Hollywood's DVD Cash Cow Starting To Falter

from the more-for-less dept

DVDs are Hollywood studios' most significant moneymaker these days, but sales are falling: one service says they're off 9 percent overall this year, while sales of higher-priced new releases are down 22 percent. With the way the economy is going, a spending slowdown isn't all that surprising, though entertainment revenues have historically held up quite well in down times. But studios are facing a scarier fact: perhaps consumers are losing interest in buying DVDs. One particularly bleak spot is the sales of Blu-ray, which was intended to spur consumers to buy expensive DVD players to match their new HDTVs, then replace their libraries with expensive new Blu-ray discs so they could get better picture quality than from standard DVDs. But sales of players have been slow, and sales of the discs haven't been much better.

The original article spends a lot of time talking about price, but never goes so far as to say that it's starting to look like consumers have no willingness to pay a premium over regular DVDs for Blu-ray's supposed benefits. For many people, the difference in picture quality simply isn't enough to justify buying a new DVD player -- no matter how cheap -- and buying more expensive discs, particularly as money gets tighter. James Surowiecki at the New Yorker has a good post on this angle, saying the vast difference in picture quality between VHS and DVD helped drive sales of the latter, but the difference between DVD and Blu-ray isn't wide enough to have a similar effect. But the studios say the down economy will give Blu-ray a boost, because "the supply of Blu-ray players is likely to sharply exceed demand in the coming holiday season, pushing down prices." That seems like a nice way to spin low sales expectations, but even if you ignore that, Blu-ray prices have a long way to fall before they're anywhere near competitive with upconverting standard DVD players.

Filed Under: blu-ray, dvds, hollywood

Warner Bros. Make Up Your Mind: Are You Competing With Piracy Or Not?

from the mixed-messages dept

It really was just last week that we were somewhat impressed that movie studio Warner Bros. recognized that it needed to compete with piracy in China, and was doing so by offering super cheap movie downloads there. However, apparently that strategy isn't universal across Warner Bros., because, as a few readers have alerted us, the studio is acting in quite a different way in neighboring Korea. Rather than compete, Warner Bros., is apparently throwing in the towel and pulling out of Korea entirely.

To be honest, I'm quite confused as to how the same company could make both of those decisions in the course of a single week. Perhaps the situations are really different between China and Korea (though, I doubt it), but it's difficult to see why it would make sense to try to compete against widespread piracy in one country, and then insist it was impossible to do the same thing in another country.

Filed Under: china, dvds, korea, movies, piracy
Companies: warner bros.

Predicting Blu-ray's Troubles Didn't Take A Crystal Ball

from the that's-gotta-hurt dept

A bunch of regular readers of Techdirt have been sending in Robin Harris' analysis that, despite beating HD-DVD in a drawn out standards battle, Blu-ray DVDs don't seem to be gaining much traction. Harris specifically states: "16 months ago I called the HD war for Blu-ray. My bad. Who dreamed they could both lose?" I guess Harris doesn't read Techdirt. Because we predicted such an outcome 3 years ago when the standards battle delayed adoption, and again when Blu-ray launched over two years ago, and again when HD-DVD dropped out earlier this year. It wasn't exactly rocket science to recognize what would happen, if you just compared the standards battle over DVDs to previous standards battles, and looked at the competitive environment and tech horizon, you could see that an extended standards battle would hurt both sides. That said, I'm actually not as pessimistic as Harris about Blu-ray's chances. I think that it will catch on somewhat and become more widely used -- though, not nearly as widely as if the standard had been set three years ago, before online delivery of movies was a viable option.

Filed Under: blu-ray, dvds, standards battles

Hollywood Again Tries To Stop Innovation: Threatening Redbox DVD Rentals

from the felony-interference-with-a-business-model dept

I have to admit that when I first heard about the whole Redbox concept of renting DVDs from a kiosk I was skeptical, but that was mainly because previous experiments had all been quite expensive with very limited selection. However, in actually offering super cheap prices ($1 rentals), I've been hearing from many Techdirt readers who swear that Redbox is fantastic and, at such a cheap price, often easier than downloading the movie.

So, wouldn't you know it? Hollywood is trying to block Redbox from doing business.

The company has filed a lawsuit against Universal Studios for trying to coerce the company into signing a ridiculous, business-destroying agreement -- and threatening to try to stop others from supplying Redbox movies if the company didn't agree. Specifically, Universal wanted Redbox to agree to:

• wait 45 days after a DVD's release date before renting it;
• pay a royalty of 40% of gross rental revenues;
• promise that prices never dip below $0.99 per night; and
• destroy all previously rented DVDs rather than offering them for purchase for $7, as Redbox currently does.

