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Virtual DVDs, Revisited

Soulskill posted about 5 months ago | from the still-waiting-on-virtual-laserdiscs dept.

Media 147

Bennett Haselton writes: "In March I asked why Netflix doesn't offer their rental DVD service in 'virtual DVD' form -- where you can 'check out' a fixed number of 'virtual DVDs' per month, just as you would with their physical DVDs by mail, but by accessing the 'virtual DVDs' in streaming format so that you could watch them on a phone or a tablet or a laptop without a DVD drive. My argument was that this is an interesting, non-trivial question, because it seems Netflix and (by proxy) the studios are leaving cash on the table by not offering this as an option to DVD-challenged users. I thought some commenters' responses raised questions that were worth delving into further." Read on for the rest of Bennett's thoughts.

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.

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Sigh (5, Insightful)

ledow (319597) | about 5 months ago | (#47110895)

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.

Re:Sigh (0, Troll)

cdrudge (68377) | about 5 months ago | (#47110981)

No, it's comments like yours that turn people off of this website. If you don't like a article, skip it.

Re:Sigh (5, Insightful)

ledow (319597) | about 5 months ago | (#47111075)

I'd say it's easier to ignore one comment, than an entire front-page article.

Especially given you can just "foe" me and never see me again. No matter how many times I've tried that with shitty articles / authors, I still end up with more shitty articles by the same authors.

Re:Sigh (-1)

Anonymous Coward | about 5 months ago | (#47111417)

Don't post here anymore. We don't like you.

Re:Sigh (5, Insightful)

khasim (1285) | about 5 months ago | (#47111109)

If you don't like a article, skip it.

Or you can present counter-points to explain WHY you did not like the article. Such as these:

1. Bennett Haselton is focusing on NetFlix. Whether his idea matches the business model that NetFlix has chosen OR NOT.

2. Bennett Haselton is focusing on the media players that he owns. Combine that with #1 and you have a very narrow complaint about a very niche service not being offered by a specific company that may not want that as their business model.

3. Bennett Haselton ignores the LEGAL ISSUES with his fantasy of a specific company offering a specific service for his specific devices.

4. Bennett Haselton is continuing on this tirade despite having been answered in his previous tirades.

Re:Sigh (2)

Jeff Flanagan (2981883) | about 5 months ago | (#47111149)

Khasim nails it. We can all get back to work now.

Re:Sigh (4, Funny)

Anonymous Coward | about 5 months ago | (#47110987)

I never thought I'd miss Jon Katz

time makes fools of us all

Re:Sigh (1, Flamebait)

Little_Professor (971208) | about 5 months ago | (#47111007)

Well said. I've got no idea who this asshat is, or why I am supposed to be interested in his lame idea

Re:Sigh (-1)

Anonymous Coward | about 5 months ago | (#47111043)

shut your fucking mouth you cum guzzling faggot

Re:Sigh (1)

Anonymous Coward | about 5 months ago | (#47111313)

Hi Bennett

Re:Sigh (0)

Anonymous Coward | about 5 months ago | (#47111071)

Where do I upvote or click like on this truly Insightful comment. :)

Re:Sigh (2, Insightful)

Spazmania (174582) | about 5 months ago | (#47111119)

because of the first sale doctrine

Unfortunately, that explanation doesn't work because Netflix generally acquires DVDs from studios as part of a cooperative agreement

Use your brain. Back before streaming, back before Netflix, back when Blockbuster was king, what motivated the studios to to make cooperative agreements for DVD rentals? If you said "first stale doctrine" you win the prize. The studios figured out they would make more money by taking a cut of the revenues instead of only getting a single sale for a DVD rented many times. The rental places figured that lowering the capital outlay for new releases was a right good plan too. So they came to a gunpoint agreement -- the gun being the first sale doctrine.

The deals with Netflix are little different than the deals with any other DVD renter. On the other hand, Netflix tries to avoid buying DVDs because they're out $20 when it breaks in the mail, versus cooperative agreements which replace them cheaply. But it has a few competitors who buy and rent the DVDs Netflix won't -- and ship them more carefully.

Meanwhile the precedents for streaming absent permission are 100% in the copyright owners' favor. Even if Aereo wins its case, DVD renters are still prohibited from breaking the DVD copy protection. So the owners don't have to permit it if they don't want to. And some have secretaries who print their email.

It's the law stupid. The answer to your question begins and ends with the law.

Re:Sigh (2)

bennetthaselton (1016233) | about 5 months ago | (#47111355)

That is a good point, but unfortunately it doesn't work as an answer to the question, because even if the original agreement is at gunpoint, it doesn't explain why both parties don't agree to replace it with another agreement that makes both sides more money.

