Redbox Realizing That Caving To Hollywood On 28-Day Delay Was A Bad Idea
from the duh dept
We were pretty surprised when Redbox caved in to the Hollywood studios, and agreed to annoy its customers with a ridiculous 28-day delay. We had many commenters say that people wouldn't care and it wasn't much of a big deal. However, the company is now admitting that the 28-day delay resulted in much lower holiday rentals than it had expected. Meanwhile, the only studio that has publicly released information about how its experiments with the 28-day delay went, Paramount, has said that such delays are bad for business, as it doesn't increase sales of DVDs, and that allowing Redbox to rent movies sooner actually helped the studio (and Redbox) make more money. So why do we still have those delays?
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Filed Under: delays, movies, rentals
Companies: paramount, redbox
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Kids and Candy Bars
I believe it goes back to psychological experiments that were mentioned here awhile back. You take two kids. Tell one he can have half of a candy bar, OR he can have a full size candy bar if another kid also gets a full size one. Most kids chose the lesser, because they didn't want somebody else getting anything from their decision. While I do not remember the specifics of the study that was the general idea.
That seems to be the studio's problem (both for movies and music really). They can't stand the idea that somebody else might possibly make money off of the content, even if it helps them out. The people in control are just too greedy. That (the greed) would also explain their odd sense of entitlement for new technologies, youtube, and anything else that might help them out but they fight it because they aren't getting a cut even though they never made an effort to do anything (or when they do it was very poorly executed). Also might explain their fuzzy accounting systems they have set up to screw artists (for music) or claim tons of losses when a movie is made (the movie studios habit of having one company another hundreds of millions in consulting so its a loss far more often then not).
Or we could just use Hanlon's razor and say they are just that darn stupid.
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Re: Kids and Candy Bars
I remember a study like this, but the first kid had to wait for the second kid to arrive and was made to wait 30 minutes. Maybe the studio executives were part of the experiment. Early childhood experiences and all ... :)
"That seems to be the studio's problem (both for movies and music really). They can't stand the idea that somebody else might possibly make money off of the content, even if it helps them out. ... That (the greed) would also explain their odd sense of entitlement for new technologies, ..."
Actually it is the psychology of monopoly and control. One of my friends is writing his psych and business management dissertations on this.
The psych part deals with the people in charge being incapable of breaking the mental patterns they and the people around them have. The belief that things have always been this way and will never change. This is the way we have always done things and it has always worked before is a common theme.
Here is the psych dissertation in a nut shell ...
The problem with the belief that their actions were effective in affecting the change they sought is, it never made any difference, in any way, shape, or form, in the outcome. What they fought against occured regardless, and the control they thought they had was an illusion.
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Re: Kids and Candy Bars
It was perceptions of fairness, not greed, that drove the results.
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Re: Re: Kids and Candy Bars
I will keep that tidbit in mind for the next time I need to refer to that.
That would still fall in line with the major's thinking. They always view the content as bringing 100% of the value. As an example for this you can look at the fees they always want to charge to license anything (the songs for Guitar Hero games comes to mind first). The games are of immense value and could use any songs really but the majors think the games are worth nothing without their songs.
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According to the Yahoo News article I read
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Re: According to the Yahoo News article I read
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Re: Re: According to the Yahoo News article I read
I saw the same report today on CNBC. The movie industry people are generally very happy with the results, and the decline in Coinstar's rental business clearly indicates that they were nabbing rentals during a key period. As soon as they aren't in that period, their rentals tank. Thus, there is demand, and that demand could potentially support a higher price (supply and demand at work).
But hey, that doesn't support the TD view of the universe. You better be quiet before someone tells you to "grow up".
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Re: Re: Re: According to the Yahoo News article I read
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The point is Redbox should not have caved. Its goals are not benefited by yielding to studio demands; demands which remain questionable in regards to the first sale doctrine and studio collusion.
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Re: Re: Re: Re: According to the Yahoo News article I read
That is the easiest transaction, but it is also the transaction that leaves the most money on the table.
I don't expect Coinstar to be happy. They have lost a market position that allowed them to massively undersell everyone else. What it proves is that people aren't willing to wait, there is enough demand to tap the supply at a higher price. when they wait 30 days, they are losing because people have already paid more to get what they wanted.
The movie people clearly and very correctly have judged supply and demand properly, a very good business move. Coinstar is only upset because they can no longer drain the larger pool for profit, no matter how much it cost everyone else.
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Re: Re: Re: According to the Yahoo News article I read
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Re: Re: Re: According to the Yahoo News article I read
Thats right, i forgot that all movie studios run rental companies as well.
Wait, they don't?
So.. Redbox and the like are Increasing their business, by buying lots of copies? Or they were. Because as business gets worse for these entities, they will no longer be buying those copies.
Weird. So studios/distributors are happy that someone else is doing badly, even when that means that they themselves are not benefiting in any way?
Sure sounds like business that is good for consumers and the industry alike!
