If Hollywood Is Upset About $1/Day Movie Rentals, How Do They Feel About 6 Cents Per Hour Rentals?

from the it'll-destroy-Hollywood-even-more! dept

Fri, Dec 11th 2009 8:44am — Mike Masnick

So Hollywood is all concerned that Redbox DVD rentals at $1 per day are going to do serious damage to the Hollywood economy -- except, of course, that the actual numbers say exactly the opposite. Still, if they're all freaked out (and some are in court) over $1/day rentals, you'd have to imagine they're not particularly pleased about rentals that could be even cheaper. Rose M. Welch points us to the news of a new DVD rental kiosk operation, called Big Box DVD, which is moving forward with a business model of charging a whopping 6 cents per hour for a new release (4 cents per hour for an older release). For folks willing to just rent the video, take it home, watch it and return it, that can be quite cheap. Of course, if you keep it for a full 24 hours, it'll be a bit over a dollar. How long until we hear about how much damage this is doing to Hollywood?

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Filed Under: business models, dvd rentals, dvds, hollywood, kiosks, movies
Companies: big box dvd, redbox

47 Comments

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moore850 (profile), 11 Dec 2009 @ 8:50am

costs review
Let's suppose that it costs 6 cents per hour to rent video content. Now let's suppose that everything that's not pay-per-view already on cable is available at this rate. A lot of cable services are in the ballpark of $25-$50 per month. How many hours of video would this get you? 416-833 hours of video per month. That's 13-27 hours PER DAY. Count me in! This would save us all so much on our cable bills... here's to a $10 or less monthly video service bill thanks to this rate someday.
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Anonymous Coward, 11 Dec 2009 @ 8:51am

It's causing $6 billion in damages per hour! I know because I pulled a number out of a hat.
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senshikaze (profile), 11 Dec 2009 @ 8:56am

Re:
I'm pretty sure you pulled it from another place.

;)
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Matt, 11 Dec 2009 @ 9:00am

Re: Re:
Was it his pocket?
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A Dan (profile), 11 Dec 2009 @ 9:11am

Maybe when they realize that it's not significantly affecting their sales, the studios will realize that rentals and purchases are different markets, where people buy to possess the movie instead of just to see it.

No? Nobody thinks so?
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An0n, 11 Dec 2009 @ 9:15am

Re: Re: Re:
Close enough
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Arbus, 11 Dec 2009 @ 9:16am

Re:
This is a joke. Maybe not a joke-joke but rediculously funny nonetheless. This service is obviously counting on its ability to capitalize on people who'll hang onto their movies for days saying "it's only six cents an hour," and run up decent charges.

Some will of course, but given how hard a time other movie rental places have making enough money to satisfy themselves, this business won't make enough off the the average customer to pay for their costs, much less to generate any profit. It's going to burn through any venture capital funds and close in the blink of an eye.
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Hephaestus (profile), 11 Dec 2009 @ 9:16am

Interesting thought ....
I like the whole "The company has three locations at University of Wisconsin campuses" what a great place to put them ... LOL ... the places that MPAA and RIAA fear most. I predict someone going to the machine with a $20 cash card, and a linux box set up to rip DVD's.

A Sys admin at local university said to me file sharing is down 95% but our encrypted traffic is up the same amount ... I wondered why? ... local encrypted VPNs on campus for movie and music sharing ...

yet another RIAA induced unintended consequence to watch happen large scale ... GRIN
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Curious, 11 Dec 2009 @ 9:18am

Double Standards are the norm...
With the studios flipping out over the $1 rentals from Red Box it is interesting that my local Blockbuster (Rochester, NY) has $1.99 one day new release rentals and $1 One day rentals on all other movies. I don't remember what the late fees are, if it's $1 a day or their regular fees.

Sounds like $1 devalues movies only if your not paying the studios.
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Jose Burgos, 11 Dec 2009 @ 9:23am

"...except, of course, that the actually numbers say exactly the opposite."

To: except, of course, the numbers actually say exactly the opposite.

Amirite?
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a-dub (profile), 11 Dec 2009 @ 9:30am

F Hollywood
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Designerfx (profile), 11 Dec 2009 @ 9:37am

Re: Re: Re:
I think it's the place the RIAA and MPAA store their versions of reality.
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Anonymous Coward, 11 Dec 2009 @ 9:37am

Seriously, fuck these people, where talking about renting movies that have paid for them selves several times over already.

Its free fucking MONEY
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Some Other Guy, 11 Dec 2009 @ 9:39am

Re:
You can't do that! I own Intellectual Property relating to virtual hat-pulling!
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sheinen, 11 Dec 2009 @ 9:41am

Once they've sold on the copy to the renting agent why the fuck should they care what they choose to distribute it for? It's not up to them, surely?

