Hollywood's Strategy: Missing The Point

from the head-in-the-sand dept

There's a battle going on in Hollywood over the staggered release of movies -- first putting a movie out in theaters, then releasing it later on DVD, then later on pay-per-view and so on. The disagreement stems from the thought that studios would be cannibalizing theater revenues by making movies available on DVD at the same time they're in cinemas, and instead of competing with DVD sales by improving the movie-going experience, they'd rather rely on the artificial protection of windowed releases. Today, the Wall Street Journal reports that movie studios and cable companies are "discussing strategies to release movies through video-on-demand cable services the same day they come out on DVD". Is it any wonder that nothing changes in Hollywood when movie studios have to have a "strategy" for something so simple? Again, they're worried about cannibalization, this time thinking that people watching movies on video-on-demand won't buy the same film on DVD. But that shows their typical misunderstanding. After all, a person watching a movie on video-on-demand isn't likely to want to own it for posterity, and isn't going to shell out $20 to watch a DVD one time -- even if they can't get the film from VOD, they could go to a video store and rent it. What the movie business fails to understand is that sales aren't like a seesaw: when one area goes up, something else doesn't necessarily go down. It stands to gain the most by doing a better job of catering to its audience -- whether those people prefer to watch movies in theaters, on DVD or from video-on-demand.
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  • identicon
    Robert Luong, 4 Jan 2006 @ 7:15am

    No Subject Given

    I may have to disagree with your point over here. Simply because the theatre experience is so terrible and that if one was to release the same movie on DVD I will assure you that a fair number of people will not put up with it anymore.
    However, I must say that I am intrigued by seeing a movie at home on DVD. I mean I know a friend with a big screen and surround sound set up. Imagine hearing about a movie in theatres and just getting all your friends to just go to someone's place and watch it. That sounds so good ...

    reply to this | link to this | view in chronology ]

    • identicon
      doubledoh, 4 Jan 2006 @ 7:31am

      prices will rise

      If the whole simutaneous release thing happens on a mass scale, you can be pretty sure that DVD prices (at least for the first few months) will rise exactly because of what the previous poster notes. People will wise up and figure it's just cheaper to buy the movie and watch it on a home theatre screen. Who in their right mind would put up with a real theatre when they can watch it from the comfort of their home?

      That said, I see DVD sales skyrocketting especially if they don't increase the prices.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 4 Jan 2006 @ 7:36am

    No Subject Given

    from the article --- After all, a person watching a movie on video-on-demand isn't likely to want to own it for posterity, and isn't going to shell out $20 to watch a DVD one time -- even if they can't get the film from VOD, they could go to a video store and rent it---

    Actually, I beg to differ. We *never* go to the movies. It never fits our schedule and the experience stinks. We watch movies on VOD and if we like it, then we will buy the DVD to watch again.

    I do have to agree that the movie industry needs to wise up on their economic model. DVD sales and ticket sales are not linked, IMO. They're completely different types of consumers.

    reply to this | link to this | view in chronology ]

    • identicon
      Scott, 4 Jan 2006 @ 7:56am

      Re: No Subject Given

      I think you may be missing the actual point Carlo is trying to make. The theater release will stay ahead of DVD/VOD for sometime, but there is no point in DVD being released for 4 weeks or so before it comes to VOD. Many people will rent a DVD once, and never touch it again, every day the studios wait for it to hit VOD is potentially lost money. People will forget it came out, they will give up waiting, etc. By releasing DVD's and VOD simultaneously, the studios will only make money. People like me who buy lots of DVD's will still buy them, but the people who have no intention of buying, hate blockbuster, hollywood video, etc, can get access to it quicker and easier, satisfying more customers AND(read here clueless studio execs)make more money.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 Jan 2006 @ 11:08am

      Re: No Subject Given

      I agree 100%.

      I have two small children and we NEVER go to the movies.

      We will wait for the movie to hit VOD. We will pay $4 to watch it for 24 hours and if the kids like it, we will buy the DVD when it comes out.

      This works out well for us by avoiding buying movies we won't ever watch again and only increasing the cost for movies we do buy by $4.

      I buy movies from two places. Walmart if I happen to see one we watched on VOD in the past couple of days or Amazon if it's not out yet.

      Perhaps when my children are older going to the movies will be attractive to them as a social event but they have been trained that the movie they see on DVD is the same one that was showing at the movies three months ago for significantly LESS cost.

      reply to this | link to this | view in chronology ]

  • identicon
    Riley, 4 Jan 2006 @ 7:49am

    I'd have to disagree as well

    People are not going to pay to for most movies in the theatre, DVD and digital download. I would think customers buying all 3 of those for the same movie would be extremely rare. More than likely it is one of those things, possibly two if they really enjoyed the movie. Theatre revenues undoubtedly would decline if they release DVDs simultaneously or closer to the release date. And DVD revenue would undoubtedly decline if they released digital downloads simultaneously or closer to the release date. BUT, if you look at the profit margins for these products, they SHOULD go something like this download > DVD > theatre. The movie industry is currently protecting its lesser profitable produts because the traditional business models for theare and retail sales require it and they think that by forcing this progression they can force consumers into buying the products multiple times. In the end, they are only serving to reduce their profits by discouraging sales of downloads.

