The Day the Studios and Theaters Stood Still
October 3rd, 2010 § Leave a Comment
Sometime in the near future there will be an explosion heard only in the entertainment trades and whispered and talked about between studios, marketing executives, theater owners and DVD retailers. The FCC gave everyone permission to enter this pissing match and what a pissing match it will be.
If you ever go to the movies (and many of us do) with more than 1 person – so two people attend a film and you have a child where you needed to hire a sitter, you might not be going to the theater so quickly anymore. Well, maybe you still will. Time will tell this one. Soon, a mere 6 weeks AFTER any movie starts playing in a theater, you will be able to watch it at home in the comfort of your ‘Aunt Fay’s couch’ (nod to Steely Dan) on your nice large LCD flat panel TV. To help you To help you visualize what this means in numbers, there are about 115 million television households in the US. Approximately 100 million of them are currently cable, satellite or IPTV subscribers. Through these cable boxes (although not every one of them, only the ‘digital’ households that have a set-top box) you will be able to purchase the very same film that was JUST in the theaters 6 weeks ago on cable for $24.99 – called premium V.O.D. – video-on-demand. BUT, the movie studios will be able to activate a technology to prevent films sold through video-on-demand cable systems from being copied. This is the ruling that the FCC just allowed in May 2010 after a two year battle with the studios.
Right now, theaters get an exclusive period — 120 days (4 months vs. 6 weeks), on average — to serve up new movies. Then the releases appear on television video-on-demand services at a price of about $4.99. Now the studios want to offer us new movies on video-on-demand services about 45 days after they arrive in theaters. But, you can’t keep a copy or make a copy (your DVR, VHS or whatever won’t work). Just like a theater, once its over, its over.
So, if you are more than 2 people (+ a baby sitter), and unless you are dying to see the film on a BIG screen, I guess you might wait a few weeks.
So, what’s the big deal? For starters, the theater owners, have made it clear that releasing a movie early on video-on-demand services — thus cutting into their window — would be the equivalent of declaring war. They feel people will be more reluctant to buy movie tickets, at an average cost of almost $8, if they know they can catch the same film just a few weeks later in their living rooms, and for less money than it costs to haul the whole family to the theater. The average moviegoer spends more than $3 on popcorn and soda and the like, the cost of Friday night at the movies for a family of four can easily reach $45 – $60 — or much more in cities like New York and California. And theater owners say this doesn’t take into account second-run and discount theaters, and that there are big exceptions: “Inception,” for instance, was still raking in millions in theaters 10 weeks after its release.
Next up, DVD retailers are fuming – Best Buy and Wal-Mart have told the studios they will retaliate against anyone who tries early-release V.O.D. because of the threat it poses to DVD sales. Huh, what DVD sales? The DVD is going the way of the CD in case anyone hasn’t noticed. Blockbuster just filed for bankruptcy. DVD sales for the year are expected to total about $9.9 billion, down 30 percent from their peak in 2004 (about $13 billion), according to Adams Media Research.
Who is the big winner here? The Studios (or so they think) because as much as 80 percent of that early V.O.D. revenue goes to them, therefore movie executives see a new way to compensate for their dwindling DVD business. And the studios are aware that consumers are growing impatient about being unable to access all movies whenever and wherever they want. An early video-on-demand option might prevent some of those frustrated customers from turning to pirated copies.
So where’s the flaw in this plan? I have a couple of thoughts. First of all, the pay-per-view business has been an anemic business since its inception on cable in 1984 when Request TV, Viewers Choice and The People’s Choice (yes, this was my company back then). Part of the problems was with the windows given to PPV movies, part was the terrible job the cable operators did to market these films to us, part was the billing mechanism (it was archaic) and part was the fact that the VHS back then and soon the DVD was simply an easier option. Not to mention you could rent the same film on VHS/DVD so much earlier than on PPV and then buy a copy to own, to watch again and again. Second problem is that you can’t keep a copy of what you fork out $24.99 for. This just begs for pirates to hack the system (and it will happen and supposedly already has). So forget the studios argument that an early video-on-demand option might prevent some of those frustrated customers from turning to pirated copies. Maybe at first, but I have no doubt pirated copies will turn up on the streets all the same – now just earlier and better quality DVD copies.
