Did you ever wonder how the drive-thru came to be? I always pictured a marketing meeting at McDonalds, Burger King or some other behemoth. Some slick executive says, “Guys, this fast food thing is working. Our customers are happy, but I know what would make them even happier. Is there any way they could avoid the whole ‘getting out of the car’ thing? Could they buy the food without the hardship of actually moving their bodies?”
As moviegoers, we are becoming the drive-thru customers. Not too long ago if I wanted to see a particular movie, I had to get up, drive to the local video rental shop and hope what I wanted was in stock. Then along came Netflix. Now I could sit in my home, pick out virtually any movie and have it mailed right to me. Foreign? Obscure? Didn’t matter. But alas, there was that whole waiting problem. I could be forced to wait an entire day, maybe even two, to get what I wanted.
That all changed for me when my wife got me a Blu-Ray DVD player as a wedding gift. Her gift was jewelry but I wanted something more romantic. The main attraction was not the Blu-Ray itself, but that the player featured Netflix streaming. All of a sudden thousands of movies and TV shows were available instantly, without me having to move or wait.
Now I could do things on a whim. I had always wanted to see the original, British, version of “The Office.” One night the thought popped into my head and there was the show. Later a childhood friend and I watched the 1973 film of The Three Musketeers and then we remembered how we liked the Buck Rogers TV show as kids. As a lark we looked for it, and seconds later we were watching. Granted, as adults we noticed the cheesy dialogue and low-rent special effects, but still, it was a fun trip down Memory Lane.
Between Netflix, other streaming services, Tivo/DVR, and On Demand services, we have more movies at our disposal than ever before. Do we appreciate this bounty? Not really. Quite the opposite – we have become spoiled.
Witness the recent furor over the Netflix price increase. Most media outlets have featured stories about enraged Netflix customers and the growing backlash. MSNBC reports that at least two million Netflix customers will drop the service. It’s even causing Netflix shares to drop on Wall Street. Those greedy Netflix fat cats. What they did is shameful. It’s outrageous. It’s ... an extra $6 a month?
Yes, the fee for one DVD at a time with unlimited streaming will jump from $10 a month all the way up to $16. That’s it, that’s what’s causing all the anger, an increase of only slightly more than what a large coffee costs at Starbucks. The total price is still less then two movie tickets. And this is for a whole month of movies. The streaming service alone gives access to 20,000 titles. Then there’s the additional 100,000 titles on DVD. As the Washington Post opined, “If you do the math, the company still offers a unique service for a fairly low price.”
Sometimes if something comes too easy, it’s hard to see its real value. With streaming, I press a button and the movie appears. But it costs money for Netflix to bring that to me. Lots of money. Last year Netflix spent $406 million on streaming rights. In other words, that’s money Netflix is paying other corporations that own the titles (movies and TV shows) for the right to stream those titles to their subscribers. In the first three months of this year Netflix spent $192 million on streaming rights. Next year streaming rights are expected to cost at least $1.3 billion. I’m far from an economist, but it seems pretty simple. If there is increasing demand for a product, those that own the product will charge more. The media corporations own the films and TV shows and, seeing the growing demand for the product to be streamed into viewers’ homes, they will make Netflix pay much more for that privilege. Netflix charging its customers slightly more, and $6 is indeed only slightly more, is perfectly reasonable.
If we want to get upset about price increases, let’s find a worthy target. How about airlines charging for taxes that are no longer collected? How about sky high gas prices while oil companies rake in record profits? How about college tuition fees that grow way above the rate of inflation? As Americans we face these and many other steep challenges. But, as moviegoers, the truth is we’ve never had it so good.
August 1, 2011
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