I'd like to see this shit happening in any other market. Oh you wanna sell on that necklace I sold you? Well you'd best be able to find someone who'll pay more than £1 Trillion for it, because I'll sue you if you try to sell it for any less!
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fogbugzd (profile), 11 Dec 2009 @ 9:47am

How long will they complain?
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fogbugzd (profile), 11 Dec 2009 @ 9:48am

How long will they complain?
They will complain until it becomes an established part of their business model, and then the next new thing will come along, and they will complain about how this will utterly destroy the highly profitable 6cent and hour rental market.
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hegemon13, 11 Dec 2009 @ 10:05am

Re: costs review
However, the plan would likely never take off. Most people are not good at even simple math, and the mental transaction would drive them away. The thought that "watching this is costing me money" would make a lot of people more reluctant to watch TV. Not that that's a bad thing...
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hegemon13, 11 Dec 2009 @ 10:07am

Re: Re:
Er...wrong. Most people will have it out for at least 18-24 hours, meaning that they are getting the same rates that make Redbox profitable. If, however, a person does return it within 4 hours, so what? The movie is now available for someone else to rent.
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Derek Reed (profile), 11 Dec 2009 @ 10:11am

Re: Re:
I think you underestimate the laziness of the average consumer of these products. The brick and mortar rental stores are dying because of the huge overhead of retail space and all the costs associated with that. An unmanned electronic kiosk doesn't have that problem. I don't think Redbox or this 6 cent deal will fail due to not bringing enough money to cover the current costs of the operation. However, they might fail due to having to pay exorbitant fees to Hollywood, or due to their currently limited selections.
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The Infamous Joe (profile), 11 Dec 2009 @ 10:16am

Re: Re:
Prove he didn't actually pull it from a real hat. Then we'll talk. :)
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Mechwarrior, 11 Dec 2009 @ 10:17am

Ill start charging $.059 an hour to undercut their prices.
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Anonymous Coward, 11 Dec 2009 @ 10:19am

>>

OMFG!!! This is going to completely destroy and obliterate all of Hollywood and lay waste to every single actor, actress, director, producer, executive producer, hair stylist, key grip, best man grip, dolly grip, special effects guy, animator, caterer, wardrobe maker, carpenter, lead carpenter, sculptor, lead coordinator, coordinator, apprentice coordinator, lead painter, painters, standby painters, apprentice painters, apprentice coordinator, storyboard artist, art department lead and staff, graphics coordinator, illustrator, payroll accountant, second accountant, lead accountant, accounting assistant, production accountant, key grip accountant, carpenter accountant, caterer accountant, production office lead, production office staff, production office assistants, production office assistant apprentices, production office assistants' accountants, dolly grip accountant, accountants' accountants, accountants' assistance accountants, accountants' assistances' apprentice accountants, pre-recording mixers, recording mixers, re-recording mixers, grip mixers, concrete mixers, prop mixers, mixers' accountants, sound design, key make-up artists, assistant costume designers (and of course their acocuntants also), vehicle supervisors, vehicle drivers, security guards, stand-ins, and pretty much everyone else with their assistants, apprentices and accountants, and any other title, position, representative and individual involved in the movies.

All of this takes money!!! How can they possibly pay all those people with 6 cents an hour!!! That's sacreligious, communistic wages that are so far under any possible pay wage that the actors couldn't possibly afford their four 125,000 sqft. manions, fifteen Bentleys, 350 flat screen 96" plasma televisions, 892 custom purses, 2,000 suits, and custom flooring made of marble only found in the deepest recesses of the Himalayan mountains that can only be dug out by 12 year old children and a goat with a gimp horn.

HOW CAN THEY POSSIBLY AFFORD TO LIVE ON THAT???

>>
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Jon, 11 Dec 2009 @ 10:21am

I highly doubt this company with 4 whole kiosk is a blip on anybodys radar. Much less have them actually make any money at this price point. Another example of why the studios are trying to put an end to these cheap rentals because look where they lead to. I don't understand why they just don't give it away there's no need for making money anyways.
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Anonymous Coward, 11 Dec 2009 @ 10:36am

Anyone else thinks it's just retarded that actors make the crazy money they make for movies. And what Hollywood is perfectly fine with the views paying for it.
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taoareyou (profile), 11 Dec 2009 @ 10:41am

Re: costs review
At .06 cents an hour, for my ATT Uverse with 300 channels:

30 days x 24 hrs = 720 hours
300 channels provided * 720 hours = 216,000 hours of potential content
216,000 hrs * .06 = $12,960 a month.

