The movie studios' short-sightedness knows no bounds, apparently. Warner Bros., which has been the most aggressive of the big movie studios in getting companies like Netflix and Redbox not to rent its movies until 28-days after they go on sale, has now decided to do the same thing for libraries, putting in place a 28-day embargo on all DVD sales to libraries, from the time of the DVD release. To make it even more obnoxious, they're removing bonus features and extras from movies sold to libraries.
Here's the thing, though. What's to stop a library from just buying an official version and lending it out? The whole thing is pretty silly anyway. Is Warner Bros. really thinking that if someone can't take out one of its movies from the library, that they'll really go buy the DVD from WB? Also, doesn't this seem like a form of price fixing?
In the end, though, it's unlikely to actually help. Slightly more enlightened studios, such as Paramount, actually tested such 28-delays and looked at the data, which said Netflix and Redbox don't cannibalize sales, and appear to "expand" the movie business. Too bad Warner Bros. hasn't seen that movie yet. Perhaps they're still waiting for the 28-day delay to pass.
from the felony-interference-of-a-business-model dept
The latest in a long line of ridiculous lawsuits from an entertainment industry that refuses to adapt and loves to put up artificial barriers, is the case of Disney suing Dish Network. Dish's infraction? Apparently a promotional decision to offer the Starz movie network for "free" to its subscribers (of course, it's not really free, since you have to pay to subscribe...). Disney claims that it has specific licensing deals with premium channels like Starz, which say that the films it licenses can only be shown on "premium" pay-TV tiers rather than basic tiers. The idea (of course) is that Disney wants to extend the ridiculous and outdated "windowing" efforts of Hollywood.
But, here's the thing: Dish Network is not a party to that contract. Dish should be free to offer whatever channels it wants in whatever tiers it wants, so long as it has the appropriate agreement with those channels. I can't see how Disney has a claim on Dish here, since it's a third party, which is simply making a reasonable business decision that it wanted to offer Starz as a part of a lower tier. Disney is claiming in the lawsuit that this "devalues" its movies. No, it does not. What "devalues" the movies is the silly windowing plans of the studios that make those movies less valuable to consumers.
Of course, Disney is claiming that this isn't a contractual issue, but a copyright one, but even that makes no sense. Dish's license with Starz clearly includes a license to display the content. And Dish is clearly paying to carry Starz, so everyone's getting paid. The only issue is that Dish decided, for promotional reasons, to include Starz in lower tiers for no additional cost for a year (Disney, falsely, repeatedly claims this is "free.") It seems that Dish should be free to offer whatever promotion it wants to its consumers, seeing as all the other terms of the license are the same and everyone's getting paid.
I could see how Disney might have a complaint against Starz for the way it licensed content to Dish, in which Dish was allowed to offer this kind of promotion to consumers, but going after Dish for copyright infringement, just seems silly. If anything, saying that downstream providers can't set their own pricing seems like Disney is opening itself up to a price fixing claim. It made its deal with Starz. Dish then did its deal with Starz. Dish should then be free to determine how much it charges consumers.
We recently wrote about how various theater owners were freaking out about new plans by studios to release movies for video on demand ten weeks after they went into the theaters... though for the astoundingly ridiculous price of $30. We noted that the complaining theater owners were more or less admitting that their theaters and the theater-going experience they provided sucked. If you can't compete with a home theater, you don't really know what business you're in. It would be like restaurant owners complaining that people can buy fresh food to cook in their own kitchen, so they'll never go out to restaurants again. Going out to the movies is a social experience, and theaters can easily compete by providing a better experience. The only ones who have anything to fear are those who know they provide a terrible experience and therefore can't compete.
Thankfully, some theater owners who do provide a good experience recognize this. Carlo points us to some comments from the owner of the famed Alamo Drafthouse theater in Austin, Texas, Tim League, in a blog post written by Caitlin Stevens (who, it should be noted, works for Tim):
He's not terribly worried. He's taking very much a wait and see attitude. "I think some of the charges that have been made [about premium VOD] are invalid and reactionary," he said. "It remains to be seen if this does impact theatrical. If you look back historically all the way to the 1950s everytime there has been a challenge -- from TV to VHS to DVD -- there has always been a component of the theatrical community that has said this will be the death of cinema."
Tim's also really skeptical of the claim that this VOD system will hurt smaller films that have platform releases, and points to distributors like Magnet, who have had great success with films they release on VOD before even hitting theaters. Those films tend to do well at the Alamo as well. "We've had good successes with those films even when they're playing VOD at the same time they're in the theater," he said.
Ultimately a lot of this comes down to the theatrical experience. Not to be a total shill here, but part of the reason people go to the Alamo is for the complete experience, which includes food and drink, high quality projection and a firm policy against talking and texting in movies. The big chains simply don't offer that -- not even protection from noisy patrons. "It's an industry that's vulnerable because if you give people the choice they won't choose a flawed option," Tim explained.
