Yet Another (Yes Another!) Study Suggests Hollywood's Problem Is Dumb Release Windows That Cost It Money

from the damn-the-facts,-it's-piracy-piracy-piracy dept

It really was just two months ago that we pointed to yet another study saying that the problem that Hollywood was facing with infringement was almost entirely its own fault for creating stupid “release windows” that make it harder for consumers to view what they want, when they want it. It’s that point alone that is driving significant amounts of infringement. It doesn’t add much new, but a new report suggests that if the studios got rid of the windows, they would actually make more money. In aggregate, people would end up spending more money on movies. Of course, we’ve made this argument for years.

To be fair, a big part of the reason this doesn’t happen is because of the theaters themselves. Any time the studios seek to take away the box office window by releasing something elsewhere earlier or at the same time, the theaters throw a complete hissy fit — effectively admitting that they’re so bad at the service they provide, that they can’t compete with home theaters. Of course, it’s not all the theaters’ fault. As we’ve seen with studios like Warner Bros., they’re so obsessed with the ability to price differentiate through windows, that they keep seeking to add new windows, which only serve to drive more consumers to infringe.

Honestly, I’m at a loss as to why Hollywood can’t do the math here, in terms of how much they’d gain from doing day-and-date release for everything (even if it meant fighting the theaters). It seems like a clear win, with multiple studies supporting that, including this new one. They seem to think the only way to price differentiate is through windows — but, as lots of others have discovered, you can launch a variety of differentiated offerings at the same time and offer them at different prices, and the market self-segregates. Sooner or later, someone at a movie studio is going to figure this out, and make that studio a lot of money.

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Comments on “Yet Another (Yes Another!) Study Suggests Hollywood's Problem Is Dumb Release Windows That Cost It Money”

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38 Comments
Anonymous Coward says:

It's all about choice

See, by only providing content through locked down, time limited, location restricted methods, the studios are actually giving us a lot more choices in how we consume our content. Dirty pirates can only consume their content in one way: no encryption, HD, and worldwide. But the studios give us an unending stream of different choices that provide real value to their content. Maybe you want DRM that requires a constant connection to the internet. They have that. Maybe you DRM that limits you to only certain devices. They have that. Maybe you want content that’s purposefully degraded. They have that. Maybe you want to be able to watch content only in the US. They have that. Canada? They have that too. Content that expires after 48 hours? No problem. Maybe you want to have to watch it in the theater? They got you covered. The depth and breadth of choices that the studios provide is something that the evil pirates just cannot cover. The other day I asked someone at the pirate bay for an encrypted copy of The Grey that would only play on my computer for a week and they couldn’t do it!

Anonymous Coward says:

Sooner or later, someone at a movie studio is going to figure this out, and make that studio a lot of money.

The major studios would never do this. You might be able to successfully argue the idea to a smaller studio (I dunno, maybe someone like Relativity) but such studios simply don’t have the muscle to go against the theaters. If you compare the docket of a Relativity versus, say, Warner Brothers:

Relativity:
Haywire (January,20)
Act of Valor (February,24)
Mirror Mirror (March,30)
Movie 43 (Apirl,13)
The Raven (April,27)
House at the End of the Street (September,21)
Hunter Killer (December,21)
21 and Over (TBA)

Warner Brothers:
Journey 2: The Mysterious Island – February 10
Ghost Rider: Spirit of Vengeance – February 17
Project X – March 2
Wrath of the Titans – March 30
Bullet to the Head April 13
The Lucky One – April 20
Dark Shadows – May 11
Rock of Ages – June 15
Magic Mike – June 29
The Dark Knight Rises – July 20
The Apparition – August 24
Cloud Atlas – October
Gravity – November 21
The Hobbit: An Unexpected Journey – December 14
The Great Gatsby – December 25
Who Bump Tom Cat – December 31

The theater could threaten, and successfully carry out, a boycott of Relativity movies with far less impact then they could if they threatened Warner Brother with a similar boycott.

Kevin H (profile) says:

Researcher: The numbers show that your windowed release window is actually costing you more money than its bringing in.

Studio Exex: But that method worked great since the 80s. What do you mean its costing us money?

Researcher: Given internet based entertainment choices people do not want to wait for a movie to be released 6 months after it was in theaters. The especially do not want to wait over a year for the geographic restrictions. They want it much sooner, and because you are unwilling to give them what they want they are using methods like Bit-torrent to get it.

Studio Exec: So Piracy is the problem…… Thank you, you may go researcher. Gene? (Secretary)

**researcher leaves the report on the desk and walks out as the secretary walks in

Gene: Yes sir?

Studio Exec: Get Lamar Smith on the phone. Tell him its that “special” contributor from California.

Gene: Right away sir.

**she turns to leave, but the studio exec grabs the study and hands it to her before she goes.

Studio Exec: And shred this. I got what I need out of it.

Gene: Right away.

**Gene leaves the office and closes the door behind her.

Studio Exec: Fucking Pirates.(**muttered)

/end

fogbugzd (profile) says:

Re:

In these discussions we miss one source of revenue that the studios see. Right now they have companies like Blockbuster and several On-Demand services paying them up front to delay release through services like Netflix and Redbox (you know, the services people actually like to use).

Companies actually pay the studios for the privilege of getting the movies 28 or 56 days before their rivals.For a business it is awfully hard to pass up a contract with a fixed cash payment as opposed to some diffuse future revenue stream. That may be a foolish perspective in the long run, but it is always tempting to take the immediate cash.

One big problem with early release agreement approach is that many of the early release partners are dying slow and painful deaths. Blockbuster is on life support, and On-Demand services are usually tied to cable television which is suffering from a lack of growth potential and market shrinkage as more people cut the cable.

