Home Media Magazine has run an interesting article in which BTIG Equity Research analyst Richard Greenfield asserts that Hollywood is getting close to achieving its windowing ambitions for new release movies that place kiosk and by-mail rentals at the bottom of the food chain.
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The article states that the studios’ preferred sequence of windows for new release titles would include offering, after a two-month theatrical window, “new releases as premium priced (from $25) video-on-demand (VOD) on cable and the Internet, followed by electronic sellthrough on iTunes, Amazon VOD, Wal-Mart’s Vudu, DVD/Blu-ray sellthrough, electronic rental via cable/web VOD, store-based rentals, kiosks and lastly, subscription-based rentals such as Netflix.”
With the recent FCC waiver decision enabling video-on-demand releases the day titles hit theaters, Greenfield sees this channel taking off in the coming months:
“We would expect premium priced, early release VOD movies to become a reality before year-end,”
Greenfield also believes that it’s in the studios’ best interests to quickly get their preferred windowing sequence in place before physical media reaches its nadir:
“Hopefully, the studios actively embrace and push out these sequential release windows before digital, IP content eliminates half of the aforementioned windows,”
In addition, Greenfield expressed incredulity that Disney will be allowing its hit film Alice in Wonderland to be available at Redbox, etc. on the day of its release to the home video market. Said Greenfield:
“Consumers cannot rent a movie (legally) the day it hits the movie theaters, why should they have easy access to renting it for $1/day the same time it hits Wal-Mart for sale at $16? We understand what a consumer wants, we just see no reason why the studios should enable that behavior.”
What do you think, Insiders? Is Greenfield right in saying that the studios should not be giving consumers what they want (cheap day and date rentals) in this case?
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Is there a large group of consumers out there that are willing to pay $25 to view a movie at home the day it launches in theaters? Are the studios underestimating the public’s willingness to trade instant gratification for cost savings?
Didn’t the data & date experiment fail?
“Bubble” by Steven Soderbergh was released simultaneously through all channels and grossed less than the craft services budget.
When, oh when, will the “empty suits” in the entertainment industry realize that if they can’t collectively produce **desirable and added-value entertainment**, it doesn’t matter how the distribution channels are scheduled.
I have to proof-read better :)!
Didn’t the day & date experiment fail?
“Bubble” by Steven Soderbergh was released simultaneously through all channels and grossed less than the craft services budget.
When, oh when, will the “empty suits” in the entertainment industry realize that if they can’t collectively produce **desirable and added-value entertainment**, it doesn’t matter how and when the distribution channels are scheduled.
Still not right!
I have to proof-read better :)!
Didn’t the day & date experiment fail?
“Bubble” by Steven Soderbergh was released simultaneously through all channels and grossed less than the craft service’s budget.
When, oh when, will the “empty suits” in the entertainment industry realize that if they can’t collectively produce **desirable and added-value entertainment**, it doesn’t matter how and when the distribution channels are scheduled.
Good for Disney taking the initiative to give customers what they once instead of doing what some of these other studios are doing and trying to force customers to do what the studios what them to do.
Good for Disney taking the initiative to give customers what they WANT instead of doing what some of these other studios are doing and trying to force customers to do what the studios what them to do.
(fixed a word)
Theater groups will hate the new premium VOD offer. Expect a fight there even though I’d bet this doesn’t gain much traction with consumers anyway. Pay TV also won’t like it and once their blocking rights clear one could assume they will adjust downward what they will pay for the new rights with the premium VOD ahead of them. This new window will not be a cakewalk for the studios. Regular VOD a few months later at 1/5th the cost probably will compete well.
The analyst continues to be misguided in his focus on kiosks as the root cause of the studios woes. Even without Redbox the negative trends on sell through would still be present and some other entity would be getting the blame. The median transaction for Redbox is an impulse rental from a busy mom. Cannibalization is myth. Sure there is some but not much. That being said the studios have a lot at stake so they should experiment away with 28 days. They’ll figure out soon enough that it won’t help sell through or VOD much.
First, “Bubble” doesn’t really count. It did poor theatrically, VOD and on DVD. A poor of example how this program works in the mind of a studio.
This really comes down to studios trying to maximize their revenue stream. With the advent of new technology studios need to realize they need to get their product into peoples homes quicker, faster and cheaper. I don’t think premium VOD 2 months later will really do it for them. Their best play is one release. Maximize the revenue with the advertising and distribution. Have an incentive to go to the theater. Have a premium priced VOD. Have a premium priced Blu-ray and DVD on the release date. Then wait a period of time (28 days?) and go to the $1 theater or get it from Redbox, Netflix or BBExpress.