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 4 Jan 2006 @ 9:15am

      Re: I'd have to disagree as well

      I think a lot of people are misunderstanding Carlo's point. He isn't saying that people will watch all three (theater, VOD and DVD), but that offering it in all three formats means the movie studios will capture more viewers. The people who wouldn't watch it at all at the theater will now be more tempted by VOD or DVD.

      Plus, if this happened then it would force everyone to provide a better experience. The theaters would have to recognize that they're providing a social environment for a group of people, and do a better job catering to that. The studios making DVDs would make that more compelling with additional extras, etc.

      reply to this | link to this | view in chronology ]

      • identicon
        bigpicture, 4 Jan 2006 @ 9:31am

        Re: I'd have to disagree as well

        I don't think the point is missed at all. Is this about eating popcorn and drinking two gallons of pop, or about watching a movie. If it is about watching a movie, you can do that on a lot of different devices and in a lot of different social settings.

        Where are all the Drive-In theatres, and what is the excuse for their demise?

        reply to this | link to this | view in chronology ]

  • identicon
    Brian, 4 Jan 2006 @ 8:37am

    Where the heck do you go to the theaters?

    I have to say I'm completely baffled as to why there are so many folks out there who think the theater experience is SO horrible. Here are the givens: ticket prices are too high in major cities; concession workers are notoriously slow & unable to manage inventory/demand; noisy people/crying babies ruin the experience.

    But why's this any worse than anything else we choose to do? Take going to Best Buy. CDs & DVDs are almost always overpriced; the register lines are ALWAYS too long AND the salespeople that instruct you on what you're buying are not the same people who ring you up; if they don't have what you want, you're screwed and have to either go somewhere else or (god forbid) forgo instant gratification and order something to be delivered in a few days. The crying baby factor is slightly less applicable here, but let's let that go.

    BUT: people are CONTINUOUSLY spending more & more time at consumer electronics boutiques. All the "bad" parts of the movies exist at Best Buy, yet you don't really see a huge upswing of online ordering just so people can avoid this. The experience of going to the store is still worth something to people.

    When Amazon.com launched, did we see a reduction in the number of bookstores because people stopped going to them to buy books? Negative; B&N and Waldenbooks and Borders have all STEPPED UP their store presences in all major metro areas. How did they pull this off? They made the experience more valuable - quiet stores, helpful staff, cafes with internet access, big comfy chairs.

    Unless you're going to theaters where you're getting stabbed, spit on, spilled on, or have to threaten the fat guy down the aisle that if he doesn't stop talking, you're going to shove your Mega Size cup up his Mega Size rectum, then the movie experience isn't much worse than anything else we choose to do with our disposable time & income.

    Can it be improved? Heck yes it can. Take Australia: at theaters there, you can see movies in the Gold Class theaters. You get a waitstaffer, big comfy chairs & a table to eat from, a full menu, and only like 25 people can be in the theater at once. This costs an extra $10, but (to me, at least) it's totally worth it, at least every once in a while. But imagine if that were the STANDARD?

    reply to this | link to this | view in chronology ]

    • identicon
      Nipsey Russell, 4 Jan 2006 @ 8:59am

      Re: Where the heck do you go to the theaters?

      I disagree with Brian, and I assume many others will, too, especially those of us living in major cities.
      A: the theater experience is actually ok in the "art-house" theaters, but I have long ago decided that it is not possible to go to a "mainstream movie" any more as the clientele at these places is contemptible, despicable, disgusting, and generally not fit to be around other humans. This may only apply to 1%-5% of the people in the audience, but it only takes one to ruin it for the whole theater. Not to mention the ads, delayed start times, concession prices, etc..
      B: As to your comparator: buying a DVD at best buy. Well first of all, you can go to a store and buy 20 DVDs in 15 minutes versus the 2+ hours required for a movie. Also, this is not the only alternative, I use netflix and never have to deal with anyone outside my house!

      reply to this | link to this | view in chronology ]

    • identicon
      rich, 4 Jan 2006 @ 11:04am

      Re: Where the heck do you go to the theaters?

      Actually I think that Hollywood should look to see how product is staggered. My logic is that they refuse to look at the quality/originality of their product so what else do they have to do other than to maximize their usually lame content?