Imagine the dialog:
Netflix: "We'll give you $20 per DVD and rent them to our users, let's just make it a cooperative process to reduce the hassle, otherwise we'll just go out and buy them at retail and do the same thing." [cocks gun]
Studio: "*sigh* fine. But as long as we're doing that anyway, why don't we also sell you some 'virtual DVDs' which you agree to only 'check out' to one home user at a time, with a cap of 20 monthly 'virtual DVD checkouts'. The total gross revenue from users will be more, because we'll rope in some additional users who wouldn't want to deal with physical DVDs."
Netflix: "Sounds good."

That would bring in more money, and that's what makes it an interesting question as to why they don't do it.

Re:Sigh (1)

Spazmania (174582) | about 5 months ago | (#47111525)

This argument makes sense to a lot of copyright owners -- all the ones who participate in Netflix streaming. What possible advantage over streaming would any of them realize with this "virtual DVD" concept? And why would anyone who rejects streaming not also reject the virtual DVD concept?

Re:Sigh (1)

bennetthaselton (1016233) | about 5 months ago | (#47111723)

Right, nothing I've said would apply to the people who already let their stuff be streamed on Netflix.

I'm only talking about the cases where studios only allow the movie to be mailed out on a physical DVD. Why don't they allow the same movie to be "checked out" on a "virtual DVD", under the same terms? (Netflix has to "buy" the virtual DVD for the same price as the physical DVD, users are capped at 20 "virtual DVD" rentals per month, etc.)

Re:Sigh (1)

cyborg_monkey (150790) | about 5 months ago | (#47111799)

Is this how you spend your days? Don't you have a job or some purpose to your life?

Re:Sigh (1)

Jiro (131519) | about 5 months ago | (#47112157)

Oh, please.

Someone already pointed out that the studio has no reason to make this offer instead of normal streaming, but even if they do decide they want to make that offer, the next question is what price the studio wants to charge. The studio would charge a price for the streaming agreement that is less favorable to Netflix than the price for the DVD agreement, because Netflix can't resort to first sale. They may even charge a price that Netflix feels isn't worth it. (If Netflix then refuses to buy, it's a standoff which is bad for both the studio and Netflix, but standoffs don't get resolved instantly.)

Furthermore, studios have marketing and marketing does not always mean "sell things whenever someone wants to buy one". There are all sorts of reasons why a studio might want to limit sales, ranging from "we only want to sell this in odd years to increase demand" to "that movie was produced under a company president who was replaced and having it make a lot of money would be really bad for our office politics".

Studios can't do any of these things for physical DVDs that are covered by first sale.

Re:Sigh (2)

Jmc23 (2353706) | about 5 months ago | (#47111167)

You don't KNOW Bennett Haselton???

His 'oral' skills provide the 'tension relief' for Slashdot ed's like Timothy and Soulskill.

Re:Sigh (3, Insightful)

Charliemopps (1157495) | about 5 months ago | (#47111453)

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.

Right. This entire premise is dumb from the start.
And he ends with:

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.

Really? So this entire post is a summary of all of your other posts, your opinion on the comments section of each, and you're conclusion is you can clamp a tablet or DVD player to your headboard and it's almost as good... So you've stuck it to the industry overlords whos only real goal is to make you unhappy?

I'm sorry... but the fact that this post got through when ANY of my submissions didn't is insulting to say the least. I dont mind if you don't think what I'm interested in today isn't of interest to the general Slashdot community... but this is? Really? I'd have been more interested in what a 2yr old produced by pounding on the keyboard than this self aggrandizing drivel.

Classic Bennett (5, Insightful)

Anonymous Coward | about 5 months ago | (#47110897)

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.

Re:Classic Bennett (2, Funny)

Anonymous Coward | about 5 months ago | (#47110937)

Who the fuck is Bennett and why should I care? tl;dr.

Re:Classic Bennett (3, Funny)

Kookus (653170) | about 5 months ago | (#47111153)

He's the equivalent of Slashdot Beta aka Slashdot Bennetta

Re:Classic Bennett (0)

Anonymous Coward | about 5 months ago | (#47111141)

Bad analogy. A spinning wheel has an actual use as a tool. Bennett Haselton certainly IS a tool, but he's not really useful. It'd be more like giving a mule a vat of radioactive waste.

Re:Classic Bennett (1)

Jmc23 (2353706) | about 5 months ago | (#47111219)

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.

Wrong! Through the power of slashdot, we now know that pretty much all animals will give a wheel a spin, conversly, the same is not true for the amount of people willing to swallow his tripe... unless he's already swallowed something of theirs.

Ignorant of legal issues (5, Insightful)

SuperKendall (25149) | about 5 months ago | (#47110909)

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"??

Re:Ignorant of legal issues (2)

lgw (121541) | about 5 months ago | (#47110985)

Not to defend Bennett, but copyright law for "phonorecords" is just different; e.g. you can't rent out CDs like you can DVDs.

But Bennett is still an idiot to think that Netflix hasn't already worked through this idea with their lawyers. Plus, let's face it, Netflix is gradually dropping DVDs as a thing. I think the first 20 DVDs in my queue now are "very long wait", and it looks like Netflix is just giving up on anything but new releases and a bit of older schlock, much like Redbox.