Another problem delayed release causes is that the later releases kill marketing efforts. At least up until now you could add a movie to your Netflix queue when you see the advertisement for it, then have it show up 28 days later. In the lastest brilliant Hollywood move you can’t add it to your queue for 28 days. It delights the dying Blockbuster, of course, but by the time the 28 days expires I no longer remember the movie so I never add it to my queue. What an enlightened business strategy!

Anonymous Coward says:

Re:

Major studios most certainly can do this and all it takes is one of them to break from the pack and show that they make even more money doing it.

If someone, like WB, decided to release ‘The Dark Knight Rises’ to blu-ray the same day to theaters, there is NO FRICKING WAY that AMC will boycott it. Heck, other chains like Regal or Rave might step up and buy the rights and advertise that AMC doesn’t have it!

The problem today is that Hollywood spends a great deal of resources in trying to protect it’s current cash cows, that any hint of change closes their doors to other opportunities.

hegemon13 says:

Appeasing the theaters

One way to appease the theater owners may be to at least start out by offering theaters an exclusive on the discs. That is, only theaters that exhibit a particular movie can sell the discs. They’d likely charge FYE-level prices for them, but they could further entice theater-goers with a discount for those who have purchased tickets to the movie. There are many movies I’ve left thinking, “I’m going to buy that when it comes out,” and then never bought because the excitement was gone by the time it was available. Had they had it available in the theater lobby that day, I’d have bought it on my way out.

jupiterkansas (profile) says:

Of course every release window has a separate marketing window. They would save a ton of money on marketing by releasing everything at once.

And then once same day world-wide releases becomes the norm, they can make more money by reintroducing windows on their biggest films. Special previews with $20 tickets. Maybe put a little glamor back into show business.

Benjo (profile) says:

2cents

Disclaimer – the following is just an opinion.

People (on a case by case basis) are going to spend roughly the same amount on “Entertainment.” What I mean to say is for every person, there is a dollar amount they WANT to spend on entertainment each month. The only thing that really affects this number is the availability of such entertainment, and probably to some extent marketing / advertisements. This seems like an underlying fact that the entertainment industry wants to ignore.

If theaters boycotted same day streaming/dvd releases by not showing something like the Dark Knight Rises, they would be incredibly stupid. A movie theater is a completely different experience (usually a social one, though not necessarily) than watching something on your computer, or even at home on a home theater (visual/audio is inferior). But if they DID boycott, fans would still find a way to see the movie.

drewdad (profile) says:

They aren't going to innovate themselves out of a job.

If your job is to manage the release windows and make sure that everything gets released at the right time, everywhere, why do you want to get rid of release windows?

These dinosaurs will change when they have to change, and not a moment before, because these middle managers aren’t going to put themselves and their subordinates out of work.

PRMan (profile) says:

Re:

Yeah, Netflix buys a lot less copies but not even 1/4 of the renters will buy, so that’s even less money for the studio. It’s about power and control, not money.

I haven’t ordered a single PPV movie since the 24-hour limit started. I also haven’t purchased any of those movies, or any more than I typically purchase. I just made a clever search on my DVR to always have 5 movies available at all times in HD. How’s that working out for them?

timmaguire42 (user link) says:

It's a Monopoly

“I’m at a loss as to why Hollywood can’t do the math here”

I think it helps to realize that entertainment companies are a sort of monopoly. Sure, there are many studios, big and small, but if you want to watch this particular movie or listen to that particular singer, someone in the chain must deal with the particular studio that owns the rights.

The main focus of the monopoly is not maximizing customer service (indeed, the fundamental problem with monopolies is that they don’t have to care at all about customer service), it’s maintaining control.

If you own Toy Story 3 or War Horse, your only competition for people wanting to see these movies are the pirates. Stop the pirates and you can have any release window you want and there’s nothing anybody can do about it. And you like your release windows.

So of course you will do whatever you can to get the pirates and save your monopoly. Screw the internet users. Your secretary spends too much time on Facebook anyway.

John Nemesh (profile) says:

What happened to day and date?

It seemed like last year, things were starting to get better. You saw ads for movies coming out on disc (DVD and Blu-Ray) and they actually ADVERTISED that these movies were also available as a digital download! Now…I go to watch a movie like “Attack the Block” (which is about as far away from “Blockbuster” status as you can get!) and I only have the option to purchase the movie for $19.99 instead of just being able to rent the damn thing for $5.99? (which is a high price for rentals to begin with!) These guys need to get their act together QUICKLY if they hope to remain profitable much longer! I am sick and tired of these “windows” which do nothing but prevent me from spending money to LEGALLY watch their crap!

Bernard Swiss says:

Don't blame the cinemas -- they have no say

As I understand it (and for some reason it’s not acknowledged much in mainstream circles or “the press”)…

When a new release hits the theatres, the terms usually amount to the studios getting all the profits for the first several weeks, and the cinema only starts collecting a piece (~ 10%) of the ticket sales after three or four weeks (longer for a real block-buster). Then they start to collect a growing share, the longer the movie stays on the marquee.

That’s one of the reasons films with relatively low turnout numbers get dropped so fast — the cinema is never going to see a dime from showing them (technically they get a few percent to “cover costs”, but it’s inadequate to even that).

That’s also why popcorn and carbonated flavoured water keep getting even more ridiculously expensive, and pre-show advertizing has gotten so intrusive — the cinema has essentially been cut out of the actual screening revenue, until the studio agrees they’ve pulled in enough dough, that they don’t mind sharing a few crumbs at the end of the run.

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