First the content. A year after the launch of Netflix streaming option (enabled via a "Watch Now" button next to movies that can be viewed online), only 10,000 videos were offered, just 10 percent of the firm's long tail. And not the best 10 percent. Why so few movies? It's not just studio reluctance or fear of piracy. There are often complicated legal issues involved in securingthe digital distribution rights for all of the content that makes up a movie. Music, archival footage, and performer rights may all hold up a title from being available under "Watch Now". The 2007 Writers Guild strike occurred largely due to negotiations over digital distribution, showing just how troublesome these issues can be.Add to that the exclusivity contracts negotiated by key channels, in particular, the pay television networks. Film studios release their work in a system called 'windowing'. Content is available to a given distribution channel (in theaters, through hospitality channels like hotels and airlines, on DVD, via pay-per-view, via pay cable, then broadcast commercial TV) for a specified time window, usually under a different revenue model (ticket sales, disc sales, license fees for Netflix streaming Malaysia VPN 22 Copeland, 200823 Boyle, 2007Netflix Case www.gallaugher.com p. 13broadcast). Pay television channels, in particular, have negotiated exclusive access to content as they strive to differentiate themselves from one another. This means that even when a title becomes available for streaming by Netflix, it may disappear when a pay TV window opens up. If HBO, Showtime, or Starz has an exclusive for a film, it's pulled from the Netflix streaming service until the exclusive pay TV time window closes. Add to all this the influence of the king of DVD sales, Wal-Mart. The firm accounts for about 40 percent of DVD sales – a scale that delivers a lot of the bargaining power it has used to 'encourage' studios to hold content from competing windows or to limit offering titles at competitive pricing during the peak new release DVD period24. Taken together it's clear that shifting the long tail from atoms to bits will be significantly more difficult than buying DVDs and stacking them in a remote warehouse.
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