Re:Ignorant of legal issues (-1)

bennetthaselton (1016233) | about 5 months ago | (#47111157)

Obviously, I don't mean to imply that Netflix and the studios haven't thought about this. What I mean is: assuming they have thought about it and decided not to do it, what is their reasoning? There's no obvious answer as to why they don't do this, since it would enable them to make additional money off of people who don't want to deal with physical DVDs. My best guess was that it's a price discrimination tactic (where DVDs are the deliberately inconvenient option targeted at price-conscious users, while less price-conscious users just buy or rent the same movies online, which costs more). There may be other possible answers.

Re:Ignorant of legal issues (1)

lgw (121541) | about 5 months ago | (#47111585)

They don't do it because the lawyers didn't see it as any different from their current streaming, that is, it would require a license. Since the license is the stumbling block for Netflix's sad lack of older streaming content, I'm not seeing how these shenanigans would help.

Form what I hear, the big problem for streaming license for older works isn't even the price negotiation, it's that the contractual rights are unclear for everyone involved in making the movie, when it comes to this new form of revenue.

There certainly isn't some scheme by Netflix to offer DVDs to price-conscious users, since DVDs are so much more expensive to the end user than streaming, unless you only watch a couple of movies a week.

Re:Ignorant of legal issues (0)

bennetthaselton (1016233) | about 5 months ago | (#47111807)

They don't do it because the lawyers didn't see it as any different from their current streaming, that is, it would require a license. Since the license is the stumbling block for Netflix's sad lack of older streaming content, I'm not seeing how these shenanigans would help.

Form what I hear, the big problem for streaming license for older works isn't even the price negotiation, it's that the contractual rights are unclear for everyone involved in making the movie, when it comes to this new form of revenue.

Yes this could be an explanation for why there is no streaming of older content that was made before contracts were written to take streaming into account.

However, for more recently made movies, when everybody knew about streaming when the movies were made and the contracts were written, it doesn't explain why the studios release those movies as physical DVDs for Netflix to mail to people, but not as "virtual DVDs" that they could sell to Netflix for the same price, and that Netflix could then "check out" to people.

There certainly isn't some scheme by Netflix to offer DVDs to price-conscious users, since DVDs are so much more expensive to the end user than streaming, unless you only watch a couple of movies a week.

My wording was unclear; what I meant was that for the movies that Netflix has available on DVD (but not available on Netflix streaming), it's much more expensive to stream each of those movies if you buy/rent it from Google Play or iTunes, than it is if you just queue them up and have them mailed to you through Netflix. So that's possibly how the studios are price-targeting people: If you're willing to go through the inconvenience of queueing up movies, waiting for them in the mail, and then watching them on a clunky old 20th-century DVD, you can watch all those movies at a pretty cheap cost per movie. If you bought or rented those samne movies on iTunes it would cost much more.

Re:Ignorant of legal issues (1)

lgw (121541) | about 5 months ago | (#47112001)

So are you really asking why the studios don't charge less for streaming licenses? That question answers itself. Of course, those paying attention to stuff like Steam sales discover that dropping the price for older stuff can result in vastly more revenue, but Hollywood hasn't clicked to that yet. Once they do, they won't need "virtual DVDs", they'll just reduce the licensing fees as titles age.

Netflix has gotten pretty good about licensing recent blockbusters for streaming though. It might be a couple of months between DVD and streaming availability, but then these days it can take Netflix a couple months to send you the DVD at the top of your queue.

Re:Ignorant of legal issues (0)

Anonymous Coward | about 5 months ago | (#47111269)

Not to defend Bennett, but copyright law for "phonorecords" is just different; e.g. you can't rent out CDs like you can DVDs.

Why not? CD's are the same size and weight as DVD's. You can borrow them from the library, just like DVD's. You can rip them, just like DVD's.

But Bennett is still an idiot to think that Netflix hasn't already worked through this idea with their lawyers. Plus, let's face it, Netflix is gradually dropping DVDs as a thing. I think the first 20 DVDs in my queue now are "very long wait", and it looks like Netflix is just giving up on anything but new releases and a bit of older schlock, much like Redbox.

There is some attrition. Physical DVD's do break down, and I'm sure that the US mail system is not kind to mostly unprotected disks of polycarbonate and foil. It may not be so easy for them to replace out-of production videos, and replacement efforts are surely influenced by demand. I do believe you are right in that Netflix would rather deliver all of it's movies digitally. But, the studios won't allow that sort of convenience unless Netfilx, and thereby Netflix customers, are willing to pay through the nose. Netflix has to continue to support the DVD by mail business because the studios can't realistically cut off access to the retail DVD market.

Re:Ignorant of legal issues (1)

lgw (121541) | about 5 months ago | (#47111415)

DVDs can be rented out with no special licensing. Buy the DVD, and right of first sale says you can do anything but rip it. The law for CDs (and other phonorecordings) is just different - the law was sabotaged there a century or so ago.