Quit trying to control the technology. You always lose when you do that. Maximize technology, that’s where the real money is to be made. Look at Apple. They have taken other peoples product and maximized the technology that brings the product to you. Look at Amazon, again taking someones product and providing it to the consumer quickly and easily.
Look at the Video Game market. Premium pricing up front and people still buy like crazy. COD-MW2 was a massive hit at $50 during the holiday.
Windows flat out don’t work. Consumers figure out how to get around them. Release it all at once. But price it at a premium on the product you can.Can you imagine Iron Man 2 on DVD on release date at $30. Consumers would buy that. Redbox could price it for $3 for the night it comes out and Redbox couldn’t keep it in stock. Paramount would probably sell 8-10 million units that weekend combined with the box office revenue would make $300 to $500 million that first weekend.
Oh well. One can always dream.
Windows make sense for the studios. It helps them max out revenue. Bakeries window by selling things for less late in the day. Airlines, book publishers and millions of other businesses sell the same thing at different prices to maximize yield. Sorry but windows will never go away except for crap movies.
Windows make sense right now, but very short term. Some of the examples you used are struggling heavily right now with the advent of new or disruptive technology.
Airlines used to charge what they could with only booking through the airlines themselves or travel agents. They would get a premium for their service. Now with all of the travel websites and bots to monitor them, you can get cheap flights with relative ease. Book publishers are the same way. Just look into the ipad and kindle and you will see the window collapsing on hardback to paperback. Or the Amazon-Walmart price war last year during the fourth quarter. That was disruptive.
I think the studios need to look at the music business. The key now is value added content. I think you can make Windows work, but there needs to be value added to the content. That’s why Redbox works. The value is $1. People wait for the content at the window for $1. Some people go to the theater the first weekend. Why? Because you can be the first to see a film, that is the value cost. Or the theaters that offer a higher ticket price for 3d, luxury seating and a dinning experience, the Alamo Drafthouse as example. Or look at what Summit did with Twilight-New Moon. Multiple discs across multiple points with different content depending on what disc set and where you bought it. Depending on what was value to you determined where you rented or bought Twilight-New Moon.
Windows, generally speaking, are working the way you describe. Not perfectly but each window has it’s place and reasoning. Airlines self window especially the smarter ones. Point was that they sell seats differently to max out yield. I hear you on the book businesses. Perhaps hardcover to softcover window will vaporize.
Bottom line is that the biggies like avatar generate multiple sales to consumers by windowing. Would it have made sense to not window avatar? No way. Any efficiencies gained in marketing would be lost to revenue shrink.
The release windows are bad for customers but good for studios.
Will it lead to more income for the studios? I don’t know. I know that I am going to wait the extra 30 days to see DVDs from Redbox & Co. (Did this for Sherlock Holmes and The Blind Side.)
Yup, my sentiments exactly. I have no problem waiting a little longer. If I want to see a movie really badly then I’ll go to the theater. And that has been a few years now…
That said, Transformers II has been impossible to rent from RedBox this weekend…
I don’t care. When I feel like watching a movie, I go see what’s available at RedBox. I’ve even taught my kids to be patient and ignore the new-movie ad-attacks on TV. If the studios keep making it worse, I’ll just stop paying them for watching their movies – I don’t care if they go broke and stop making any.
Further proof that the US is a capitalistic nation that does not understand capitalism.
“why should they have easy access to renting it for $1/day the same time it hits Wal-Mart for sale at $16?”
Capitalism, stupid. The same reason why retailers compete with offers and promotions to get you to buy the movie from THEIR store. Why should Wal-Mart have the movie on sale at $15 when Target has it on sale for $16? Because that’s capitalism. Competition creates low prices; what these studios are asking for is no less than the creation of an oligopolistic cartel to make sure their discs sell for as much as possible for as long as possible.
Redbox needs to attack this collusion as illegal. Market competition decides who stands and who falls, not the studios. We, the consumers, settled the DVD vs. DIVX battle, not the studios. We’ll settle this too. We’ll win in the end.
Still not right!
I have to proof-read better :)!
Didn’t the day & date experiment fail?
“Bubble” by Steven Soderbergh was released simultaneously through all channels and grossed less than the craft service’s budget.
When, oh when, will the “empty suits” in the entertainment industry realize that if they can’t collectively produce **desirable and added-value entertainment**, it doesn’t matter how and when the distribution channels are scheduled.
Quote Greenberg:
“Hopefully, the studios actively embrace and push out these sequential release windows before digital, IP content eliminates half of the aforementioned windows,”
meaning, hopefully the studios will get this up and going and make enough cash, because once it hits physical media, then it will be cracked, torrented, and
that’s all she wrote of the profit margin.
Stupid, stupid, stupid.
