Studios (and partners) Leaving Money On The Table

The title pretty much sums it up, and this isn’t a new topic here at ZNF. The movie studios’ antiquated release window cycle doesn’t fly in the digital age. Which is costing them and their partners. Their attempts (including Netflix’s malleability) to coerce folks into purchasing content, starting with physical media, by delaying movie rentals and digital release do nothing but confuse or alienate the consumers who are paying attention. Granted, we’re probably a minority at this point. But I’d like to think I represent the leading edge. And, not only don’t I deal in physical media, I don’t purchase content. What’s gotten me agitated this time:

After coming across a decent amount of positive blogosphere and Twitterverse buzz for the SciFi flick Moon towards the end of last week, we decided to take it in Saturday evening. For spontaneous viewing, we generally look to Amazon VOD – downloaded via TiVo or streamed via Roku. Unfortunately, Moon is only available for digital purchase until next month. For reasons known only to the studios and their partners. As I rarely see a flick twice and it’s impossible to share digital purchases the way you’d share optical media, I abstain 100% of the time. And I imagine some in my situation, with my mindset might look to more illicit means of obtaining their entertainment. However, I took this as an opportunity to patronize a Redbox kiosk for the first time.

So instead of gladly paying $4-$6 for a high def digital rental (that Amazon, the studio, and perhaps TiVo/Roku would split), I made two trips to the McDonald’s for a free standard def DVD rental. Which is less than ideal. No one got paid, and I was inconvenienced for lower quality content. All it’d take is a little less greed out of the studios for happier consumers and continued revenue… Hope it’s one of their New Year’s resolutions.

Click to enlarge:

18 thoughts on “Studios (and partners) Leaving Money On The Table”

  1. As an aside, Redbox rentals are super simple and inexpensive (even when not free). I rarely patronize grocery stores or McDonald’s though. So how do I get a unit in SBUX? With Blu-ray titles.

    Also, we enjoyed Moon – a little bit Truman Show, a little bit Gattaca, a little bit Memento, all overseen by the corporation from Aliens. However, I would have enjoyed it more in HD.

  2. I think you are confused Dave. You open with “attempts to coerce folks into purchasing physical media” then later you mention how Moon was available for purchase on Amazon VOD.

    What I think you meant was that you don’t think Hollywood should attempt to coerce folds into purchasing movies.

    As for the loop hole you found, Hollywood is trying very hard to close it, we’ve covered the suits between Redbox and Hollywood many times on Engadget HD.

    The fact is that rentals were way up while sales are way down last year which means Redbox and Netflix are getting more of the money and the studios are getting less. Now lets have you play CEO, what is your plan to appease the stock holders?

  3. I still don’t get the push away from physical media. Between quality – BluRay handily beats digital streaming formats in bitrate – and security, digital media just isn’t there yet. And I don’t think it will be for a while. As evidenced by the Kindle snafu, digital sales lack consumer protection and that’s probably not gonna change for years.

  4. Ben, thanks – I tweaked the post to hopefully better illustrate the staggered release windows. What I need to do is diagram it, so all the various permutations (and delays) are clearly visible. Regarding rentals outpacing sales and the financial impact on the movie studios, they’d clearly get a larger cut, additional income via digital rentals (iTunes, Amazon, Vudu, CinemaNow, whomever) rather than via disc rentals where they get to sell the physical media to a third party just once. That’s my point and where they’re leaving money on the table. Also, hopefully the way the music industry imploded will motivate them. I don’t swipe content, but amongst my peers it seems the fast, inexpensive broadband has clearly led to increased BitTorrent or Usenet downloads.

    RandomRage, for me it’s about convenience. If I plan well enough ahead, physical media is fine – and of course comes with higher quality video. But a good percent of what I watch is spontaneous, so I want that digital access. And the HD rental quality has been perfectly acceptable.

  5. Ok, but you still say “And, not only don’t I deal in physical media,” then you go and rent a physical disc. And of course I know you realize that the studios would’ve preferred it if Redbox didn’t offer the movie for rent yet either.

    So let me ask you this. Do you have a problem with Hollywoods intended windows, or just the reality of the situation? So in other words Hollywood wants you to go to the theater to see it in the first 90 days, buy in the next 30 days, rent it for the next 90 days and watch it on a premium channel for the next 90 days. Digital or physical, Hollywood doesn’t care, as long as they get paid.

    Personally I don’t think the windows work the way Hollywood thinks they do. I believe that people have a preferred way of consuming content and it isn’t the money that is keeping them from using other avenues. But I understand if Hollywood wants to experiment to optimize the bottom line. And at the same time I don’t mind waiting another 30 days to watch a movie on Blu-ray (my preferred way).

