WarnerMedia Sued For Giving People Want They Wanted (The Matrix, Streaming) During An Historic Health Crisis

from the oh-no,-not-what-people-want dept

AT&T got a lot wrong (and still really can't admit it) with the company's $86 billion acquisition of Time Warner. There were endless layoffs, a steady dismantling of beloved brands (DC's Vertigo imprint, Mad Magazine), all for the company to lose pay TV subscribers in the end.

But the one thing the company did get right, with a little help from COVID, was its attacks on the dated, pointless, and often punitive Hollywood release window. Typically, this has involved a 90 day gap between the time a move appears in theaters and its streaming or DVD release (in France this window is even more ridiculous at three years). Generally, this is done to protect the "sanctity of the movie going experience," as if for thirty years the "sanctity of the movie going experience" hasn't involved sticky floors, over priced popcorn, big crowds and mass shootings.

During COVID, big streamers like AT&T and Comcast shifted a lot of their tentpole films (like Dune) directly to streaming, which technically saved human lives, but resulted in no limit of raised eyebrows and scorn among the "Loews at the mall is a sacred space you can't criticize" segment of Hollywood. You might recall that AMC Theaters was positively apoplectic when Comcast showed that release windows were a dated relic, declaring it would never again show a Comcast NBC Universal picture anywhere in the world if Comcast kept threatening the sacred release window (the threat lasted about a week).

WarnerMedia (in the process of being spun off by AT&T) has faced similar whining from the industry. This week the company was hit with a lawsuit (pdf) by Village Roadshow Films, which claims the company "rushed" the release of The Matrix Resurrections from 2022 to 2021 as part of an (gasp) effort to boost streaming's popularity. All through 2021, AT&T/Time Warner released films simultaneously in theaters and on streaming to boost HBO Max subscriptions. And people liked it.

Unsurprisingly, Village Roadshow Films did not, claiming the effort (dubbed "Project Popcorn") was a "clandestine plan to materially reduce box office and correlated ancillary revenue generated from tent pole films that Village Roadshow and others would be entitled to receive in exchange for driving subscription revenue for the new HBO Max service." HBO Max and AT&T telegraphed this intention, so it seems hard to argue this was somehow clandestine. The suit also accuses WarnerMedia of ignoring the fact that piracy would have hurt the overall profits to be made from the film, though, again, metrics proving clear financial harm appear lacking.

But just as unsurprisingly, Warner Brothers thinks Village Roadshow Films is just annoyed by reality and shifting markets:

"In a statement shared with The Verge, Warner Bros. called the lawsuit “a frivolous attempt by Village Roadshow to avoid their contractual commitment to participate in the arbitration that we commenced against them last week. We have no doubt that this case will be resolved in our favor."

Again, while it's true that AT&T attacked the sacred old release window to goose streaming subscriptions, this was something that happened during an historic plague in which indoor transmission of a deadly virus could kill or disable you. It's also almost an afterthought that in the advanced home theater and mall shooting era, this is something consumers desperately wanted. For all its downsides, COVID had a strong tendency to painfully highlight shortcomings (see: broadband, the U.S. healthcare system) and dated antiquities (like release windows or a disdain for telecommuting) that no longer served us.

While there's a shrinking sect of Hollywood folks like Spielberg who still think in-person theaters and release windows are sacred and above reproach, COVID laid bare the fact that not that many people agree with them. And while that certainly disadvantaged folks financially dependent on older models (like theater owners and studios heavily vested in release windows), the reality is what it is, and a popular change was accelerated all the same.

Filed Under: covid-19, movies, pandemic, release windows, streaming
Companies: at&t, village roadshow, warnermedia

AT&T Pisses Off Everybody (Especially Christopher Nolan) For Launching Movies Straight To Streaming

from the right-idea,-wrong-implementation dept

To be clear, AT&T has no shortage of nasty habits, whether we're talking about how the company routinely does too little to thwart criminals eager to rip off AT&T customers, or the way it can routinely be found hoovering up taxpayer money in exchange for, well, less than nothing. But one thing the company did get correct (or at least more correct, more quickly than other counterparts in cable and TV) was that streaming was the future.

Most cable TV companies refused to fully embrace streaming, worried they'd cannibalize existing traditional cable revenue and thinking they could milk a dying cash cow forever. AT&T jumped in with both feet early on, launching a dizzying array of different streaming services. Sure, AT&T then proceeded to lose seven million pay TV and streaming customers in just three years thanks to a series of bone-headed mergers, rate hikes, and idiotic branding choices, but its original instinct to get out ahead of the problem was the right one all the same.

Earlier this month, AT&T announced that Covid had forced it to effectively put a bullet in traditional movie release windows, resulting in the company releasing new Warner Brothers films on streaming the same day they're released in theaters. It's obviously a necessary response to an unprecedented threat, and it comes with some caveats. One, it's only a one-year trial. Two, movies will still hit theaters. Three, you'll probably pay more for home viewing than is sensible. It's likely a temporary shift in tactics that's geared as much toward goosing lagging HBO Max subscriptions as it is public safety.