The fact you can’t keep a copy is just self-defeating. Instead, what the studios SHOULD be doing is giving everyone a ‘cloud’ storage locker for say, $ 10.00-20.00 a year. Once you pay $24.99, the film goes straight to your locker. Then, its kept there to be watched as many times as you want for as long as you keep the locker subscription current each year. Sure, pirated copies will still happen but there is a much better chance that people will be more willing to pay the $24.99 IF they can watch it over again, anytime, and on any ‘authorized’ device you own (i.e. mobile phone, Galaxy ‘Tab’, iPad, etc). Apple does great job with ‘authorized’ devices and computers.
I’m sure a studio would say ‘well, then your friends can come over and see the same film without paying for it because its in your locker’. Well, its in YOUR locker, not theirs and they can come over anyway under the present scenario. And this is the same ridiculous argument studio exec’s made in the early years of the PPV business. It didn’t stop anyone back then and only help stifle the PPV business – a misjudgment they appear are doomed to repeat once again. Will they ever learn from past mistakes?
So, will you pay $24.99 to watch a film at home you can only see one time? You might if it’s a title you don’t really care to much to see in the theaters. Would you have seen Avatar that way? NOT ME!
Steve Jobs said “They want Hollywood movies and TV shows whenever they want them,” went his description of consumers’ wants. “They don’t want amateur hour.”
September 1st, 2010 § Leave a Comment
- Image via Wikipedia
I couldn’t agree more. Asking consumers to put out ANY cash for ‘clips’ on youtube and the like is indeed amateur hour. Not that we don’t want to watch an occasional youtube clip ( I have a laptop for that), but not while we can see ‘The Expendables’ streamed to my flat screen TV day and date with DVD. Goodbye plastic DVD via Apple TV.
Doesn’t this smell like the the death of the DVD – reminiscent of the music CD ? It does to me.
Hollywood to sell movies online – Monday, April 3, 2006
August 30th, 2010 § Leave a Comment
It is 4 years and 4 months later and look where we are now. CinemaNow, Movielink and other services have all failed. What’s a studio to do? Blockbuster will be filing for Bankruptcy shortly and they plan to re-emerge from Bankruptcy to do what? Put kiosks into stores next to other kiosks? I feel for the debt holders who have lost quite a bit of money. I wonder if Blockbuster ever paid attention to what happened in the music business? Apple certainly did. Maybe Steve Jobs will have a partial answer comes September 1st. And now Google will be offering pay-per-view movies.
Hollywood to sell movies online
Monday, April 3, 2006; Posted: 5:38 a.m. EDT (09:38 GMT)
“Brokeback Mountain” will be one of the first films available to download.
LOS ANGELES (AP) — Hollywood studios will start selling digital versions of films such as “Brokeback Mountain” and “King Kong” on the Internet this week, the first time major movies have been available online to own.The films can’t be burned onto a disc for viewing on a DVD player. Still, the move is seen as a step toward full digital distribution of movies over the Internet. Six studios said they would announce Monday that sales will begin through the download Web site Movielink. The site is jointly owned by five of the seven major studios. Warner Bros., Universal Pictures, Sony Pictures, Paramount Pictures, Twentieth Century Fox and MGM will offer some first-run and older titles on Movielink. New films will be priced similar to DVDs — between $20 and $30 — while older titles will sell for $10 to $20. In a separate announcement, Sony and Lionsgate said they will sell films through the CinemaNow site. Only films from The Walt Disney Co. will not be available, although both services say talks are ongoing.
“Digital delivery hasn’t arrived until the major studios allow home ownership, and now they have and now digital delivery is very real,” said Jim Ramo, Movielink’s chief executive.
Studios will sell some new films online the same day they become available on DVD. Most films will be made available within 45 days. Studios began renting films online several years ago as a way to combat illegal downloading. Movies have been available through the Internet 30 to 45 days after hitting video stores, with rentals lasting just 24 hours for viewing primarily on computer screens.
Digital delivery of video grew rapidly after Apple Computer Inc. began selling episodes of TV shows through its iTunes online store last October. This year, devices powered by new Intel computer chips and TV service delivered over the Internet will allow more consumers to watch Web video on their TVs instead of their computer screens, a key factor in downloading to own, analysts said. Studios are being cautious about selling films online in part because DVD sales produce more profit than box office receipts.