  6. Yep, that’s my goal and this is the first movie I’ve seen on disc in quite some time (as opposed to television show seasons). My Toshiba HD DVD unit is lone gone, our DVD player has been decommissioned (in the closet), and the only optical drive currently in our place resides within my Xbox 360. Redbox or Netflix rental discs is an issue for them, the studios, and perhaps the legal system to work out. I’d rather skip that particular drama and just pay more to get content the way I want it.

    So let’s simplify the release windows given your thought, which I obviously agree with, that folks have their own preferred methods of consuming movie content and my skepticism that the current multiple release windows notably improves movie studios revenue. I guess what irked me most this weekend is the artificial delineation between digital purchase and digital rental. I’m not going to buy it, so at least give me the opportunity to rent it – I get it the way I want, they make a little more money. What’s not to like?

  7. Dave, While it was a little difficult to follow all of the back and forth with Ben, I think I agree with your overall assessment; the window system for the release of physical and digital media is silly.

    At the end of the day, I can break movies into four categories. For those I plan to watch in my media room at the highest possible quality and I will probably watch more than once, I will buy the blu-ray disc and I don’t mind paying a premium. For those that I have an interest in, but probably will not watch more than once, I would like the option of streaming the HD version and would pay up to $4.99 for the privilege. For those that I am only interested in watching if nothing else is on, the SD version will do, and I don’t mind paying $2.99 to stream it. And finally, the last group are the movies that I really have no interest in paying anything for, but might watch if it is on television for free.

    After the theater run, studios should just make the movie available in every format imaginable. At the end of the day, most people already know which format they prefer (digital or physical) and how much they are willing to pay for it. The artificial windows probably have very little influence on how people choose.

  8. My theory is that Netflix will implement an add on cost for early access. I think a per-rental fee for early access (stream or physical media) would be of more interest to the studios, as it’d be very easy to just take a cut of each rental.

    On the other hand, that would require you to opt-in to an upcharge, either in an aggregate form (you pre agree to pay any fee for a first 30 day release rental of any disc that comes up in your queue or any stream viewing), or on a per-rental basis before any disc ships.

    Easy to implement would be a monthly fee, as they do for Blu-ray. One problem I have with that is payment during periods of non-use. A consumer friendly version would be a monthly fee for a maximum number of early rentals, but you don’t pay if you don’t utilize it at all. E.G. a $3-$5 fee for 2 to 3 “first 30 day rentals” but no charge if you don’t rent/watch any “first 30 day rentals” during your monthly subscription period.

    There’s a lot of backend stuff to consider too, especially on the streaming side. Right now, it’s an ‘all you can eat’ setup, which simplfies UI issues for viewing devices. Adding functionality to authorize an surcharge for a streamed viewing is a complication.

    Look how long it took the music industry to embrace digital and remove arduous DRM issues. But they did. The movie industry is certainly not the same, but I sense some of the same group-think with these physical/digital/rent/own issues. They’re focusing too much on trying to prevent people from certain means of consuming their product instead of encouraging more consumption.

    I also suspect there’s some jealousy involved especially with Netflix being a middle-man in the streaming arena.

  9. I pre-ordered the Blu-Ray DVD Moon from Amazon for $24. I received it the same day it was released to retail sales (and presumably Amazon Unbox Purchase). I will watch it in it’s full Blu-Ray glory (with little worry of the scratches, glitches with Netflix – not that it’s available there.) Later, if I choose to, I will sell it used on Amazon marketplace for a 20-30% discount. I received a free digital copy with the DVD as well, so I can watch it on my computer/Ipod for all eternity. So, I guess I am the anti-Dave when it comes to this whole release cycle thing. I semi-happily pay a premium for watching the latest hot film. If I am not amped about a film, I’ll wait the 30-days or so for it to show up as a Unbox/On-Demand rental. Selling on Amazon when I chose not to keep the film, I end up with a net $6-8 payment for a film. No contracts, no worries.

    While it may be kind of a pain for people who want to instantly have the latest film rental delivered digitally, I think they are managing demand, and maximizing the profit. If there weren’t money in it, they wouldn’t do it. They aren’t totally stupid.

  10. well the studios can either play games and fight the inevitable or study recent history and embrace digital. I currently just wait for Netflix to have the disc for rent and then rip it to my PC and watch it via TiVo then delete the file. I find all kinds of interesting old stuff this way (or just delete the boring stuff agter 10 minutes) and no studio is going to force me to physical media simply because no MOVIE is that must have to me to buy it now versus rent it in 30 days.

