Judge Says No Antitrust Violation In Hollywood Killing RealDVD

from the it's-just-a-mad-power-grab-by-paranoid-delusionals dept

In the ongoing saga of Hollywood's bizarre and self-defeating attack on RealNetworks for its RealDVD offering, a judge has dismissed Real's countersuit claiming antitrust violations by the Hollywood studios in effectively creating a cartel that controls the encryption on DVDs and refusing to license it to Real for the purpose of its DVD backup solution. The court basically said that there is no harm to Real caused by any actions of the Hollywood studios, because the real "harm" is in the fact that it created an infringing product in RealDVD.

This reasoning isn't surprising given the earlier rulings in this case, but is no less ridiculous when looked at in context (and with any bit of common sense). Remember, the product in question does not allow for anyone to make a bunch of copies and pass them along. It allows you to make a single backup copy for personal use -- a use that has been found to be perfectly fair use for software and music. It makes little sense that the law did not intend for movies to be backed up in this manner as well. The only reason this is stopped is because of the bogus DRM that the studios put on DVDs, known as CSS. This has been widely broken and does absolutely nothing whatsoever to stop copying of DVDs. The only thing that CSS serves to do these days is act as a tool for the Hollywood studios to team up to prevent products like RealDVD, because they can use the DMCA's anti-circumvention rule to claim that products like that circumvent the broken DRM they use. And, even if it's for a legal backup that can't be copied again (i.e., like RealDVD, it puts new DRM on top of it), suddenly it's "infringing" thanks to the DRM. In other words, the only purpose CSS serves is for the Hollywood studios to have full veto control over any software product that wants to be marketed legitimately, rather than underground. Under almost any definition of antitrust, it's difficult to see why this is not an antitrust violation. It's the major companies in a market, putting in place a tool whose sole purpose is to block others from offering up products.

Of course, the whole lawsuit and this whole charade is incredibly self-defeating for the studios anyway. Because now, instead of having a product on the market that limits what kind of copies people can make, instead, people who want to back up their DVDs simply get one of the long list of underground products out there that will let you rip your DVDs with no limitations whatsoever. It's simply stunning that the studios think it makes sense to drive users to such a solution. The only possible way it makes sense is if you put on your "studio thinking cap" and realize that the studios, in their infinite wisdom, think that they can ship these special -- much more expensive -- dual layered DVDs that have a DRM'd-up digital copy included. But, again, this should raise an antitrust flag, in that the studios are killing off the RealDVD product to try to protect their own sales of these DVDs with the silly Digital Copy technology. But, instead, many users are simply using the underground technology that doesn't cost them anything and gives them much more value.

Filed Under: antitrust, competition, copyright, css, dvds, realdvd
Companies: mpaa, realnetworks

Warner Bros. Gets Netflix To Delay Movies; You Don't Save Your Business By Pissing Off Your Customers

from the this-is-a-mistake dept

While not a huge surprise, it's worth discussing just how bad an idea it was for Warner Bros. Studios to get Netflix to delay renting DVDs of its movies for 28 days in order to offer up more streaming content. To recap, the very, very, very confused movie studios seem to think that the way to deal with increasing competition is to just add more windows to releases -- and one way to do that is to delay when you can rent a movie. In the studios' incredibly short-sighted thinking, they believe this will make more people buy DVDs -- the one area of the movie business that has been on the decline of late. At the same time, the studios have been pissed off at Netflix for routing around them and getting rights to stream movies from Starz, and as such, have been denying requests to stream more movies.

So, the compromise is getting Netflix to delay the rentals in exchange for more streaming content.

It's hard to express just how bad an idea this is for Warner Bros., and how far out of touch with their customers they must be to think this makes any sense from a business standpoint. What they are saying is that they are not going to give in to customer demand and offer them what they want, but actually make it more difficult, more annoying and more confusing for them to get what they want -- and (at the same time!) screwing up basic marketing plans as well. Now, when movies are released on DVD and the large group of people who prefers renting to buying goes online to their Netflix account to do so, they won't be able to. Four weeks later, they'll be looking for something else. And, for those who simply want to see it right away, they're now more likely to get it in an unauthorized manner.

Under what set of logic would it ever make sense to give the customer less of what they want in an era when increased competition from other sources is causing them to already wonder if they should buy your product?

Filed Under: business models, dvds, hollywood, movies, rentals, sales, streaming, windows
Companies: netflix, warner bros.