But studios are also preparing for the day when major retailers such as Wal-Mart and Amazon.combegin offering their own movie download services.
“The important thing is to embrace the future, respect the economics of DVD but move forward into digital delivery,” said Ben Feingold, president of Worldwide Home Entertainment at Sony Pictures. The films available on Movielink can be stored indefinitely on a computer hard drive or transferred to as many as two other computers. The movies can be played on a TV if the computer is part of a home network. A copy can be burned to a DVD as a backup. Discs can be played on up three PCs authorized by Movielink but cannot be viewed on a standard DVD player because of special security coding.
Consumers will not be able to transfer the films from a PC or laptop to a handheld portable viewing device. But that capability should be available sometime within the next year, Ramo said. Films on CinemaNow will be playable on just one computer. The company said it eventually expects studios to allow consumers to burn movies on DVD and transfer them to portable devices.
- Blockbuster tells Hollywood studios it’s preparing for mid-September bankruptcy (latimesblogs.latimes.com)
- Google Jumps on the Hollywood Bandwagon (fool.com)
The ‘commodization’ of the movies
July 27th, 2010 § Leave a Comment
Movies. We see the commercials/ spots on TV, ads in the newspapers , posters on the bus stops and digital ‘moving’ billboards, hear them tout them on radio and of course we still discuss them at the office and home. We still go to the theaters to see them, then we go home and wait for them to be available to us on…? well, not really DVD‘s anymore. Blockbuster is going away, we really don’t run to Best Buy or Fry’s to ‘rent’ them. Maybe RedBox in a grocery store too. Some of us now are using Netflix, iTunes and some in major metropolitan cities can find them for $5.00 on a table on a street corner (illegal copies albeit, if you know where to look). And fewer of us get them from Torrents, and even less from the newsgroups. But what has happened over the past 10 years to the DVD business has caused a major shift in perception for all of us. Its no longer the ‘event’ it used to be to wait to get a movie in DVD form to bring home and watch on a weekend night. Years ago, there weren’t 15-20 movies in the theaters at once. Movies started a run in the theaters and most lasted a few months. Now, most last a few weeks, if that. Or never see a theater at all. Back then, we could peruse Blockbuster along with our neighbors to grab a copy and return it the next day (if it was a new release). There was a sense of pent up demand to get that movies when it came out on DVD. That no longer exists. What happened? Where did that great feeling of waiting for that movie you liked so much in the theater to come out on DVD. I miss that ‘looking forward’ to a film at home. How did Hollywood lose that edge with all of us? They blinked.
Today, even ‘Avatar‘ released on DVD or to Netflix, iTunes, etc. is a non-event. True, Hollywood tries to make it an event. They really do advertise the DVD release. Target and Wal-Mart carry it but years ago Target and Wal-Mart were not even in the running for carrying and stocking an ‘Avatar’. I think to some extent that the loss of the trips to the local DVD store and the swing to the Targets and Best Buy seem to lend a feeling to each movie released that there a sense of ‘mass commoditization’ of the movies. You just don’t ‘run’ to Wal-Mart for a film. You can’t even rent them at Wal-Mart or Target – they must be purchased. To compound this, movies are being released sooner than ever before. This gives one a reason to stop before going to a theater right away to see a movie. Given the cost of a ticket, popcorn etc., a babysitter (if you need one) and you’re into 1 movies for nearly $ 100.00 if you go with 1 other individual. Ouch!
Years back, certain theaters carried certain films. There were ‘art’ houses (for independent films) , there were theaters that carried foreign films ( Goddard, Truffaut) and there were retro houses and mainstream theaters. With costs so high these days, theater owners must give way to larger bigger well advertised releases. When was the last time anyone saw an ad on TV, newspapers, bus stop, radio, etc for a foreign language film from a well known director. It used to be Directors could lure an audience into the theaters alone. It didn’t matter who was in the film, what the special effects were or if there were any at all. Few directors today can do this (Cameron and a handful of others can, but not too many).
Movies are a commodity today. One released after another, not much difference between them all. And once they are out and available after the theaters, they are all but forgotten. We have no more real teams of actors and actresses that are featured in several films (except for Tarrantino and now Rob Zombie, who do this).
I miss all of this. Do you?