Exactly. Furthermore, he notes the key point that these complaining theater owners don't seem to grasp, despite their jobs running theaters:
"People -- especially on a Friday and a Saturday -- inherently want to get out of the house," he said. If theater owners can offer them a good option for getting out of the house at the movies, they'll take it.
Indeed. What stuns me is that theater owners who are complaining don't even recognize what they're telegraphing: that their theater experiences suck and they know you'd be better off staying at home. If that's the case, it's easy to decide to stay home, creating a self-fulfilling prophecy of sorts. However, for theater owners who really do provide a great experience, they have nothing to worry about. Many years ago, theater owner Marcus Loew famously stated: "We sell tickets to theaters, not movies." It's really unfortunate that so few theater owners recognize that today, but it's always nice to be reminded of the few that do... such as Tim League and the Alamo Drafthouse.
A few weeks back, we noted the rumors that a bunch of studios were getting ready to offer $30 video-on-demand movie rentals, in an attempt to create a new tiered "window" much closer to the original theatrical release date. It appears those stories are now confirmed, as DirecTV has said that it will, indeed, be offering $30 film rentals for movies just 10-weeks after their theatrical release. Of course, before we discuss how bad an idea this is from the studio's perspective, let's look at the even more braindead response from movie theaters:
Regency Theatres, based in Calabasas, California, will pull "Just Go With It" from its second-run theaters, where it was among the top two titles last weekend, said President Lyndon Golin.
"We don't want to show movies that are on TV," Golin said in a telephone interview. "We want to protect the movie-going experience."
Protect the movie-going experience? Huh? Does Golin even hear what he's saying. First off, how does pulling the movie out of the theaters protect the movie-going experience? It seems to do the opposite. It seems to tell people "we don't want you to enjoy the movie-going experience" with this movie. Golin seems to be flat-out admitting that his movie theaters suck. After all, if he can't provide a better movie-going experience than a TV at home, then apparently his theaters really aren't worth going to, right?
I've pointed this out in the past, but I can never understand theater owners who complain about competition from rentals or video streaming. The whole point of a movie theater is that it's a social experience. It's "going out" to the theaters. It's enjoying the overall event on a giant screen. Obviously with home theater systems, there is some competition, but theater owners can certainly provide an overall excellent theater experience, if they put some effort into it. What Golin's statement here says is that he's not interested in trying, and he doesn't think his theater's experience can compete. That's really more of a statement about problems with his own theaters than about this new rental window.
As for the rental window, it'll be interesting to see who actually pays $30. I understand the studios' logic. They think they're providing extra value by making a movie available earlier. But that's not -- at all -- how consumers are likely to view this. They're going to compare it to Netflix or other PPV/rental options and have no idea why the studios and DirecTV think they can get away with charging many multiples higher.
Of course, going back to the theaters' response, it seems even more ridiculous when you realize that Regency doesn't even think it can compete with a ridiculously overprice home rental option that very few people are going to choose.
btr1701 points us to a report from Thursday's (not April Fool's Day) Variety, which claims that the movie studios are getting ready to offer $30 dollar per movie Video On Demand (VOD) offerings. This is a classically short-sighted Hollywood-type of solution. Over the past few years, the big movie studios have become even more enamored than ever with the concept of release "windows," in which they offer movies on different platforms/formats at different times. Rather than moving in the other direction, towards so-called "day and date" releases that offer up movies on all platforms at once, they're trying to make the whole thing more frustrating and annoying for customers by spreading things out and offering more windows.
This explains the recent efforts to delay various movie rental releases and the whole plan to break your DVR/TV so that you can't actually record certain VOD showings. Now that they have these in place, apparently they think the answer is to offer this new window, between theater showings and when you can rent from Netflix or your video store of choice, in which they somehow think people will be okay paying $30 per movie.
It kind of makes me wonder what they're pumping into the air down in Hollywood.
I'm sure their argument is that since a "whole family" or a group of folks can watch the film, it's more cost reasonable, and they'll argue that the release -- closer to the theater release -- makes it worth the extra money. This, however, assumes that consumers are stupid, and I think Hollywood may quickly discover that consumers aren't quite as stupid as the studio execs think. Of course, even more amusing is that the theater owners -- who have always fought any attempt to do releases close to the theatrical release, are freaking out about this. I doubt they have much to worry about.
The report notes that Paramount has chosen not to join in this scheme, suggesting that it's worried about how this might increase piracy. I'm not sure if that's true. After all, Paramount is the one studio that has publicly said that those 28 day rental delays didn't make any sense and that it didn't drive customers to buy DVDs. So maybe the folks at Paramount actually realize that consumers don't want more windows and more ridiculous price points...