So what’s to say that people won’t “pirate” the $25 “premium” VOD and
post THAT on torrent?
If its digital, it can be pirated.
Seems like they aren’t looking at anything but punishing Kiosk operators
who price movies to rent at $1. What about video stores like Hastings
or 7-Eleven that rent movies at $1 a night? Or Family Video with their
upcoming “summer half saver” they have been advertising lately?
( Pay $30, and for 30 days get any movie or game for $1 a night)
They just do not like the fact that the old model exposed the truth:
Consumers don’t buy crappy movies, they rent them.
Consumers don’t buy movies for $20 +, most movies are worth on physical
media less than $10. ( ex. look at copies of Star Trek sold on Black Friday 2009 vs.
January 2010)
they can try and “slow the maturity of DVD” but the truth is what it is.
From a business perspectve, it makes no sense to allow the demand for a product to be diluted intentionally by giving a consumer the option to rent a movie for a buck when they could be willing to buy it for $16. Avatar is a perfect example: if everyone could have rented it at redbox, would they have sold a million copies of it via stores? I believe they wouldn’t have and the studio et. all would lose millions in the process. Disney is stupid.
Customers expect there to be a delay and for the big-demand movies, the studio should have the right to hold back certain distribution to maximize their profits. The customers will still get what they want, they will just have to pay more for it. Business 101.
I think some people might pay $25 to view a first-run movie at their home. Afterall, that’s fair if you are taking your family to a movie it would cost $32 (plus $10 in popcorn). But, the market has been set for $4.99 VOD movies and asking 5x for a first-run might be considered pricey. But, start off high and it will move lower, but I would suspect it will end up at $19 fairly quickly.
The real question is what will happen to theater pricing? If the studios will do $19 or even $25 first-run movies on-demand, would the movie theaters see more empty seats or will it be segmenting their customers to those who wouldn’t go to the theater anyway? At $19 or $25, the two could start to compete against one another and the theaters will have to lower prices or increase services to entice people back to the theater. This is especially true for kiddie movies, which do make up a huge % of movies each year.
I personally don’t think the theater owners should allow them to release the movies on the same day it is in the theater. The studios have been trying to cut out the middle men and keep the profits and they see this as a way in the door. Giving people a way around your established distribution could end up coming back and biting you down the road.
I would say that the movie would be on-demand, at a premium, 7 days after release. People would still pay a premium because they couldn’t get it at redbox and the theaters get first crack at releasing the movie.
Stupid or Traditional?
I disagree with your ‘Avatar’ vs Disney example. This waiting period just went into affect within the past few months. Disney chose to go the way that consumers have been used to for years: buy it or rent it – your choice – no delay. On blockbusters like ‘Avatar’, they will sell like mad because people will watch them time and time again and consumers are used to getting the ‘first week discount’ price. ‘Avatar would have sold whether or not the delay was in affect. Look at the mass sellers prior to this year and the delay: Lord of the Rings, Spider-Man, Dark Knight, Shrek, Harry Potter, etc.
If I have no plans to buy a particular movie, then having to wait 30 more days to see it won’t entice me to spend the cash now. On the other hand, if I do plan to buy a movie then I could care less if it is available for rental or not.
As far as VOD for $25…I agree that it most likely settle out over time to a figure more commonly accepted by the market such as $19.95. Not THAT much less than 25 but feels less to the consumer. Will this kill the local cinemas? While it will hurt them for the lesser releases it shouldn’t put them out of business. It cost us $60 to see Avatar in 3-D as a family. We can’t afford to see all the movies we want to see as a group so we do wait for DVD for many of them. Having a $19.95 option would be nice for some of the titles we are on the fence on. Will it replace all of our cinema viewing? Of course not. You go to the cinema to escape – the concession smells, the giant screen and much better quality image (than downloads), the elaborate surround sound, the audience reactions, the lack of the household distractions and of course now for the 3-D effects. I see it as a welcome option.
I think a week or 2 between the theatre and VOD makes the most sense. Theatres have been struggling a long time and I don’t want to see that option go away. What would make me go to the theatre more again besides better movies is more food choices and lower pricing on that, also quality seating. How about large chairs where everyone has their own arm rests and it can recline with a foot rest. Tired of bad seating. If they starting offering nice theatres and no one under 18 allowed, it would be a theatre I would go to. They can keep the crappy seat theatres for families if they really want where the kids can keep making a mess.
I for-see a huge rise in torrents and pirated downloads if this is the way they go. You cannot FORCE people into 1 model because you want to line your pockets with more cash.
These morons running companies have been fighting and losing these battles for years, and they want to continue to fight and lose? The sooner they embrace what people want the better off they will be. Why do these people feel entitled to billions of dollars a year in profit?