Re:Ignorant of legal issues (1)

Jason Levine (196982) | about 5 months ago | (#47112095)

Actually, I believe you are allowed to rip it. (Distributing the rip is what tends to get people in trouble.) However, making a ripping program available can get you in trouble. In short, the action is legal but the tools to let you perform the action are not.

The reasoning here is that studios know they'd never be able to stop people from ripping their own DVDs. They wouldn't even be able to detect this - unless the person shared it online, of course. But a DVD ripping program being offered online is something they can find and stop. Without those, there is no DVD ripping (at least for most people).

Re:Ignorant of legal issues (0)

bennetthaselton (1016233) | about 5 months ago | (#47111099)

What I mean is: Why don't the studios let Netflix stream the movies that are currently only available as physical DVDs, under the same plan that applies to physical DVDs? In other words, you only get to stream 20 "premium" movies per month (where "premium" refers to the selection of movies that are currently available as DVDs, but not on Netflix streaming). So you get access to the same movies, at the same rate, and the studios and everybody else still gets paid the same money -- but users don't have to mess with clunky old DVDs, instead they can watch the movie on any device they want.

Re:Ignorant of legal issues (3, Insightful)

tepples (727027) | about 5 months ago | (#47111281)

Because the studios want to sell streams of those movies at $3.99 a pop.

Re:Ignorant of legal issues (0)

bennetthaselton (1016233) | about 5 months ago | (#47111405)

OK, but then why sell physical DVDs in a cooperative agreement to Netflix at all, isn't that also undermining their sales of streams? Why don't they make it difficult every time for Netflix to acquire their movies, the way they did with John Carter?

In other words, the question is, why do the studios allow users to "check out" a fixed number of premium movies per month (about 20) via DVD-by-mail, but don't let users do the same thing for streams. The answer can't simply be about undermining their iTunes stream sales, because both the DVDs and the "virtual DVDs" would undermine the iTunes stream sales.

Re:Ignorant of legal issues (2)

alen (225700) | about 5 months ago | (#47111551)

itunes rentals along with cable tv premium movie rentals are impulse buys. like hey, i want to watch this movie now and it's only $5 and i don't want to wait 2 days for the dvd to arrive

impulse spending is a huge margin money maker. goes back to the crap you buy in the supermarket checkout aisle while waiting

Re:Ignorant of legal issues (1)

bennetthaselton (1016233) | about 5 months ago | (#47111685)

Yes this was actually one of the answers I came up with in the original original article:
http://news.slashdot.org/story... [slashdot.org]
that maybe they didn't allow virtual DVD checkouts because it competes with the impulse buys.

So then I wondered: why don't they just allow "virtual DVD" checkouts with a delay imposed between the time you check out the movie and the time that you can start streaming it? That would avoid competing with the impulse buys, and it would work "like the DVD by mail service", except that it wouldn't require the user to deal with clunky physical DVDs.

One possibility is that people would then blame Netflix for the delay and resent them for it. Whereas when Netflix mails you the DVD, people blame the mail service for the DVD and maintain happy feelings towards Netflix.

It was never about what can work (1)

SuperKendall (25149) | about 5 months ago | (#47112223)

Why don't the studios let Netflix stream the movies that are currently only available as physical DVDs

Because the studios are asking more money than Netflix can pay at a flat rate for streaming. Simpler answer: The studios hate money, or rather they value imaginary money more than real money so they maximize the imaginary return.

Why are you trying to ask a rational question of an entity that has shown no degree of rationality? You come across as the very worst sort of engineer, explaining how something can technically work when we all know it can technically work and the thing holding everything back is not technology at all.

Re:Ignorant of legal issues (1)

bill_mcgonigle (4333) | about 5 months ago | (#47111771)

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.

I don't recall CDNow, but Cringely [pbs.org] had a posited legal maneuver to account for the phonorecording problem. But, yeah, his idea is over a decade old, so way to use the Google, submitter.

ob: this never occurred to anybody at Netflix...

uh... streaming? (0)

Anonymous Coward | about 5 months ago | (#47110917)

In your mind what's the difference between a stream and a "virtual DVD"?

I can't seem to imagine a difference that's relevant...

Re:uh... streaming? (1)

Russ1642 (1087959) | about 5 months ago | (#47110979)

To some people if you made a virtual VHS rental service they'd even want something that simulates rewinding. They don't understand that some things become obsolete and are replaced by something different.

Re:uh... streaming? (1)

ArcadeMan (2766669) | about 5 months ago | (#47110993)

I really don't understand either.

If Netflix has the movie in its library, you stream it and watch it. Done.

but they don't (1)

Chirs (87576) | about 5 months ago | (#47111835)

The streaming library is currently different from the physical DVD library. Not everything is in both.

Re:but they don't (1)

ArcadeMan (2766669) | about 5 months ago | (#47112303)

I'm Canadian. There's no such thing as a "physical Netflix DVD library".