Sony Won't Support Its Own Movie For An Oscar Over Misplaced Piracy Fears

from the that-evil-internet-again dept

One of Jack Valenti's final battles while still in charge of the MPAA was his silly, misguided war on DVD screeners. Screeners are copies of the movie (on DVD, obviously) that are sent out to people to view (to "screen") for awards shows and the like. Valenti freaked out that since these screeners went out before the official DVDs were out, they would lead to people uploading them online, creating a piracy problem. Of course, that assumed two incorrect things: that those movies weren't already online and that adding one more copy would create any sort of "problem." Valenti lost his initial battle to forbid studios from sending out DVD screeners, but what came next were a series of convoluted attempts to stop "piracy" via the screeners -- including sending DVDs that could only play in special players. Two years ago, studios finally realized how ridiculous and cumbersome this process was, so it dropped the special DVD player requirement, and instead went with a watermarking option. But that's crazy expensive. Each DVD screener now needs to be individually watermarked and tracked.

Given that, it seems that some studios are simply deciding not to support certain movies for the Academy Awards. johnjac points us to the news that folks involved with the movie Moon are pissed off that Sony won't send out DVD screeners for the movie, as they were hoping that actor Sam Rockwell might get an Oscar nod for his part in the movie. Sony claims that it's just too expensive to do the watermarking.

It's really no surprise that this comes from Sony Pictures, whose CEO, Michael Lynton, is on record as saying that nothing good has come from the internet, and then when questioned on that statement, stands by it. So I guess that Lynton doesn't use the internet, or he would know, as pointed out in the Slashfilm link above, that perfectly good copies of the movie -- sans watermark -- are already widely available for download. In other words, there's no reason whatsoever to waste money watermarking the DVDs. It won't make a difference. Yet, because of Lynton and his crew's misguided fears, Sony Pictures won't support this particular movie.

Filed Under: academy awards, dvds, piracy, screeners
Companies: sony pictures

Movie Studios Pissed Off At Netflix, Don't Want To Allow More Streaming Movies

from the this-will-not-end-well dept

Honestly, at what point do entertainment execs finally figure out that by purposely not making content available in the format people want it in, they're only encouraging them to get that content through unauthorized means? We already knew that the big movie studios were annoyed with Netflix and trying to get Netflix to delay movie rentals until at least a month after the DVD comes out. Now we have an explanation why. As JJ was the first (of a few) to send in, the studios apparently are quite annoyed that, in order to jumpstart its movie streaming offering, Netflix routed around the movie studios, and signed a deal with Starz that allowed it to stream the same movies without a direct deal with the studios. It's not clear how or why Starz had the right to also stream movies through Netflix, but I'm guessing it was a loophole in Starz' deals with the studios -- a loophole that's now closed. So, Netflix is saying it needs to convince Hollywood it's not the enemy, but Hollywood isn't quite buying it yet.

This really shouldn't be a huge surprise. After all, this is Hollywood, where reports that actually show that the movie industry will grow quite a bit in the next decade are also used to claim that rental services like Redbox and Netflix are killing off jobs. It's also the world where Hollywood execs still think that the answer to their problems (problems like its best box office year ever) is to just add more release windows. It's as if they still think that keeping content away from people makes them more likely to buy.

Filed Under: dvds, hollywood, movies, studios
Companies: netflix

Blu-Ray's Managed Copy Appears To Be Another Hollywood Disaster In The Making

from the could-it-get-any-more-ridiuclous? dept

One of the major reasons why Blu-ray is still struggling to catch on (despite winning the long drawn out victory over competing format HD-DVD) is that you're extremely limited in what you can do with Blu-ray content. In an era when people are used to being able to move content and time- and place-shift it at will, Blu-ray is quite limiting. This has become a growing concern to those in Hollywood who thought Blu-ray was going to be its savior. Unfortunately, the response is being equally bungled by Hollywood. The key concept is the idea of "managed copies," which (in theory) will let users make limited DRM'd copies for time- and place-shifting.

Of course, that assumes that the offering actually works. And right now it's nearly impossible to tell. Jerry Leichter alerts us to a story of one small studio that's trying to implement "managed copy" offerings and is finding it to be nearly impossible. The instructions on how to do it are not at all clear, and the studio is not getting much in the way of help from those behind the standard. Furthermore, there's simply no way to test to see if they're doing it right, since there's no equipment that can handle managed copies yet. And this is from a studio, Scenic Labs, that believes DRM is pointless and "piracy is going to happen." So why is it even bothering? It basically has no choice. If you're creating commercial Blu-ray discs, this is the only option you get: it must include this poorly documented DRM if you want to offer a copyable version.

Of course, there is one alternative. As the head of the studio notes, if they screwed up the process, they have no interest in remastering the discs, so they'll just ask buyers to send a cameraphone photo of the purchased DVD, and they'll send them a digital file over the internet.

Filed Under: blu-ray, drm, dvds, managed copy, movies

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

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?