In reality I am paying about $0.0007 an hour for available content.
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senshikaze (profile), 11 Dec 2009 @ 10:43am

Re: Re: Re:
you don't need proof anymore, joe.
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taoareyou (profile), 11 Dec 2009 @ 10:45am

Re: Re: costs review
And thinking about it, my Uverse bill also includes fiberoptic high speed Internet access, so technically I am paying slightly less for content than I first calculated.
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Chris (profile), 11 Dec 2009 @ 10:45am

Re: Re: Re:
don't have to just have to accuse you 3 times and then you cant' do it anymore.
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TheStupidOne, 11 Dec 2009 @ 10:55am

Re: Re: costs review
But if you are charged for what you actually use, not what you have access to ... It should work out to be cheaper for you (which is why it won't happen) unless of course you actually do watch 216,000 hours of TV each month in your household ...
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senshikaze (profile), 11 Dec 2009 @ 10:58am

I think redbox and this new deal needs to push back the movie studios saying that they are helping less well to do families to be able watch movies.
then it makes it look like the movie studios hate poor people (which i am sure they do, it just isn't politically correct)
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taoareyou (profile), 11 Dec 2009 @ 11:07am

Re: Re: Re: costs review
If I rent a video for .06 an hour and I watch it and return it 24 hours later, I only used it for 90 min or so, but I am still charged for every hour in which the content was available to me, whether or not I actually used it.
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V2COMP, 11 Dec 2009 @ 11:09am

Who Cares?
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Jaws4theRevenge, 11 Dec 2009 @ 11:11am

Re: Re: Re: Re: costs review
ERROR: Logic Fail (0x000F8822)

Nobody is making you drop it back after 24 hours, you could drop it back after 110 min (counting a short trip to and from the kiosk) and pay 12c.
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cc, 11 Dec 2009 @ 11:19am

Why can't they apply that sort of pricing to online streaming, then? (if they have, I haven't seen it)

Pay-per-view for 6p an hour of streaming + ads... their margins will probably larger than physical stores that way.
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Huh, 11 Dec 2009 @ 11:19am

Re: Re: costs review
How do you watch all 300 channels at the same time?
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taoareyou (profile), 11 Dec 2009 @ 11:34am

Re: Re: Re: Re: Re: costs review
I do not disconnect my cable when I am not watching it. Therefore the 300 channels are being made available to me 24 hours a day. When you rent something by the hour, you are paying for every hour it is available to you. Bringing it back after 110 min is certainly an option. But then the movie is no longer available. This is the same as calling the cable company and having them turn it off.

However, they are not going to reconnect my cable every time I feel like turning on the telly.
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taoareyou (profile), 11 Dec 2009 @ 11:48am

Re: Re: Re: costs review
When you rent a video for .06 an hour, you are paying for the availability of that content, not just the time spent consuming it. Imagine if you rent 300 movies at once, all being charged by the hour. You are paying $18 an hour even though you are not watching all 300 movies at once, because you have the content available to watch.

When I subscribe to cable and have 300 channels, I have 300 hours of content available to me per hour. I have the ability to jump around and consume bits and pieces of that content however I want. Obviously I can't watch it all, but it is available.

If I rent a movie by the hour, say .06, I am paying for the availability of the content. Under that premise, taking my $150 a month for TV, 300 channels available 24/7, my cost per hour is fractional and considerably less than .06 cents.
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Anonymous Coward, 11 Dec 2009 @ 12:15pm

Assuming payment is made via credit/debit cards (I may be wrong), wouldn't they have to rent it for at least a few hours to make back the transactions fees paid for processing the credit/debit card?
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Anonymous Coward, 11 Dec 2009 @ 12:19pm

Re: Re: Re: Re:
That's Asinine.
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Anonymous Coward, 11 Dec 2009 @ 12:53pm

Re: Re: Re: Re: costs review
And the reason you assume that you're charged for the usage and not the availability is...?
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Andrew D. Todd, 11 Dec 2009 @ 1:57pm