Re:uh... streaming? (1)

Ericular (876826) | about 5 months ago | (#47111029)

I believe he's referring to Netflix's physical DVD selection, which offers many newer releases that their streaming library does not. 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 - stream it (similar to their streaming library) except with a fixed maximum of simultaneous viewings and a reservation system (similar to their DVD mailings). A hybrid approach to bring even the latest titles to consumers without having to involve physical media.

The Difference (1)

SuperKendall (25149) | about 5 months ago | (#47111031)

In his incredibly naive mind he imagines a stream that is limited to one person at a time and backed by a physical DVD.

Or at least I'm pretty sure that's what he meant, reading his whole missive would lower the IQ of anyone by ten points.

It's always because of licenses (1)

Anonymous Coward | about 5 months ago | (#47110919)

If you think, for even one second, that the MPAA will allow you to conveniently watch their movies however you please, the instant they are released, worldwide, you should check yourself into a mental hospital.

Re:It's always because of licenses (-1)

bennetthaselton (1016233) | about 5 months ago | (#47111177)

Well obviously I don't mean "Why doesn't Netflix just barge ahead do this without the studios' permission?" What I mean is: Why don't the studios allow Netflix to stream movies to users under the same terms that they mail the physical DVDs to users -- so you're capped at, say, 20 per month, and Netflix still has to pay the studios for the "virtual DVDs" that it "checks out" to users. So everybody still gets paid, and Netflix and the studios would theoretically make more money, because they'd make additional revenue off of users who won't sign up currently because they don't want to deal with physical DVDs.

Re:It's always because of licenses (1)

almitydave (2452422) | about 5 months ago | (#47111589)

Your talk of "Virtual DVDs" and limited rentals is just overcomplicating the question, "Why don't the studios allow Netflix to stream everything?". And the answer is the same to every question of the form "Why doesn't Hollywood...": money. The studios think licensing Netflix to stream recent AAA releases (at the rate Netflix wants to pay) will undercut their physical disc sales and reduce profits. In Hollywood, money is everything, and right or wrong, studios won't make a business deal if they think it will lose money. It may very well be the case that the studios don't understand the streaming business and underestimate its revenue potential, but there it is.

Remember, Netflix streaming was originally limited to a certain number of hours per month, and this cap was lifted (although I assume that had more to do with Netflix infrastructure bandwidth capabilities than licensing). You should check out Amazon Prime - for a similar price to Netflix streaming, they offer some items for free, but also allow you to pay to rent or buy digital copies of more recent or popular films not available for streaming on Netflix. This is the model preferred by the studios - where they make money off of each individual digital rental. It's a "safer" revenue stream - guaranteed per-view income - than a riskier "all-you-can-eat" package deal, although obviously favorable terms could theoretically be negotiated for that.

So your question should actually be, "why doesn't Netflix negotiate with the studios to offer a premium add-on to their streaming service, so that users can stream recent releases and a wider selection of AAA titles?" which IMHO is a better and more interesting question, and the answer probably lies in Netflix's confidential market research and business plans.

Re:It's always because of licenses (1)

bennetthaselton (1016233) | about 5 months ago | (#47111887)

Yeah, I guess that is a simpler form of the same question.

I asked the question the way that I did because I designed my idea to be as close as possible to the existing DVD-by-mail situation, so that people couldn't nit-pick differences between the two scenarios. But it's essentially, "Why don't the studios let Netflix stream the titles that it currently only offers by physical DVD, for some amount of money that could be split between the studios and Netflix?"

A more puzzling fact is that if you search for a movie on Netflix streaming and they don't have it available for streaming, nothing comes up. That would certainly seem like a case where they're just leaving cash on the table, since if they offered the user the chance at that point to stream the movie for $4.99, at least some users would take it. As it is, the user either just streams something else, or goes to a different service like iTunes to buy what they wanted.

Re:It's always because of licenses (1)

almitydave (2452422) | about 5 months ago | (#47112297)

A more puzzling fact is that if you search for a movie on Netflix streaming and they don't have it available for streaming, nothing comes up.

To the best of my knowledge, this is only true of the embedded & mobile Netflix streaming software - the sole purpose of which is streaming, so it makes sense. These apps aren't the full Netflix queue management system, they're just about streaming, so when you're searching for something to stream, why bother you with search results that don't do you any good? If you search on the Netflix website while viewing the "Watch Instantly" page, non-streaming titles do appear in the results (as you'd expect).

Re:It's always because of licenses (1)

Jason Levine (196982) | about 5 months ago | (#47112161)

Exactly this, though I'd add that the studios have this odd fixation on Netflix. They realize they make money from it, but also think it is killing off their DVD/Blu-Ray sales and thus view it as an enemy. They want Netflix dead and giving Netflix unfettered streaming rights to new selections goes against that. Instead, they will grudgingly give Netflix access to older titles that don't make them that much in DVD sales anyway while pushing their newest "streaming" program that is doomed to fail because it was designed by the studios for the studios with customers as an after-thought.