In other words, Universal Studios is basically trying to kill off Redbox, a company that has innovated in its business model, and, in doing so, effectively trying to circumvent the first sale doctrine by controlling how a copyrighted product can be resold. Universal threatened that if Redbox did not agree to these business-destroying clauses, it would stop supplying movies to any distributor who supplies Redbox. Effectively, that would mean that those distributors would stop supplying Redbox, rather than lose Universal as a supplier. This is, quite clearly, a case of corporate bullying. It's also yet another example of how the movie studios want to stop any innovation in the industry that doesn't come directly from the studios.

Filed Under: business models, dvd rentals, dvds, hollywood, innovation
Companies: redbox, universal

HD DVD May Finally Be Dead... Only Three Years Too Late

from the still-time-to-salvage? dept

A few weeks ago, when we noted that it really looked like HD DVD might finally be done for, we were surprised to see the number of folks in the comments insisting that we were crazy, and HD DVD had a long future ahead of it. Well, it appears that future has been cut short. In the past week, Netflix, Best Buy and Wal-Mart all said they would sell exclusively Blu-ray players and discs going forward, squeezing out whatever last minute hope there was of rescuing HD DVD. Now reports are finally coming out that Toshiba has come to terms with the inevitable and will officially kill off HD DVD in the next week or so. The thing is, this is really three years too late. There were three years where a next generation DVD standard had an open market to dominate. Yet, in those three years, the ability to deliver videos online has grown tremendously, meaning that there's even less of a reason today to upgrade than in the past. No, internet delivery of movie content isn't ideal yet. It's still much easier to use a disc -- but the gap has closed quite a bit and it's only going to get narrower -- until internet delivery systems surpass any kind of disc-based system. It's a classic "innovator's dilemma" where internet delivery mechanisms are getting better at a rate much faster than next generation DVD systems. Those three years of fighting over standards is going to come back and bite everyone who spent all this time fighting over a standard only to miss the larger picture.

Filed Under: blu-ray, dvds, hd-dvd
Companies: best buy, netflix, toshiba, wal-mart

Cablevision Will Let You Watch Movies The Day Of Their Release, If You Buy The DVD

from the loopholes dept

We were surprised that even Apple was forced by the movie industry to delay the release of online movie downloads until a month after the DVD release. This seemed totally pointless and self-defeating by the movie industry (though, hardly the first time that's happened). However, it looks like Cablevision has discovered an interesting workaround to this "window" between releases: it's launching a video-on-demand (VOD) system that will let you watch movies the day they're released on DVD. The trick? You need to actually buy the DVD first, via Cablevision. Then, while you're waiting for the physical DVD to arrive in the mail, you're free to watch the movie via the VOD offering. Of course, this sounds something like what the original MP3.com used to do, allowing people to access MP3s of CDs they just bought, while they wait for the CD to arrive. And, as I'm sure many of you remember, the entertainment industry sued MP3.com and actually won that lawsuit. While there was some questionable reasoning in the decision, MP3.com was unable to appeal, due to some quirks of the legal system. Has it really taken 8-years for the entertainment industry to start to come around to this idea? Perhaps not. Apparently, only a very few titles are available on Cablevision's new service.

Filed Under: dvds, video on demand
Companies: cablevision

MPAA Finally Realizes That Proprietary DRM'd Screener DVDs Are A Waste

from the it-took-this-long? dept

Way back in 2003, then head of the MPAA, Jack Valenti, got so worried about "piracy" of movies coming from insiders that he banned the use of "screener" DVDs for those voting for the Academy Awards. If you're unaware, traditionally, Motion Picture Academy members received "screener" copies of the movies up for awards on DVD or VHS tape so they could watch them at home and decide how to vote. Yet, in Valenti's twisted world, this had to be stopped because screener copies were appearing online. Of course, banning screeners created quite a mess for the folks who actually had to vote on the awards, as there was no longer an easy way to actually see the movies. It also really upset smaller studios, who knew that their movies were less likely to be seen by Academy members if they couldn't send out screeners. Eventually, the MPAA relented, but the following year came up with a new ridiculous solution. Rather than sending DVD screeners that members could watch with their existing home theater setup, it hired a company to make special DRM'd DVDs that would only play on special DVD players. Then it sent these special DVD players with the screeners to the Academy members. Of course, this was both a huge expense and still a tremendous pain in the ass for voters, who had to hook up this special DVD player that could only be used for screeners. It also made it difficult if the Academy member wanted to take the DVD somewhere else (say on vacation) and watch it elsewhere without dragging along this "special" DVD player. Apparently it only took 3 years of complaints before the MPAA realized that perhaps this was a dumb idea (that also didn't stop the movies from getting online anyway). This year, it's apparently phasing out the special DVD players and will provide (gasp!) normal DVDs for voting members.