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

Study Being Promoted As 'Redbox Kills Jobs' Actually Shows That Hollywood Jobs Will Grow

from the not-what-they-said... dept

We've already been covering Redbox's legal fight with a few movie studios who so hate the idea that Redbox is actually giving people something they want (legally) at a reasonable price (legally), that they want to kill it. The whole thing is so ridiculous that it's difficult to believe there's anyone out there defending the anti-Redbox studios' position (and, in fact, a couple of the other studios, with Paramount in the lead, have realized that it's smarter to partner with Redbox than to try to kill it). Yet, the Los Angeles Economic Development Corporation (a non-profit with LA government connections) has put out a report claiming that Redbox kills jobs and harms the economy throughout Los Angeles (thanks to reader Valkor for sending this in). If you want, you can read the full report (pdf) -- but prepare to be amazed as what the report actually says is quite different than the press release headline.

Hidden within the report are claims that the industry will continue to grow nicely for the next decade and that alternative business models will develop that more than compensate for any loss of revenue from reduced rental prices. But that's not what the headline of the press release says. No, it reads:

Study says low-cost DVD rentals could lead to $1 billion, 9,280 jobs lost

But, deep in the actual report? Why, it says the following:

The shift to digital delivery will provide new revenue streams for the industry and new opportunities... Increased availability of all types of digital content and media have changed lifestyles and will continue to contribute to demand for video products. Indeed, SNL Kagan forecasts continuing growth in overall industry revenues as alternative streams compensate for this loss of revenue. In total, SNL Kagan projects an increase in distributor revenues from all sources worldwide from $51.3 billion in 2008 to $67.6 billion in 2017. While the composition of these revenues will clearly change, distributors will continue to experience revenue growth into the next decade.

So how does it get from that to the headline? Well, it assumes that Redbox is decreasing revenue from traditional rental, and seems to assume that these other alternative revenue streams are not influenced by Redbox or other forms of distribution that are more convenient and cheaper and attract a new or different audience -- which seems like a dubious assumption. Another way of looking at this: it's as if the horse and buggy industry put out a report just as automobiles were coming to market that said, yes, the auto industry will be huge and will create millions of new jobs, but because a much smaller number of jobs are lost due to downsizing the carriage market, we can release a report saying that the auto industry is "killing jobs." Logically, that's ridiculous.

On top of that, it makes some odd assumptions throughout the report, continually throwing out the idea that Redbox itself might increase the revenue for the industry, repeatedly suggesting that the industry is mature and if there were a way to get more revenue out of it, it would have already been discovered. Of course, considering that the market has long been dominated by a single player, not prone to innovating, and with close ties to studios that have limited some of how it could act -- that assumption is highly suspect. In fact, the very reason that Redbox has been so popular (and which also explains the rise of Netflix) has been consumer dissatisfaction with the old Blockbuster model, which was designed to squeeze consumers.

To the authors' credit, they do try to be fair on other numbers and assumptions, recognizing that effects go in multiple directions and that there are other issues at play, but the press release headline claiming that Redbox costs the industry a billion dollars and nearly 10,000 jobs, when the actual report claims that revenue is increasing and will continue to do so, just seems hard to swallow. Unfortunately, every single press report covering this study seems to only take the PR headline from the report and repeat it, without anyone appearing to have read the part of the report that says the exact opposite of what the headline claims.

Filed Under: dvds, hollywood, jobs, los angeles, predictions, rentals, ripple effects
Companies: laedc, los angeles economic development corporation, redbox

Danish Anti-Piracy Group Tells DVD Ripper Who Turned Himself In That It Won't Sue Him

from the how-nice dept

A bunch of folks have submitted the story of Henrik Anderson, a Danish man who ripped a bunch of DVDs for personal storage, and then turned himself in, noting that even though Danish law says it's okay to make a backup copy of content for private purposes, it also forbids circumvention of DRM, such as the DRM found on DVDs. We had avoided posting anything on the story until the Danish group responded, and while it missed the original deadline, it has now stated that it will not go after Anderson, so long as he's only using the content for private use:

The main purpose of the rule is to ensure against abuse of films and music being illegally copied and distributed further. The Association of Danish Videodistributors certainly have no interest in suing consumers who like you have purchased legitimate products -- quite the contrary.

Of course, if that were true, then wouldn't the Danish Antipiratgruppen push to change the anti-circumvention law that makes this particular process illegal? After all, shouldn't they stand behind what they claim?

Filed Under: anti-circumvention, copyright, denmark, dvds, ripping

Could Redbox Crowdsource Its Way Around Movie Studio Blockades?

from the connecting-with-fans dept

Last week, we wrote about the legal battle Redbox is facing with some of the movie studios. Redbox, of course, rents DVDs at a $1/rental from vending machines that it places all over the place. Some of the studios are upset that (a) they don't get a cut of each rental and (b) that Redbox also sells those DVDs. So they've been trying to force Redbox to sign agreements that would give them a royalty cut and which would put limitations on Redbox -- such as not renting out videos until well after the DVDs are released and also having the company destroy, rather than sell DVDs when they were done renting them. Of course, the labels don't have much of a legal claim here. Redbox has every right to buy DVDs and to then rent them (right of first sale and all that). But, what at least some of the studios have done is to demand that DVD wholesalers not sell to Redbox, which certainly seems like a typical restraint of trade situation. In at least one case, a studio has also told downstream retailers, like Walmart and Best Buy not to sell to Redbox either.