Re:It's always because of licenses (0)

Anonymous Coward | about 5 months ago | (#47111637)

It is also a royalty issue.

The writers' strike five years back was all about this.

You cannot possibly track the number of times a DVD is viewed once it is mailed out. Maybe they watch it once, never, pass it around to a dozen people?

With streaming you know exactly how many times the content was accessed, and the writers have negotiated royalty fees for those streaming views.

You answered your own question (0)

Anonymous Coward | about 5 months ago | (#47110933)

"Netflix likes that deal because if the user is paying $15/month to rent an average of 20 movies per month,"

What Netflix won't like is people who rent 40 movies a month because subscribers won't have to wait for the snailmail.

"When did Slashdot turn into Pinterest?" (1)

Himmy32 (650060) | about 5 months ago | (#47110935)

"When did Slashdot turn into Pinterest?"

Or someone's blog...

Re:"When did Slashdot turn into Pinterest?" (2)

Russ1642 (1087959) | about 5 months ago | (#47110991)

September 2012

Re:"When did Slashdot turn into Pinterest?" (2)

pla (258480) | about 5 months ago | (#47111125)

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?

Virtual DVD? (1)

Anonymous Coward | about 5 months ago | (#47110951)

How is this different from the streaming service that Netflix currently offers?

I'm sure the author has some differences in mind, but it wasn't clearly spelled out.

Re:Virtual DVD? (1)

alen (225700) | about 5 months ago | (#47110973)

duh, better content?
most of netflix streaming is crap that wasn't very popular to begin with

Re:Virtual DVD? (1)

Anonymous Coward | about 5 months ago | (#47111079)

I think the point being made was, "Why reinvent the wheel?" They already have the technology and infrastructure to support streaming services, so why would they deploy an entirely different method of virtual distribution? What advantage does "Virtual DVD" provide over the existing streaming technology? If none, then the simple approach of getting better content on the streaming service would appear to improve quality of service for a broader audience, and is thus more cost-effective.

Re:Virtual DVD? (2)

jythie (914043) | about 5 months ago | (#47111027)

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.

Re:Virtual DVD? (1)

Jason Levine (196982) | about 5 months ago | (#47112207)

Right. Even if Netflix could legally stream the video on one DVD to one home at a time (ala a DVD version of Aereo), having a rack of millions of DVD players - each with one DVD in it - would be hard to manage. And if they tried ripping the DVDs, they would suffer the same fate that MP3.com did when they tried ripping CDs for their music locker offering. (I'm sure the studios would love for Netflix to do this as it would give them an excuse to sue Netflix into oblivion.)

itunes makes too much money (1)

alen (225700) | about 5 months ago | (#47110961)

last i read itunes sells/rents over 300,000 movies and tv shows a day
add amazon, vudu, cinemanow and who ever else and there is no way netflix will be able to license rentals for $8 a month.

you also have to figure that like DVD's they will have to limit the number of times a movie can be streamed at the same time so even with a virtual service you may have to wait weeks or months to watch it when you want.

Streaming service? (0)

Anonymous Coward | about 5 months ago | (#47110983)

How is this different than the streaming service?

so much anger (0)

Anonymous Coward | about 5 months ago | (#47110997)

..over something so pointless. Redbox offers "virtual DVD's". You could always switch to their service or use both Netflix and Redbox. Redbox charges by the rental, not a flat fee, so you wouldn't really be paying 2 membership fees. I guess in your little world, that would be considered a "hack".

Wrong (0)

Anonymous Coward | about 5 months ago | (#47110999)

Totally wrong. It is all about the first sale doctrine. Without it, dvd rental wouldn't exist or would be significantly more expensive. Studios are not cooperating with Netflix, they know they can not stop them and only strike a deal to make the best of a raw deal for them. Typically this involves a slight discount for a delay in release. Studio would never let first run movies be rented virtually for any less than the $3-$4 they get from other VOD services. If they let netflix do this, studio would lose money by other sources of income disappearing (VOD services). Netflix DVD rental only works because the low turnover (2-3 days in the mail) makes the $.50 mailing cost below what you can consume in a month. With virtual dvd, you could easily consume 3-5 a day and if netflix had to pay $.50 a stream to the studio, it would lose money. The streaming service only works because they are significantly after the DVD release and can negotiate much smaller per stream payments. If you get old movies for $.05 a stream, netflix is profitable.

Zediva (5, Informative)

Xipher (868293) | about 5 months ago | (#47111005)

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 [slashdot.org]

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.

Rights (1)

jythie (914043) | about 5 months ago | (#47111013)

One thing to keep in mind is that rights are complicated, and often there is a lot more involved then a studio waking up one day and deciding to allow a particular bit of media to be streamed. Often the way contracts are written, well, they left out this scenario, esp for older stuff, and various piece of content that go into a work may or may not be covered. A classic example is the inclusion of music, when music is put into a piece the people who produced the movie do not 100% own that music, they have the right to use it in their work and certain types of distribution. If you want a streaming version of the film you have to go back and rewrite the contract to get that permission. It can be a complicated, expensive, and time consuming process.