Of course, at the very same time that Hollywood is going down this ridiculous path, others are urging them to go in the other direction. TorrentFreak has a post about a UK movie reviewer's simple and clear explanation for why the studios should offer day and date releases:
Kurata points us to the news that French politicians are debating extending the "you must be a criminal" private copying levy to tablet computers -- but, oddly, the new levy would not apply to tablets running Windows (Google translation from the original French). The tax would apply to any iPad or Android-based device, but apparently Windows tablets won't be counted, since they'll be classified as full computers, while the other tablets are in this new taxable category. Not surprisingly, this has some companies up in arms, with the French-based Archos particularly steamed, since it's producing Android-based tablets, and doesn't like the fact that its government seems to be giving preferential treatment to an American company.
Hollywood continues to seek new and ever-more creative ways to shoot itself in the foot and drive movie fans to unauthorized copies of movies. Earlier this year, Warner Bros. studios was successful in pressuring Netflix and Redbox to delay rental releases by 28-days, with the hope that people who couldn't rent the movie would buy it. Warner Bros. has been claiming this strategy succeeded and that they've sold more DVDs because of it. I would doubt that it's the delay that's increasing sales, and it seems like a pretty short-sighted strategy to look to increase sales of a format like DVD right now. Either way, Warner Bros. is now claiming it may try to increase the window over 28-days. It's as if they want to drive more people to get the movie from unauthorized providers. Making it more difficult to let people watch movies the way they want to isn't a solution that will work long-term.
Warner Bros. studio was among the more adamant about getting Netflix, Redbox and others to delay rentals of movies until 28-days after the DVD release, in the hopes that it would drive more people to buy. We suggested that was pissing off customers, just at a time when they're discovering they have (perhaps not very legal) alternatives, and it probably isn't a great business strategy. However, Khyle points us to the news that Warner Bros. CFO is claiming success with the program, claiming that DVD sales are up 15% following this strategy.
Of course, that leaves out all sorts of important details. Beyond the simple correlation ≠ causation issue, there are so many other variables here, I'd be hesitant to believe that the higher sales were due mostly to this delay. Perhaps there was just a popular movie that people really wanted to own when it came out. Or perhaps there were other promotions. Or, maybe, it's just a dead cat bounce. Either way, let's wait and see before declaring that pissing off your customers so much is a good idea.
The best part, though, might be the confident quote from the guy:
"You make money in the film business by putting your content in appropriate windows that matches up with the way consumers like to use it."
Thing is, he's got it wrong. It's not the "windows," but the different convenience and values that people consider. You can offer "the way consumers like to use it," all at the same time, if you want. The studios aren't doing this because they're so in love with the "windowing" system as a way to price differentiate, that they keep wanting to introduce more and more windows. At some point they'll realize that this is really dangerous short-term thinking. Pissing off people eventually comes back to bite you.
A bunch of folks have sent over the story of how Microsoft recently patented its method of shutting down Windows (7,788,474), which plenty of people are mocking for all sorts of reasons. Reader Prashanth points out the fact that the patent actually helps demonstrate why Microsoft's shut down process is so slow. The whole thing just highlights how companies these days file for completely ridiculous patents just to pad their patent portfolio, and potentially to block others from doing pretty obvious things.
We've talked numerous times about the movie industry's love affair with release windows, where they basically try to get people to pay for things multiple times by releasing them in different formats at different times. The first window, normally, is the theatrical release -- and the theaters go absolutely livid if anyone suggests shortening the theatrical release window. Heaven forbid anyone go so far as to suggest something as "radical" as a so-called day and date release, where it's released in all formats at the same time, and watch the theaters go ballistic and boycott the film, as a startling admission that they don't think they can compete with home theaters.
So, it's quite interesting to see that the Freakonomics movie that's coming out in the fall is apparently going to flip the windows over. Sheri Candler points us to the news, as seen at the end of the movie's trailer, that it's going to be released via iTunes on September 3rd, and in theaters October 1st:
Yes, it's being released online before it's released in the theaters. This isn't exactly the first time this has been tried. Magnolia Films, who produced the Freakonomics film is trying something similar right now with the film Centurion, which was released via On Demand cable systems a few weeks back, and is about to come to theaters. Still, this is pretty big news. In mentioning this reversed window, Freakonomics author Stephen Dubner mentions that there's also another "wrinkle to the release schedule," but he's not revealing what it is just yet.
I'm curious about this, because what the Freakonomics duo are famous for is exposing how "the common wisdom" is wrong on a variety of things. I don't always agree with their analysis, but it would be fascinating to see if they're exposing that the common wisdom on movie release windows is -- as we've suggested for years -- totally screwed up. I am curious, however, to see how the theaters handle this. As mentioned, in the past, they've boycotted day-and-date releases, and even boycotted movies that they thought were coming to DVD too soon after the theatrical release (in that case, 12 weeks). So, will theaters be boycotting the Freakonomics film? I really don't know enough about how the film is being positioned, so if it's only in indie/art house-type theaters, perhaps it's not as big an issue. Still, I can't see any of the big theaters too happy about these "wrinkles," even if they actually prove that theaters can get more business with simultaneous releases.