We’ve already heard about at least one major studio putting the squeeze on Netflix to obtain more favorable terms. Now it appears that something more wide-reaching is afoot. According to the Los Angeles Times, several unnamed major studios are considering a new policy that would impose a moratorium on ALL DVD rentals for the first few weeks a title is available for sale. The plan’s obvious aim would be to push more consumers into purchasing titles, a transaction that is much more profitable for studios than a rental. Studio sources consulted for the story stated that “such plans were under consideration and probably would take effect next year.
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According to the Times, “Under the plan, new DVD releases would be available on a purchase-only basis for a few weeks, after which time companies such as Blockbuster Inc. and Netflix Inc. would be allowed to rent the DVDs to their customers. The move comes as the studios are grappling with sharply declining DVD revenue, which has long propped up the movie business.”
Reed Hastings, CEO of Netflix, is quoted in the story saying that he has already discussed such delays with several of his suppliers. Said Hastings:
“The studios are wrestling with declines in DVD sales while the DVD rental market has been modestly growing. . . One of the mitigating steps some are considering is introducing a DVD retail sales-only window for a few weeks.
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Hastings went on to add that depending on the details of the arrangement, the delays could have a positive impact, as studios may have to offer rental companies lower wholesale pricing to obtain their acquiescence.
“If we can agree on low-enough pricing,” observed Hastings, “delayed rental could potentially increase profits for everyone.”
Interestingly, a Redbox spokesman consulted by the Times gave the impression that Redbox would go along with a sales-only window if it wasn’t the only company placed under such stipulations, since a blanket rental delay would level the playing field.
Would an inability to rent a title the first month or so it was available push you into buying more movies, Insiders? Could this be a canny move by studios, or is it just one more example of Hollywood’s insular thinking and devotion to an obsolete business model?
[via The L.A. Times]
There are a lot of people who won’t go to the theater to see a new release because of the high price of tickets & concessions. There are others who don’t rent movies, but will purchase a copy after they have seen a movie they like.
It’s hard to replicate the experience of seeing a good movie on a state of the art big movie screen with the digital surround sound. We are getting closer to being able to do that in our own homes now without feeling like we’re missing something.
If a large segment of society decided to cut back on the number of DVDs and BluRay discs they were willing to purchase, would the movie industry be in danger of going out of business? And could you look back and place the blame on companies like Redbox? I don’t think that will happen but i do believe that this is a sign of changes to come. It amazes me how the new releases are marketed on tv and radio as if they are really must have movies. The studios are trying very hard to convince you that you should go buy a copy of a movie that often times was not that good to begin with. Of course they have to recoup all that money spent on production costs and the salaries of the actors and directors, etc. It just makes you wonder how the studios ever made money before the advent of VHS, DVDs, and BluRay.
At the end of the day, most people just want to be entertained, without feeling like they’re being jerked around or gouged.
The HackingNetflix.com blog quoted Netflix CEO Reed Hastings saying something interesting about one side effect of studios restricting DVD rentals:
Occasionally, a studio tries to find ways to restrict a rental firm’s ability to buy at retail. But retail is so big and diffused, this strategy has never worked. Four years ago, Blockbuster in an attempt to have an exclusive in rental, paid the Weinstein company to block all purchases of their films by Netflix. This attempted blockade continues today. But we have never had a problem buying Weinstein DVDs, such as the Academy Award winning Vicky Cristina Barcelona through retail and third parties. Along the way, we have also found that buying used copies of Weinstein titles was very attractive and saved us money. The larger a title is, the better our used purchase works, because there is liquidity in the supply chain.
Waiting a little longer is not a problem. I won’t ever buy a DVD before renting to see if it’s worth purchasing, and even then I wait for the sale price to drop. The movie studios need to get their budgets in line, just as the rest of have to. Does anyone deserve $20 million to work for 6-9 months? Movies are a form of entertainment, not a requirement to live. I can easily do without buying, and can easily wait.
OK, so the big studio’s want rental consumers to wait two weeks while they try and sell their new releases. Fine.
Scenario – ‘Up’ is scheduled for release on Nov 9, 2009. ‘Up’ was originally released on May 29, 2009. The wait to dvd time is 6 months. Why would I care, as a dvd rental consumer, that the title I want to rent is pushed back 2 weeks. So big f’n deal that the wait is now 6.5 months instead of 6 months.
IMHO, there isn’t a shit load of difference between 26 weeks and 28 weeks.
of course fewer people are purchasing movies, it seems like you no sooner get a good collection going and then they introduce it on a new system. don’t get me wrong I’m all for new technology I’m just not gonna spend a ton of money on something I can rent for cheap.
Just like Will Ferrell & friends complain about health insurance executives making too much money I think they make too much money. Entertainment is a stress reliever, it’s good for anxiety, depression and procrastination. They already charge too much for theaters, DVD’s and preminum cable channels (which are useless anyways) and overall movie quality has been bad too. Which leaves me to Redbox: even though it’s a buck it’s still hard to find a movie. With the economy getting worse and entertainment money tightening studios should be happy anyone wants to rent let alone buy.
Obviously most people don’t care if new releases don’t arrive in kiosks until a month later. But so the studios care? No, because probably all they need is 1 of every 10 would-be-renters to buy instead, and they make much more money. The other 9 they wouldn’t have made much money on anyway.
Just because the studio execs want to make more money doesn’t mean the rest of us have it in our budget to give it to them. So waiting an extra month won’t mean I will go buy an over priced movie. I will still continue to buy those that I know I will like (mainly kids movies) and wait for the rest to be available for rent.
Anybody remember the early days when a movie first came out it was MSRP’ed at a hundred bucks on VHS? Funny thing is, it sold for maybe $30 on LaserDisc, a format that delivered better picture quality. The studios must have been raking it in then, to the cost of the rental industry. And six months later the price on the VHS dropped and it started showing up for sale in stores. They continued this trend into the early days of DVD, where you could pick up a DVD of a new release immediately but if you wanted tape you had to wait. That didn’t last too long and the field was leveled.
How history repeats itself… and those that do not learn from it are doomed to repeat it.
Greed is before a fall.Why can a movie get made for 12,000 dollars and make 20 million in a weekend? It’s time to give the people a break.
PHYSICAL: Video-rental chain has trouble paying rent
By Danny King — Video Business, 10/29/2009
OCT. 29 | PHYSICAL: Movie Gallery might close as many as 450 of its eponymous and Hollywood Video stores, or about 14% of its total, by the end of the year, as the No. 2 U.S. movie-rental chain struggles against increasing kiosk and by-mail sales by competitors such as Redbox and Netflix.
Movie Gallery, which has about 2,900 units, has closed 250 stores since the beginning of last month and might close another 200 by year end, the company confirmed today. The company has said it would shut 200 of its Game Crazy stores this month.
Movie Gallery has faced growing competition from U.S. movie-rental kiosk leader Redbox and by-mail leader Netflix since emerging from Chapter 11 in May 2008. In the past few weeks, Movie Gallery set up a “real estate hotline” for its landlords that promised a 48-hour response to their inquiry, implying the chain has had trouble keeping up with its rent payments. One landlord told Video Business that the chain was 20 days late paying rent to him.
The closures were reported by Bloomberg News earlier today.