On the other hand, once a DVD is pressed, what can be done with it is pretty well established, so as long as the disks exist Netflix can rent them.

Re:Rights (1)

spire3661 (1038968) | about 5 months ago | (#47111151)

The solution is to force copyright into more of a FRAND system. We need to remove the ability for copyright to have absolute control over venue.

Re:Rights (1)

alen (225700) | about 5 months ago | (#47111207)

it doesn't work that way
every movie is a separate project and investment with the studio being the center of it all. the people making the movie all negotiate different contracts for every movie so all the actors, directors, producers, writers, etc will have to agree on the new system

Re:Rights (1)

bennetthaselton (1016233) | about 5 months ago | (#47111225)

That's an interesting theory. It certainly could explain why some old stuff might not be available for streaming.

On the other hand, the explanation wouldn't work for any movie made after the advent of streaming, since surely at the time that the movie was made, they could have written clauses into the contracts to cover that.

Back catalog (1)

tepples (727027) | about 5 months ago | (#47111311)

I thought the big reason that people sign up for Netflix DVDs by mail instead of cycling to a Redbox was to watch movies first published before streaming became practical. Redbox, as I understand it, is all new releases all the time.

Re:Rights (1)

Jason Levine (196982) | about 5 months ago | (#47112235)

Sadly, this is one reason why you'll likely never see a "Muppet Babies" Blu-Ray or streaming release. That cartoon used snippets of various movies in their episodes. They would need to get permission from each rights holder to include those scenes.

Because you don't understand the economics, at all (1)

Anonymous Coward | about 5 months ago | (#47111051)

My god, that's full of ignorance.

Extra features (1)

kimvette (919543) | about 5 months ago | (#47111053)

Will this actually be a true substitute for physical media, including alternate soundtracks (including 7.1/7.2 or 9.1/9.2 or even 11.1/11.2 surround when the media delivers it), deleted scenes, alternate angles (rare but some films do offer them as an extra feature), commentaries, easter eggs, and so forth? If not, I'll keep buying physical media.

Its the first-sale doctrine... (2)

Chris Dodd (1868704) | about 5 months ago | (#47111101)

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.

Copyright (1)

spire3661 (1038968) | about 5 months ago | (#47111111)

It all comes down to insane copyright. We could do amazing things with culture if copyright was outlawed.

Re:Copyright (0)

Anonymous Coward | about 5 months ago | (#47111691)

no one would create beautiful works which costs tens of millions to make and sometimes hundreds of millions without copyright protecting their work from being stolen and resold by someone else.

Re:Copyright (2)

Jason Levine (196982) | about 5 months ago | (#47112265)

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.

Netflix (0)

Anonymous Coward | about 5 months ago | (#47111189)

I'm so confused right now. Isn't this exactly what Netflix is doing? I have Netflix on my phone, on my game console, on my computer, on my laptop, and I can watch whatever I want for a flat monthly fee. Did this question drop out of a 10 year old discussion board or something?

When a studio declines to make a movie available (1)

tepples (727027) | about 5 months ago | (#47111345)

Isn't this exactly what Netflix is doing?

The difference is that the major studios have chosen to make far more films available through DVDs than through streaming.

I can watch whatever I want for a flat monthly fee.

Only if the studio has chosen to make it available to Netflix for streaming.

Price discrimination and... (1)

Beorytis (1014777) | about 5 months ago | (#47111237)

Yes, price discrimination is probably part of it. Amazon is probably also involved, since Netflix runs on AWS, and a "virtual DVD" would compete directly with Amazon Instant Video.

Sigh (3, Insightful)

jratcliffe (208809) | about 5 months ago | (#47111241)

"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.

meh. (2)

JustNiz (692889) | about 5 months ago | (#47111257)

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.
 

Vanilla edition for rental (2)

tepples (727027) | about 5 months ago | (#47111375)

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.

allow downloading virtual DVDs (1)

Chirs (87576) | about 5 months ago | (#47111927)

The problem is that the physical DVD netflix service has a selection that is different from the streaming netflix service. If you want the increased selection, you have to forego the ability to download it.

There is no technical barrier preventing netflix from allowing you to download a DRM'd exact copy of a DVD. You could then play it, or transfer it to another device, or maybe even transcode it for smaller screens and transfer it to another device, all within their app. The only barrier is copyright. And by allowing in-advance downloads you could preload devices for use where there is no data connection.

The OP is suggesting that this copyright barrier doesn't make sense.

Another worthless Bennett Haselton 'article' (0)

Anonymous Coward | about 5 months ago | (#47111287)

Ugh.

Sounds a lot like Aereo (1)

tobiasly (524456) | about 5 months ago | (#47111289)

This sounds like Aereo [aereo.com] , which also provides a business model in which physical resources dictate the scarcity. Since they are currently preparing for a trial at the Supreme Court it's probably wise to hold off a bit.

the studios are leaving cash on the table

You must be new here; the studios have always been in the business of fighting progress as long as possible in order to protect existing revenue streams.

