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As consumers, we have been trained to expect a specific behavior with regards to digital rights. Similarly, our television viewing habits have been defined for us as we watch whatever programming the provider chooses. As we have taken a strong stride into the digital era, the way we as people view such previous tendencies has been re-evaluated.

The ubiquity of the digital video recorder has given the user more control of their viewing habits, while iTunes and Amazon have improved rights management for the consumer. 2011 bore witness to the widespread adoption of the cloud and thereby marked the start of an entirely new, previously impossible type of consumer media consumption.

We all know how media purchases have worked in the past. We buy Star Wars on VHS then we buy the new and improved version of Star Wars on VHS. Then, we enter the digital era and that means Star Wars on DVD, so we buy that. Next, there is a re-release where Han shoots last and even though we despise George Lucas for ruining something from our childhood, we buy the DVD of this as well. We simply cannot help ourselves.

Finally, when the 1080P Blu-Ray version of the entire Star Wars saga is released, how can we resist the siren song of Jar-Jar Binks with optimal audio/video quality? We are only human and in the case of Star Wars, we are several hundred dollars poorer because George Lucas takes total advantage of our admiration of his work. And do not even get me started on Peter Jackson and his mega-super-extra-extended versions of The Lord of the Rings. I figured out the other day that it's about 11 1/2 hours to watch the trilogy in its entirety. We live in the Twitter era. Who has the attention span for that? But I digress. The point is that every time a new physical media format is released, the standard consumer behavior is to re-purchase all of the same movies we had before but in the new and improved format. This is the way physical media works and until recently, we as consumers had not realized there was a better way.

One of top Film Industry Stories of 2010 was the unprecedented ascension of Netflix as the service almost overnight became the easiest way to watch a movie. All the user has to do is purchase a Netflix subscription then populate their queue with the films and television programs that pique our interest. Compared to the repurchasing madness, this is a clean and elegant solution for watching movies. Remarkably, this is neither the easiest methodology to consume media nor is it the most satisfying one for the consumer.

Even with a selection of thousands of titles designed to appeal to all potential consumers, Netflix has a limitation. They may only stream the titles for which they are able to acquire rights. And as we have confirmed with the failed Starz Channel negotiations, this is far from a painless process. The licensing negotiations will only grow more acrimonious from here. Netflix paid approximately $180 million for their content in 2010. That number is projected to be $2 billion in 2012. Such is the explosive growth in instant streaming movie delivery. And one corporation asking another corporation to lease their digital licenses is akin to asking someone in the desert to give you their canteen. Netflix has the right idea but neither the means nor the resources to perfect the process.

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