Now, you might think that Redbox could just send employees into those stores without saying where they're from, but those stores probably don't carry enough stock for Redbox to buy enough DVDs efficiently. But what if they did something different? In the comments to that post last week, our rather insightful community started suggesting ways that Redbox could get around the sales blocks from studios by crowdsourcing the acquisition of movies.

There were a few different suggestions on how this could work, but the basic idea, presented by commenter "McBeese" laid out the basics:

• Consumers open online accounts with Redbox. The account contains a Paypal id for deposits.
• Redbox publishes how many copies of each DVD that they want.
• Joe Consumer buys the movie, watches it, and then logs in to the Redbox site and 'pledges' the DVD. Each pledge automatically reduces the amount of a particular DVD that redbox is seeking.
• Joe consumer mails in the DVD with an associated pledge number. When the DVD is received, the agreed amount is deposited into Joe Consumer's account.

A little slower than buying in bulk, but unstoppable.

I'd argue that rather than paying the user for it, Redbox could just credit their account for a certain number of free rentals. Then, not only does Redbox get these movies, but it builds up an even more loyal userbase... with really no significant way for the studios to block this out. There are some things that are tricky about this -- including verifying that the purchased DVDs are what they say they are, and coming up with a way to accurately handle the inventory management, but it is creative, and it shows that as much as the studios want to think they can control this market, there's always going to be some way around their restrictions.

Filed Under: crowdsourcing, dvds, movies
Companies: redbox

Dear Hollywood: Don't Be Idiots; Don't Delay Movie Rentals

from the seriously dept

Sometimes you just shake your head at ideas that come out of some executives that are just so incredibly dumb, it makes you wonder how anyone ever took them seriously. There have been some hints about this latest one, though. Just last week, in discussing the latest IP Colloquium podcast, we noted (with surprise) that Paramount's top lawyer thought the solution to business model problems in the entertainment industry was "more windows." Windows, of course, are the different time periods in which movies are released solely for different formats/media. So, it starts with the theater (the first window), followed by video, pay per view, cable and network TV -- each representing another window, and another chance to squeeze more money out of the same content.

Yet, with the industry facing some challenges, rather than actually looking at what users want, its top brains seem to think that the answer is more windows. It's hard to explain how incredibly short-sighted this is, because it's so monumentally backwards that it makes you wonder what they're thinking. At best, my guess is that the execs are extrapolating out in the simplest form that with the launch of each "window" they make more money, so the way to make even more money must be to offer more windows. Of course, this assumes two rather basic things that are totally wrong. One, is that these windows won't piss off users and two, that those users have no alternatives.

But, apparently not realizing that, these execs have hit upon a few different attempts to add more windows. First, they've been pushing for the permission to break your TV or DVR with selectable output control barring your ability to tape movies. This way, they can create a new "window" of movies on TV that you can't record, that they can offer before the movies even get out on video. Of course, this will (a) piss people off and (b) drive them to more piracy. Brilliant.

The other attempt, is to get video rental places to stop renting movies when the DVDs first come out. The LA Times had an entire article explaining this plan, whereby the studios would force all rental services, including Netflix and Blockbuster to not rent certain films -- but only offer them for sale. The idea (short-sighted as it is), is that this would somehow force people to buy more DVDs, which gives the studios a higher margin than rentals. We actually heard about this earlier this year with the contract terms that the studios tried to put on Redbox, but it's apparently trying to do the same with Netflix and Blockbuster as well.

This idea is so bad that even the LA Times, who tends to support its hometown industry more often than go against it, put out a separate opinion piece with the original article, calling this new idea "crazy" and "absurd."

In the meantime, what do customers actually want? Well, there's pretty good evidence they prefer choice not being limited by windows. They've been clamoring for so-called "day-and-date" release, whereby all these windows are compressed. If you don't want to see a movie in the theater, why not be able to get the DVD? It's as if the studios don't realize that part of what they're selling is the social experience of "going out" to the theater. Even better, if the DVD comes out at the same time as the theater version of the film, less marketing money needs to be spent to sell more DVDs, and you can do nice tie-ins, like having the ability to buy the DVD as you walk out of the theater. Giving people more value and more choice is what the market is asking for.

Instead, Hollywood execs are trying to take away choice and limit value. Incredible.

Filed Under: dvds, hollywood, movies, rentals, sales, windows