Filed Under: drm, dvds, oscars, screeners
Companies: cinea, mpaa

Psst! DVDs Are Starting To Die Too...

from the well,-look-at-that dept

For years, we've been pointing out that disc-based media was on the way out, but for the industries (mainly music and movies) that make money from selling those discs, the allure of the cash cow was too strong. They've done little to plan for a future without disc-based media -- which is why you see the recording industry in such a freakout these days. In the meantime, the DVD world wasn't much better off. DVDs could have been saved if they'd agreed to a new format early on, stuck to it, and worked on continually adding new and interesting features that made the DVDs, worthwhile -- but instead they've been stuck in a pointless standards battle where no one will win. Thanks to that, it appears that DVDs are starting to follow CDs on their inevitable sales decline. While there may be whining and complaining about how this damages the movie industry, that's not the case at all. The demand for movies is still quite high -- and if the movie industry ever figures out how to stop treating its customers like criminals, perhaps it will come up with business models that work.

Filed Under: dvds

Using The DMCA And DRM To Prevent Innovation

from the not-quite-what-it's-supposed-to-do dept

Earlier this year, we wrote about the bizarre story of how the entertainment industry could misuse the law to effectively ban DVD copying -- even when it's allowed by fair use. It involves a bit of sneaky lawyering, but here's how it works: the group that creates the DVD spec could just create a new spec that would ban any product from making DVD copies. Since the DVD spec includes a totally pointless bit of DRM known as CSS which has been broken for ages, anyone who makes any copies without licensing the spec, has then violated the DMCA's anti-circumvention clause -- even if the use was perfectly fair. The specific case where this applies was with a $20,000 DVD jukebox that would make copies and store your DVDs on a hard drive. It had all sorts of copy protection built in itself, so it was clearly not a tool for unauthorized use. A court agreed that it was perfectly legal.

However, for some bizarre reason, the movie industry fears this perfectly legal jukebox and has resolved to kill it. Since the law isn't on its side, it's getting around the ruling by using the DMCA to its advantage. It's made an amendment to the DVD standard that effectively makes it impossible for a company to allow DVDs to be copied. Thus, even though the law is clear that it's perfectly legal to make a personal copy of a DVD, the makers of the DVD standard (the movie studios) are now saying that you can't license the necessary standard to playback movies unless you don't allow any copying -- and if you do so anyway, you are circumventing the DRM and therefore violating the DMCA. In other words, rather than protecting copyrights, the movie industry is using the DMCA and DRM to define what's acceptable innovation in terms of how a DVD jukebox can work.

Filed Under: dmca, drm, dvd-cca, dvds, innovation

$150 Million Sure Can Inject Some Life Into A Pointless Standards Battle Over Next Generation DVDs

from the oh-that? dept

In what must be the world's most pointless standards battle over next generation DVD technology, apparently all it takes to reignite the tiny fire of interest is $150 million. If you hadn't been paying attention (and, honestly, why would you?), two separate groups have been battling it out over which technology will represent the next generation of DVDs: Blu-ray or HD DVD. Like many standards battles these days, the players believe the pot is so lucrative that they refuse to come up with a single standard -- despite the fact that competing standards basically guarantee that both sides lose. Fewer people are willing to adopt one technology if there's still a half decent chance the other one might prevail. At the same time, fewer people are willing to adopt one technology if half the content they want to view is stuck on the other technology. It's a lose-lose situation. While the HD DVD crowd would deny this, over the last few months, it had finally seemed like Blu-ray was edging ahead (for example, with thieves). However, HD DVD's backers have fought back from oblivion by giving Paramount and Dreamworks $150 million to only release movies on HD DVD, effectively ensuring that this remains a standards battle that no one cares about. The good news is that the longer this battle goes on, the more likely most folks will simply jump to alternatives that don't involve plastic discs.

Filed Under: blu-ray, dvds, hd-dvd
Companies: dreamworks, paramount