      "When Amazon.com launched, did we see a reduction in the number of bookstores because people stopped going to them to buy books? Negative; B&N and Waldenbooks and Borders have all STEPPED UP their store presences in all major metro areas. How did they pull this off? They made the experience more valuable - quiet stores, helpful staff, cafes with internet access, big comfy chairs."

      Nonsense. The number of books sold has been on the decline for several years. Sure they sell other stuff as revenue (including DVDs by the way but sales are down. The same is true for movies, actual people in seats has declined over the last four years and this is only covered up by the increases in ticket prices.

      I don't know why Amazon is mentioned but surely everyone knows that the number of bookstores as declined for many many years as so many independent booksellers have gone out of business when they couldn't compete against the mega book chains (who by the way are struggling themselves).

      So Amazon has had a small impact on the number of stores simply because the mega-chains had already slaughtered them.

      reply to this | link to this | view in chronology ]

    • identicon
      Rikko, 4 Jan 2006 @ 11:10am

      Re: Where the heck do you go to the theaters?

      Brian, your argument is flawed in that we don't go to retail stores for entertainment - we just go to buy. In a theater you are paying money for the experience you receive in the given time. At Best Buy or the like you are paying for the whachamacallit that's in your plastic bag - all the bored teenagers behind the cashier and irritating shoppers are either incidental or overhead.

      Now if Best Buy started charging admission to look around, then you'd hear some shit.

      reply to this | link to this | view in chronology ]

    • identicon
      Zonker, 4 Jan 2006 @ 11:40am

      Re: Where the heck do you go to the theaters?

      But why's this any worse than anything else we choose to do? Take going to Best Buy. CDs & DVDs are almost always overpriced; the register lines are ALWAYS too long AND the salespeople that instruct you on what you're buying are not the same people who ring you up; if they don't have what you want, you're screwed and have to either go somewhere else or (god forbid) forgo instant gratification and order something to be delivered in a few days. The crying baby factor is slightly less applicable here, but let's let that go.

      I agree the shopping experience at Best Buy is pretty horrible -- but you seem to be missing the point.

      If I buy a DVD at Best Buy, I *watch* it at home. The screaming baby factor, etc., doesn't affect me there.

      Plus, I usually buy DVDs online or at Costco when I do my other shopping, thus negating the negative experience from Best Buy.

      reply to this | link to this | view in chronology ]

  • identicon
    bigpicture, 4 Jan 2006 @ 9:02am

    Hollywood's Strategy

    How could something so simple seem to be so difficult to understand? Most people only watch a movie once, and a few who don't get it the first time, may watch it twice. The media that it is watched on is relatively unimportant, say if I watch it at the theatre first then I won't rent the DVD. If I watch it on DVD first then I won't watch it on television.
    That is why I got rid of the cable TV movie package, because by the time movies reach TV, I have usually seen the ones that I want to see, on an earlier media release. There is enough of the same old things over and over again on TV, without the movies.

    reply to this | link to this | view in chronology ]

  • identicon
    Ariel, 4 Jan 2006 @ 9:20am

    Hollywood's Strategy: Missing The Point

    For me its about economics and experience. DVDs cost about 2x Movie Prices. Movie Prices (at least in NYC) are not stable, the prices have hiked at least 4 times in 05 alone. VOD prices are about = to rental prices. I dont readily own each movie I have seen in the theaters. So how would simultaneous release effect the way I watch movies? I would probably just rent. If I feel that strongly about a movie based on Buzz and Peer review I would just buy it since rent+buy doesn't make sense to me. Theater attendance will surely drop since I feel that the price keeps rising while the experince suffers (i.e. phones ringing, people with shopping bags ripping open potatoe chip bags and canned sodas, some wanna be critic making comments on my right, movies starting a good 15-30 minutes later due to ads and product placements)
    DvD (Most $$$ of distros under consideration) = ThatherCost x 2 = (rental or VOD)*4
    Based on this, for me anyway, its a question of $$ vs Entertainment value. If the THX Surround sound is Hit or Miss where I normally go. Or if I know people will be cracking open those chips or soda cans then the entertainment value goes down and I would opt for renting or buying. If movies in theaters become cheaper, then bang for the buck goes up. If the industry cant figure out a price point where I wont mind spending the money for the extra bells and whistles that watching in the theater provides I will probably be spending half the money (Almost 1/3 of the movies rental in NYC) To just watch it in the privacy/comfort of my home. My 2 cents.

    reply to this | link to this | view in chronology ]

  • identicon
    CUrob, 4 Jan 2006 @ 9:40am

    Timing is everything, HA!

    Theater, VOD, DVD (rental/purchase).

