Hollywood fears Netflix is the iTunes of movies

Netflix has been more successful than ever in the past year. It's available on perhaps every single medium, from Blu-Ray players to gaming consoles, like Xbox 360 and PS3, to standalone set-top boxes, like Roku or Apple TV. In fact, the company announced that in 2010 it had made $2.16 billion in revenue. And a recent study made aware that Netflix had garnered 41% market share of just physical DVD rentals with a whopping 20 million subscriber base. No doubt, Netflix is poised to be the dominating player in the video rental game, if it's not already.

That's exactly what Hollywood executives fear.

Greg Sandoval of CNET recently spoke to film executives to collect a general consensus on different ways to distribute films; the executives said that they were going to continue to distribute films over the web on a multitude of platforms, but don't expect them to do it at the expense of their business.

While Netflix is almost certainly a success, it's also had some adverse effects. For one, evidence suggests that Netflix consumers are less likely to purchase DVDs even if it takes years to get those movies on the service, consumers are okay with waiting. Furthermore, Netflix hurts sales in other areas of the business model. Internet-capable aircrafts make it less likely that passengers will purchase in-flight entertainment rather than just streaming off Netflix. And the content that's on Netflix hinders its value. Cable networks apparently don't care to buy and air a title once Netflix gets a hold of it.

Basically: don't expect popular titles to make its way to Netflix any time soon. Hollywood executives are quite wary of Netflix dominating the Internet streaming market and running with it. They don't want to wake up one day and find Netflix dictating exactly how that market will shift or call the shots on the terms. In short, sort of what happened with music industries when iTunes became wildly popular or what could have (and has to some extent) with the eBook market and Amazon. And Hollywood has already seen Netflix veering into that direction; Blockbuster filed for bankruptcy last year.

Physical DVD sales has been a huge profit-maker for the industry and they're not exactly willing to give that up. Hollywood is hoping that UltraViolet will be their saving grace. UltraViolet is a type of DRM that allows the user to playback their digital content on a wide range of devices through the Internet. It would allow consumers to purchase content, keep a library, and play it anywhere—like the DVD.

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