Two-Hour Reserve, Where the Film Studios Will Go.
I've seen something like this before. When I started graduate school (Anthropology, then History), university libraries commonly put scarce books on two-hour reserve. This applied especially during the critical first year, the "boot camp," when people were being put through the wringer. The situation was that fifteen or twenty people would all be trying to read the same book, of which the library had only one copy, over a period of two or three days, before the next class session, so it had to be put on two-hour reserve in the interests of fairness. Of course you couldn't read a book, at least, not the kind of book I'm talking about, in two hours, but you could make photocopies. Then, if you rationed yourself to four hours sleep, you had just barely time to read the book in time for class, write a reading note, and to be able to orally answer the professor's oral questions. Being in such a program was incompatible with any kind of part-time job, of course. The professor and the library turned a Nelsonian blind eye to the photocopying. They couldn't ask starving graduate students to spend fifty or a hundred dollars a day on books, even if particular titles were still in print, but they could, by God, require them to _read_ that many books. Even if the books were in print, unless the professor had pre-ordered them through the bookstore, there simply would not have been time to find copies, this being before Borders Bookstore took off. The professor was in the position of either saying that graduate students were either required to buy a book, or required to photocopy it. The professor decided what the poorest member of the class could afford, and acted accordingly. Of course, photocopying cost about as much as mass-market paperback books would cost, but these weren't mass-market paperbacks. This kind of copying did not have much economic implication, because it involved only a tiny elite of hardcore liberal arts graduate students, compared to whom both law students and MBA students were both affluent and lazy. The difference, this time around, will be that automation will supply the place of labor. When people rent movies by the hour, they will, of course, rip them, return the originals, and watch the ripped copies at their leisure. The only practical defense the movie industry will have will be to sell movies outright for rental prices.

Hollywood is not going to find a painless marketing formula which allows business as usual. It will have to get its costs down. Hollywood will go to Bollywood, that is, it will move its operations to India. As "Anonymous Coward" (Dec 11th, 2009 @ 10:19am) notes, the vast majority of the people involved in making a movie do not appear on screen. They are cameramen, gaffers, grips, soundmen, lighting men, carpenters, electricians, costumers, make-up specialists, film editors, and a hundred other specialized trades. However, this means that it does not matter if they are Indians. The Indian film industry is one of the most vibrant ones in the world, producing huge numbers of films in multiple languages, and distributing them to Indian audiences who are film junkies in ways which American have not been since the 1930's. At some point, American directors and leading actors will tap into this system.

Now, as for the extras, walk-ons, etc., the largest category of actor, such people have traditionally moved to Los Angeles, registered with casting agencies, and then found themselves ordinary jobs to live on while waiting for screen calls. They have worked as waiters or cab drivers, or the like, dead-end jobs where the employer expects a high turn-over, and doesn't particularly mind people leaving without warning or notice, and will hire someone on a day's notice without references. Allowing for precariousness of employment, bit-part actors have been paid approximately minimum-wage for the net time lost from their table-waiting jobs. Of course, an expatriate cannot do that kind of thing in India, but living expenses are much lower, and someone who is stage-struck can work in the United States for a couple of years, in the kind of job for which one does need references, eg. teaching school, and save up enough money to live in India for a couple of years. Indian producers and directors will discover that they can make movies for the American market, working with Americans who are not affiliated with the American film industry.

Once an industry moves offshore, its political influence diminishes. It is no longer a source of steady high-wage employment for Americans. The political base of the movie industry is someone like a cameraman. The cameramen, etc. are not like actors-- they are craftsmen. Within reason, a good cameraman can film any kind of movie, which means that the cameraman can work steadily at high wages, filming whatever is being filmed. He votes for whoever favors the film industry, just the way autoworkers used to vote for whoever favored the automobile industry. As the movie industry moves offshore to cut costs, it will leave the union cameraman behind. It will no longer have its own congresscritters like Howard Berman or Mary Bono.
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Griff (profile), 11 Dec 2009 @ 2:16pm

Costs depend on number of views
Whether I bring it back aftre 4 hrs or 24 hrs I've probably only watched on once. DVD wear is the same. Kiosk has to dispense it the same number of times.

So I think their business model depends on hoping people DON'T return it after 4 hrs. If there is a business model...
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Ryan Diederich, 11 Dec 2009 @ 3:06pm

Credit Cards
These companies, Red Box and the likes, must make special deals or set something up for credit card fees. I work in retail, and fees are upwards of 25 cents per transaction plus 6ish percent. I am sure that Red Box doesnt pay 25% of their revenue to credit cards.

And no one has brought up the security issue. For example, I rent a movie and never bring it back, how do they get their money? Do they take the credit card info to start with?
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Gene Cavanaugh, 12 Dec 2009 @ 3:07pm

Fees for DVDs
Most of the stuff isn't worth six cents an hour. I am not watching any of the 240 odd channels I get on TV now because it isn't worth my (leisure) time.
Even so, if they find a way to stream it to my home for six cents per hour, perhaps pay per view will start to make some sense. Right now, we don't do pay per view (and movies? My wife sometimes does the Netflix thing, or finds something worthwhile on TV, but we recently turned down a free current movie.
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Steve, 12 Dec 2009 @ 9:54pm

Correct me if I'm wrong, but why the hell does hollywood get to decide what another business gets to charge for it's product?
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