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Re: Re: Re: Re: According to the Yahoo News article I read
As long as they get the Redbox to cave into their demands, they're free to set up all these shady deals.
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Re: Re: Re: According to the Yahoo News article I read
But were they nabbing sales? For me, personally, if there's a movie I want to buy, I'll buy it. If I want to rent it, I rent it. If I can't rent it, I'll either a) wait, or b) forget about it. Is there evidence that this is actually helping sales and not only hurting rentals?
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PPV perhaps?
Possibly the movie companies have a contract with DTV and others for this?
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Restraint of Trade?
When companies collude to set prices, that is considered illegal. Colluding to restrict sales, may have crossed the imaginary line-in-the-sand into illegality.
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Lots of reasons
1) They are probably getting a cash payment of some kind from the immediate release companies like Blockbuster. It is always hard to give up an existing income stream, even if giving it up opens up the option to make much more money elsewhere.
2) Like Charlie Brown, managers like to manage. They think they are doing something, and things like this can make impressive entries on a resume or vitae.
3) Executives have fed themselves on myths about the industry and now they have a hard time giving them up. The "we make more money because we have release windows" is going to be a hard one to loose. It is much easier to ignore the Paramont data or come up with reasons that it doesn't apply to their own studio because it would call the whole windowing paradigm into question.
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Re: Lots of reasons
Redbox was a wildcard, managed by people outside the fold, with incentives that don't match up with the traditional corporate efforts of the studios. The whole 28day release was a strategic move by the studios to kill Redbox.
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Removing customer options is never a smart choice
"On Redbox's Blu-ray woes on the quarter, Pachter offered up a solution: "Those selecting Blu-ray should be shown only Blu-ray titles, and those selecting standard definition should be shown only standard definition." Currently, Redbox lets users browse Blu-ray and DVD titles at the same time."
This "analyst" thinks the solution to sales problem is limiting customer choice? He doesn't think customers would realize that they are seeing less/different titles when they choose Blu-ray? The current system is the best for the customers, they get to see all of the choices available, and then they can choose if they want to pay the extra 50� a day for the Blu-ray option. Rebox also benefits because they can start getting metrics on what types of titles people are willing to pay the Blu-ray premium for; something the studios might find interesting as well.
Or another option is for the myopic studios to not charge more for Blu-Ray, which would likely result in a higher uptake for that underwhelming technology.
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Collusion?
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Re: Collusion?
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Re: Collusion?
It's more misleading information from TD, because unless you go look at the details of the previous story, you wouldn't realize that Paramount's comments have nothing to do with today's news, only an old observation made without the benefit of experience that has happened in the last 6 - 7 months.
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Re: Re: Collusion?
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If they have, please provide data that backs that up.
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Re: Re: Re: Collusion?
All I was pointing out was that using a 7 month old quote from a single company before the change was made is somewhat misleading. We don't know their opinion now, do we?
The old article was valid, 7 months ago. Situations have changed, so they may no longer apply.
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/sarcasm
For Redbox this was a really bad idea, as most of their business will be people wanting the new releases. For Netflix it's not that big of a deal for most people as their queues are so long (or at least mine is) that they rarely get a new movie until well after a month anyway.
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Positive? Negative?
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They are in a customer service business and not serving their customers. They do not see this, they have been a monopoly able to dictate to their customers for so long they never needed to put service first. Expect it to continue until, new technology, competition, and production houses going independent destroys them.
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cant stop the signal mel
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(deep breath)
htpc, iptv, emule, itunes, utunes, wealltunes, togethertunes...
point is, why would anybody lug around a plastic disc anymore? it's the 21st century for crying out loud!
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Redbox isn't a long term business model. The studios are basically just sending that one to the knackers yard a little early.
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. PERIOD!
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If it's a title that we aren't in a particular hurry for, we add it to our Netflix queue.
If it's not yet available on Netflix, we wait.
You know what we never do? Buy DVDs. There are no movies that are so incredible we can't wait a month or two before seeing them.
So, in our household, these windows don't help the studios one bit. Redbox agreeing to the windows hurts Redbox and (potentially) helps Netflix. Redbox's decision was obviously an incredibly bad one.
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However, there are people who might buy (or do PPV) to see the movie within that window. So what happens is increased revenues during the time period. In the meantime, you aren't really caring, you take it when it comes, no big deal.
See? Redbox's decision really isn't a bad one. The only customers they lose are the ones who were willing to pay more anyway.
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in a word comcast...
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Gradually becoming an Ex-Customer
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the 28 day delay is only a big deal to people who have to see the movie OMG NOW NOW NOW.
patience.
what is a month, really? put it in your netflix queue and watch some godzilla to pass the time.
here is the important part to remember: the movie is not going to change if you wait to see it.
they make money off your impatience. the value of the movie in those 28 days is based off your impatience. the studioes are banking on it.
so be patient. or better yet, stop buying their crap all together.
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28 day delay
Cmon RedBox pretty basic, ya got an opportunity t own the distribution, content & ultimately the consumer.
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