The Death of the retail DVD. Now you see them, soon you won’t.
November 20th, 2008 § Leave a Comment
A lot has been written about online video and its bright the future. One thing is for certain, online video has got some maturing to do, but it is here online today. Right now you can watch nearly everything you can see on cable, online in one format for free or for a fee. For the studios that ship thousands of DVD’s of first run films to the stores (and there are less of them) they are shipping less. For the independents, they are shipping even less and to add insult to injury, must take returns back of unsold plastic with DVD’s. And then you’ve got shelf space where less is being devoted and therefore more studio titles occupy that space rather than independent titles. But overall, online is slowly nibbling into these sales. How do we know? Look at the music CD business.
When we moved from cassettes to CD, the music industry reaped those dollars. Finally now, musicians are beginning to understand how to use online to actually make more money with their music than the traditional ways. Ian Rogers, ex-head of Yahoo Music has got it right. He’s dead-on. Using Topspin, he recently pointed out two examples of how this works with two artists at Topspin.
The first example is David Byrne and Brian Eno’s new album Everything That Happens Will Happen Today
. By distributing digitally and keeping most of the profits themselves, the gross revenues of the album matched what they could have expected to get as an advance from a music label within the first 50 days. The second example is a lesser-known artist in his twenties, Joe Purdy, who has sold 650,000 tracks on iTunes and was able to buy a house from the proceeds.
Ian says: “Digital sales don’t make up for physical? From the artist perspective they certainly can, and quickly. David and Brian keep the majority of the profits, and (via Topspin at least) are paid within sixty days of the fan purchasing (no wait for recoupment and complex royalty accounting). When your costs are low your royalty rate high and your channel direct, the marginal profitability from the artist perspective can be far different than in the old model, to be sure.”
Look at Radiohead and Nine Inch Nails.
So, ultimately DVD’s will go the way of the dinosaur. Just as CD’s have. Where’s the economics of sending these in a truck across the country, including packaging and shipping costs and returns? So how will an independent movies producer/company and or studio survive? It has to be online. The writing is clearly on the wall. DVD’s simply will not continue to be sold in stores. Take a look at ESD (electronic software disrtibution).
Example: Microsoft. They just moved all of their software online, into a MS ‘store’. What’s this mean? The days of buying packaged software loaded onto CD’s are numbered. The online store sells all Microsoft software from Office to Xbox 360 games. Instead of shipping the software in the mail, you download it over the Web. Just like you can download apps directly to your iPhone from the iTunes App Store, the Microsoft Store takes the same approach for its own PC and server software. (It does not distribute mobile apps or software made by other companies).
The obvious fear for most users buying ESD products is not having the software on physical media to re-install the product at a later time. Microsoft Store solves this by letting you re-download the product until mainstream support for the product ends. Typically this is 5 years after the product is released. You always have the option of copying the downloaded products to physical media if you want to have it available longer than the mainstream support lifetime.
And this can also be solved with movies and TV shows. Especially when you allow consumers to ‘own’ a digital copy to watch anytime, on their TV without actually having the digital file. How is this done? That’s my next post. There is a secret stealth company coming in early 2009 that will allow consumers to ‘stream’ anything they want (new or old), with or with out commercials (you can pay for it w/o commercial or watch for free with them) and keep the tv or film forever locked away in their own media vault (not on thier own PC, but remotely).
Its the future. Stay tuned. And its real. Using this, why in the world would anyone have to buy or rent a physical DVD again?
‘The Beatles’ are finally available in a streaming format…across the universe that is.
February 2nd, 2008 § Leave a Comment
If you are extraterrestrial in the neighborhood of Polaris, the North Star, you’ll be able to listen to ‘Across the Universe’ in 431 years for free and without any DRM. NASA on Monday will broadcast the Beatles’ song “Across the Universe” across the galaxy to mark the 50th anniversary of the agency, the 45th anniversary of NASA’s Deep Space Network, and the 40th anniversary of the song (not to mention Tuesday’s DVD release of the movie bearing the same name). The song will be broadcast as an MP3 and with the blessing of the The Beatles estate 
. Polaris is 2.5 quadrillion miles away (umm, that’s why it’s 431 years away). But that seems a lot closer than downloading anything ‘Beatles’ soon from iTunes. To Polaris anyone?