    If I buy it is because the movie is of such quality that I want to have it to watch more than once. Hmm there is a thought on how they could get people to buy movies again. ;)

  11. We agree for the most part Dave, but what sounds different is that from Hollywood’s perspective, they don’t care if it is physical or digital, they just want you to buy it if you want to watch it at home in the first 30 days, then rent it after that.

    So your distinction between physical and digital only applies because Hollywood doesn’t have as much control over physical media — thankfully.

  12. As ZeoTiVo said “no studio is going to force me to physical media simply because no MOVIE is that must have to me to buy it now versus rent it in 30 days.”

    There hasnt been a movie in the last 40 years that I havent been able to wait 30 days to watch and I dont think there will be in the next 40 years…If netflix wants to raise its rate so that there will be no 30 day window, I for one will not pay it because Hollywood can keep its new release out of my hands for 30 days all they want. All that is doing is losing them press and word of mouth promo for all new dvd releases.

  13. Charlie, I’m not sure I have it in me to produce it. Especially now that the studios are not moving in lock step, working independent deals like the Netflix/Warners 28 day DVD rental delay and some of the more progressive studios moving up their digital offerings. Maybe Ben D could put together a feature for EngadgetHD diagramming these various permutations. And he’d probably make more than I would for his time. ;)

    Ben, I agree that there are very few movies compelling enough to deviate from what we generally do. And those ‘event’ movies we usually see in the theater like District 9 and Avatar. However, my point is that the system is artificial and probably doesn’t accomplish what the studio intends. Normally, I’d have skipped Moon if the digital rental weren’t available. And by the time it was, it probably wouldn’t have the same Twitter buzz that motivated me off the couch and I’d forget about it. Internet content and Xbox 360 have replaced a significant percentage of my television and movie viewing in recent years, so the studios should be reducing barriers to separate me from my money (and Call of Duty).

    As an aside, if the theater experience were better people might spend more money going out. Put a Starbucks in the theater. And maybe let’s try assigned seating like I’ve seen in downtown London. Also, let’s do theme nights. Maybe two sci-fi flicks back to back with an intermission between. (The Best Picture Emmy thing AMC hosts is pretty cool, though grueling.) Let’s also modernize the theater+pub experience (which was historically second run films) with newer content and I don’t know Microsoft Surface tables with IMDB info or MST2k.

  14. The one thing they can do to make the theater experience better is to get people off their cell phones. My wife and I have essentially stopped going to movies because too many people can’t understand that checking messages (or worse yet, having a conversation) during the movie completely distracts others and takes away the ability to get immersed in a good movie.

  15. I refuse to pay the premium for new release blu-rays. Some aren’t that bad, but the recent release of Braveheart, Gladiator and Forrest Gump would run you $100 at BB. That’s a ridiculous price to pay for three movies (especially considering how the Gladiator transfer has been trashed in reviews.)

    I have to admit that, when I first built my Windows Home Server, the Rent/Rip/Return model was a little bit tempting because I dislike the studios so much. But, being in law enforcement myself, that was just a brief temptation. What I do is rent via netflix, decide if it’s a movie that I would want on my WHS and wait several months until I can get a used copy for $5 to $10.

    I rarely download movies on Amazon and only if there’s a discount. The audio and video quality that I want is just not there yet. I don’t use streaming that much either.

    I can see why the studios want to change things, but I think that their solutions will only lead to more piracy, be it from torrents or rent/rip/return. There has to be some middle ground here. I really think that lowering Blu-ray prices would do wonders. I’ve seen the idea of a “new release” premium for Netflix owners. Depending on the price, I could go for that, but that would make two premiums that I would be chargen in addition to my regular monthly fee, blu-ray and new release, and a lot of people won’t go for that.

    So, to sum up, the system’s broke, I don’t have any good ideas on how to fix it, but that won’t stop me from complaining!

  16. Agree in general Dave. I don’t buy or even touch much physical media anymore. And I NEVER “purchase” anything digitally, since it doesn’t really mean anything. Happy to rent what’s available to me via Apple TV or Amazon VOD on Tivo. Seems to me that more stuff lately is available on one or the other same date that it shows up on Hacking Netflix DVD release list, and I’m willing to let this thing play itself out. Movies I really wanted to see I’ve already seen in theatres anyway.

    Make the movie available digitally for rental same day as DVD via all the means available that have decent DRM. Offer HD versions for more. Offer outtakes and extras too, again for a little more if need be.

    I can’t be the only one. Several of the DVD rental places near me have gone out of business, and there’s no very few left. I suspect these too will be gone within a few years.

    And yes, there’s still the OCCASIONAL movie I’ll want to see in Blu-Ray high def. But those are few and far between. And I’d rather have a XXHD rental option for those than a disk…

Comments are closed.