    I agree with the simultaneous release, as others have said above, they tailor to different consumers. Me personally, I *never* go to the theater because of inconvenience (driving & timing), cost ($$$), etc. I do however rent and buy DVD's. I am willing to part with the 4 bucks to rent a Blockbuster to go home and watch it with my family/friends and on my time schedule, with the ability to pause to goto the bathroom without missing half the plot due to lines, or make more popcorn without waiting in lines and parting with half a paycheck.
    Home theater and entertainment systems are only getting better and more cost effective, look at the amazing quality of Plasma's, HDTV's, and LCD projectors!! Sound systems out there are nearly perfect! I say a true movie junkie no longer has to be a theater goer.

    If I rent, and realy love a movie, I'll buy it. Maybe not right away, but when the pricepoint gets to around $15 or less. Now if the prices were to raise for a new movie to say $30 for a new DVD under simulataneous release, rentals would in turn raise as well... so say $7-8. You still come out on top in my book over a theater as far as enjoyment and pocketbook is concerned.

    The other advantage to this is pricing of a product like a DVD or Rental is a retail good, subject to supply/demand, and potentially unlimited sources (i.e. compotention) versus the price fixing theaters with their hiway robbery movie and food pricing.

    reply to this | link to this | view in chronology ]

  • identicon
    Blog Gently, 4 Jan 2006 @ 10:51am

    I am a cannibal

    They should be afraid, very afraid - absolutely I will stop going to theaters and watch even more movies at home on DVD if DVDs are available at the same time as releases. I have long since given up on getting a decent theater experience - people behave like animals in the theaters where I live and like many people I'm sick and tired of it, and sick and tired of buying their overpriced crappy food.
    I also stopped buying DVDs after getting NetFlix - there's really no point in owning a big stack of movies you watch maybe once a year (if that). If VOD becomes a reality without me having to buy cable (i.e. available over any DSL or any broadband internet connection) then absolutely I will never buy a DVD again, there's simply no need.
    I would think about buying a movie IF AND ONLY IF there was some guarantee to perpetual access in a contemporary format. But as video/DVD and now BLueRay/HD-DVD formats have shown, the studios are intent to force us to buy movies over and over at full price every time a new format comes out. If they instead allowed me to license it permanently and upgrade to new formats for no, or a small fee I would do so for my very favourite movies.
    Since that will never happen I think VOD with some capability to store and watch later for a limited period, or like Napster be a subscriber and store as many as you want and watch from a fixed number of devices will be ideal.

    reply to this | link to this | view in chronology ]

  • identicon
    T, 4 Jan 2006 @ 10:57am

    No Subject Given

    I purchased three movies on DVD last year. TWO of the movies I downloaded the day they came out (or maybe even before they came out:-)
    Downloads are nice previews, but DVD's with all their extras and special features can't be replaced.
    I also took my entire family to see the same two movies in the theatre, dropping about $80 each time on tickets and snacks.
    Maybe my family is atypical, but (legal) similtaneous releases would have no effect on our movie spending whatsoever.
    I also recently had the pleasure of experiencing the new digital cinema projection for a screening of Disney's Chicken Little in 3D. While the opening credits were still rolling I leaned over to my wife and said "Oh my god, THIS is the technology that is going to save the movies!"
    If you haven't seen digital theatre projection you are in for a shock. As an imaging professional I have extremely high standards and expected to be disappointed by digital's compromises and compression. Heck, I'm the guy who regularly calls the cable company to complain about over-compressed digital cable channels. ("You're the ONLY customer who has EVER noticed that, sir").
    Digital cinema movies are clean and clear, free of dust, scratches and reel changes, and they look amazing. I was also pleasantly surprised by the fact that there were no annoying commercials before the show, only a few harmless and age-appropriate movie trailers. I don't know if the no commercials thing was due to a lack of digital cinema formatted ads or if it was an edict from Disney to improve the digital theatre experience.
    In short, release 'em all at once but force theatres to provide a decent movie-going experience that can't be matched by home theatre. We're never going to be able to run $300,000 digital theatre projectors in our homes, so that's your selling point for 'going to the movies'.
    And Mr. Megaplex - if I wanted to watch Coke commercials I would stay home. Either ditch the ads, which apparently don't make you much money anyway, or offer me a choice of discounted tickets for movies with advertising.

    reply to this | link to this | view in chronology ]

  • identicon
    claire rand, 5 Jan 2006 @ 3:01am

    DVD vs Cinema

    for me and other half, going out to see a film costs '£x', including travel, sommink to nibble on etc. if buying a film on dvd costs less than '£x' I'll buy if i *really* want to see it, cus its cheaper, with a decent telly its not too bad.

    renting, yeah fine with that, if its any good i guess i could copy it, never have though (can't be bothered). never tried VOD, but i'd tape anything that came down that route anyway.

    I own maybe 20 DVDs of films...

    oh yes and at home you can have your very own 'back row seat' without sharing it with others...

    watching the film is optional.

    reply to this | link to this | view in chronology ]


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