sale doctrine. The only reason Netflix has cooperative agreements with the studios is because they have the "threat" of simply going out and buying the DVDs. Without that, the studios would not deal with them, preferring to sell directly to customers. The cooperative agreements only come into play when the studios think they can gain a little bit by economies of scale vs forcing Netflix to go buy the discs (as happened in the Disney case you note). By doing everything they can to make Netflix as annoying for customers as possible, they try to force those customers to pay them directly rather than going through Netflix (which would make them more money -- attempted market segmentation), but as you note, it mostly just forces people to pirate instead.
Or someone's blog...
...Complete with shameless plugs to his last few blog posts. Funny, some sites actually ban you for pulling shit like that, even in the discussion* itself. Slashdot makes it an FP.
Pathetic.
* Personally I think that goes too far, on any site with even halfway functional moderation; but can we maybe at least keep the FP content on-topic?
"as long as the DVDs are provided as a cooperative agreement between Netflix and the studios, there is no simple explanation for why they don't offer virtual DVDs as an option."
Sure there are:
1. The virtual DVDs would compete with pay-per-use rentals (i.e. iTunes, Google Play, Amazon Instant, etc.).
2. The studios have in many cases already sold those rights - for example, HBO owns the rights for subscription-based streaming of all Universal movies from about 12 months after theatrical release until 24 months after release. Their rights don't extend to physical DVD, nor do they block online pay-per-viewing rental, but they DO block subscription-based services.
There are others, but to claim that this is something that isn't happening because those silly studios and those morons at Neflix haven't figured out that it's a good idea is moronic.
THis whole discussion is completely muddied by calling it Virtual DVDs.
It isn't virtual DVDs at all. I can't mount one remotely as a disk, or get an iso, and also probably not see the other stuff that would normally come on a DVD such as features and trailers.
You need to call it what it really is, conventional streaming on a views-per-month plan, which is pretty much identical to what you already get for your $8.99/month from Netflix other than what you get already isn't limited.
By adding a view limit you would probably save at most a buck month. If that amount of money is significant to you then you probably shouldn't have a Neflix account at all.
I'll stick to getting the physical DVDs by mail thanks. IMHO streaming sucks, no matter how you pay for it. DVDs dont assume a hidden requirement to have a stable internet connection, nor do they use bandwidth as you watch. They have far better image quailty than some masively compressed-for-internet video could ever provide, and you also ususally get all sorts of extras on DVDs such Directors voiceovers, bloopers and previews.
you also ususally get all sorts of extras on DVDs such Directors voiceovers, bloopers and previews.
Not always. Some studios have a habit of stripping out special features from rental copies. Some even strip out subtitles from rental copies, a practice that I find discriminatory against the deaf and hard of hearing.
Because the studios don't want another online sales channel to undercut their physical DVD sales (because their profit is higher on the latter). Because Netflix wouldn't make enough money from this service to offset the legal hassle that would come if they didn't play by the studios rules. Netflix is already being slightly bent over by its peers for network access - it doesn't need another hassle. Finally, if you press on some marginal activity like this, the studios might stop working with you altogether.
Is this enough, or need I go on?
That is all.
Copyright doesn't need to be outlawed but it does need to be severely overhauled. Simply changing the term length back to 14 years plus a one-time 14 year renewal would fix a lot of problems.
My sci-fi novel, Ghost Thief, is now available from Amazon.com.
/. should try this to see if this guy's ramblings are of interest to the readers here:
Let him submit his blog articles through the normal channels here as an "Ask Slashdot" sub.
If it is worth anything, it will get voted to the front page.
I would ask for a Bennett section so that we could ignore the posts but neither Timothy nor Soulskill can get things posted into the right sections anyway, so never mind.
'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
> Bennett's argument is that if Netflix has obtained the necessary rights to mail a physical copy of a newly released DVD, why can't they do the same thing virtually
It's pretty simple really. You just need to have been paying attention these last 10 years or so...
A DVD is the personal property of Netflix and they can do what they like with it. They don't need to ask permission.
Streaming of any kind is making copies of someone's work and that sort of thing is what is specifically banned by copyright. Get permission or you may be comitting a felony. Permission is required.
A Pirate and a Puritan look the same on a balance sheet.