Numerous issues... (1)

TemporalBeing (803363) | about 5 months ago | (#47111335)

First, NetFlix started their business by buying DVDs off-the-shelf and renting them out. If they are using cooperative agreements to obtain DVDs now, then that's a change since then - it may very well save them money, but nonetheless it's a distraction here. The people that want DVDs are going to get the DVD service.

Second, VirtualDVDs are essentially NetFlix's Streaming business, and it makes sense they'd do the streaming instead of a DVD download as you describe if for no other reason than the technical challenge of keeping people from sharing the download or breaking the download so that they can keep a copy. For example, you could use a ZFS partition to snapshot the download right before returning it so that the upper level software couldn't tell that it was copied; and then crack away at the copy until you have your HD digital download version of the movie. In other words, doing a DVD-download-as-a-service model simply has too much risk for NetFlix or anyone else in their business (e.g. Hulu, Amazon, Google, etc.).

Third, my family & I watch NetFlix on our iPad, iPod, Android Phone (NexusOne), Android Tablets (ASUS Transformer Infinity, Nubi Jr.), and computers (HP Laptop running Windows Vista, Linux Desktop with Pipelight). We have a good size DVD collection that we watch on the computers too, but NetFlix as it is now just transfers and I don't have to think about space considerations - which I would with a DVD-download-as-a-service solution.

So DVD-by-mail and Streaming are the two versions of the service that make the most sense and both offer the least risk compared to other potential solutions.

Why? (2)

frank_adrian314159 (469671) | about 5 months ago | (#47111385)

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?

Answer is still first sale doctrine (0)

Anonymous Coward | about 5 months ago | (#47111521)

Just because they actually have deals to buy the DVDs directly from the studios doesn't negate the fact that it is the first sale doctrine that allows them to do this in the first place. As you even noted, when Disney tried to not allow this Netflix just went around them and bought them at retails to have the movie to rent. Therefore the studios CAN'T stop it because of the first sale doctrine. They have to accept that fact so they worked out deals directly with Netflix that makes it easier for Netflix to get the DVDs it wants and presumably is better for both parties as it is probably cheaper/more convenient for Netflix and the studios are making more money and/or getting Netflix to agree to conditions they don't necessarily have to.

They stop the renting of "Virtual DVDs" simply because they can. There is no first sale doctrine that says Netflix can do this either way so they have no leverage to force the studios to allow it so the studios don't. Because they can control it they try to find more ways to "Monetize" it to make more money off of steaming or digital sales etc but it all comes down to the first sale doctrine not applying and giving them the ability to control it.

bandwidth too cheap, studios scared of piracy (1)

bigwavedave33 (1148677) | about 5 months ago | (#47111539)

Bandwidth is too cheap for virtual DVDs. You can get connected almost anywhere and stream. And if you are really in need of content that badly you'll buy it from the "store" of your choice and download it. They make more money this way. Its toooooooooooo easy these days to break encryption, so once its busted its busted for life and the content owners don't want to have to keep reinvesting in newer tech/encryption schemes, so they won't offer it. Example... DVD / BR... Even CDs are almost a thing of the past since they are clear digital music and the content owners don't want it shared out in the open.

Doesn't Netflix already stream movies? (1)

flyerx01 (3669511) | about 5 months ago | (#47111561)

Streaming content is more akin to broadcasting than it is to the physical delivery of DVDs. The FBI disclaimer at the beginning of movies penalizes broadcasting movies under the penalty of the law. The purchasing of a physical DVD does not allot Netflix the legal means to broadcast a DVD. Plain and simple. Netflix already provides streaming services legally via other arrangements. Therefore, I'm not sure what the point of this posting is.

Not fixed number (1)

mattack2 (1165421) | about 5 months ago | (#47111783)

Umm, the DVDs aren't a fixed number in a month for most subscribers, except the limit of actual mail times. (BTW, I'm NOT one of those who actually watched and returned a DVD in a day..)

(I was a Netflix member in the very very early days, where it WAS 4 DVDs/month.. and it was still cheaper than rental stores.)

Don't they already? (1)

B. Clay Shannon (3654135) | about 5 months ago | (#47111851)

Maybe I misunderstand, but I've had netflix for years, and that's how my wife and son use it the most - by streaming movies. AFAIK, there is no limit on how many you can stream.

No more please (0)

Anonymous Coward | about 5 months ago | (#47112073)

Please stop with these Bennet Haselton posts, please.

-A long time lurker

what the fuck man? (0)

Anonymous Coward | about 5 months ago | (#47112167)

this shit blows.

One sentence answer. (0)

Anonymous Coward | about 5 months ago | (#47112215)

Movie studios won't license 20 streams a month for $10-15, because they can and do make more money selling individual stream licenses for $5, or thereabouts.

End of discussion.

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