Still, the decision resulted in no limit of consternation in Hollywood, which was already sore about AT&T's steady parade of layoffs at Time Warner properties (HBO, DC) it acquired in 2018 (promising no limit of amazing synergies), and the general annoyance of having bumbling telecom executives stumbling around a more creative, competitive sector than AT&T's used to. Director Christopher Nolan was particularly pissed off:

"Some of our industry’s biggest filmmakers and most important movie stars went to bed the night before thinking they were working for the greatest movie studio and woke up to find out they were working for the worst streaming service."

Ouch. For a company that's struggling to keep pace with the likes of Amazon, Disney, and Netflix, that's not exactly what you want to hear. Nolan's biggest gripe is that AT&T, in a rush to drive HBO Max streaming adoption and please Wall Street, doesn't really understand what it's dismantling as it works to pivot from brick and mortar releases to the virtual world:

"Nolan said that the Burbank, CA lot was “dismantling” an ideal distribution system between theaters and homes “as we speak. They don’t even understand what they’re losing. Their decision makes no economic sense and even the most casual Wall Street investor can see the difference between disruption and dysfunction."

Of course this being Hollywood, a chunk of this is just errant hyperventilation. Hollywood has long despised any attempt to disrupt the traditional movie release window, despite the fact it's an antiquated construct that doesn't make a whole lot of sense during the broadband and streaming era. This is not an industry that takes change or disruption particularly well, and that's pretty well evident here.

But it would be a mistake to suggest this is entirely just Hollywood being afraid of change, and Nolan's not entirely wrong.

Having written about AT&T for twenty years I can assure you the company doesn't really know what it's doing in the entertainment space. AT&T's good at two things: running networks and lobbying the government to kill competition. And while it tries to hire competent entertainment-sector executives (like Warner Brothers Chief executive Jason Kilar) those executives will, sooner or later, run up against rigid-minded executives from a government-pampered telecom monopoly that don't really understand (or care to understand) how creative ventures work.

That was reflected in AT&T's early streaming headaches, it's reflective at the consternation at HBO and DC Comics, and it's also apparent here. Despite a lot of pretense to the contrary, AT&T is making it up as it goes along:

Nolan claims AT&T didn't really bother to fully consult with Warner Brothers folks before undergoing such a massive pivot, one that's going to hit union employees particularly hard (something I'd wager, based on its history, AT&T's not too broken up about):

"The director called the decision by WarnerMedia, owned by tech giant AT&T, as devaluing billions in film assets “by using them as leverage for a different business strategy without first figuring out how those new structures are going to have to work, it’s a sign of great danger for the ordinary people who work in this industry."

Dune director Denis Villeneuve was even more blunt in a piece at Variety:

"There is absolutely no love for cinema, nor for the audience here. It is all about the survival of a telecom mammoth, one that is currently bearing an astronomical debt of more than $150 billion. Therefore, even though “Dune” is about cinema and audiences, AT&T is about its own survival on Wall Street. With HBO Max’s launch a failure thus far, AT&T decided to sacrifice Warner Bros.’ entire 2021 slate in a desperate attempt to grab the audience’s attention."

Again, this is all a bit more complicated than Hollywood being a disruption-phobic baby (though that's absolutely part of the equation). Everything about AT&T's venture to dominate streaming has been a convoluted mess, including the $200 billion in megamergers that saddled AT&T with so much debt it resulted in an investor and consumer revolt. So while pivoting hard(ish) to home releases is the right move at the right time, there's absolutely no indication that AT&T's the kind of company capable of doing a good, conscientious job at it based on what we've seen so far.

In short, AT&T's right to adapt to the historic health threat at hand by pivoting hard to streaming, but creatives under the AT&T/Time Warner flag are also probably right to worry that a pampered telecom monopoly with a long history of dodgy ethics will do a crappy job at it.

Filed Under: chris nolan, covid, day and date, hbo max, home release, movies, release windows
Companies: at&t

AT&T, HBO Put Another Bullet In Antiquated Theatrical Release Windows

from the inevitability dept

Among the dated and dumb business concepts exposed as folly during the pandemic is the traditional Hollywood film release window, which typically involves a 90 day gap between the time a move appears in theaters and its streaming or DVD release (in France this window is even more ridiculous at three years). The goal is usually to "protect the traditional film industry," though it's never been entirely clear why you'd protect traditional theaters at the cost of common sense, consumer demand, and a more efficient model. Just because?

While the industry has flirted with the idea of "day and date" releases for decades (releasing movies on home video at the same time as brick and mortar theaters), there's long been a lot of hyperventilation on the part of movie theaters and traditionalists that this sort of shift wasn't technically possible or would somehow destroy the traditional "movie experience," driving theaters out of business.

The pandemic has changed everything. To the point where AT&T/HBO this week announced that the company's entire lineup of 2021 films will be released on the company's streaming platform (HBO Max) the same time it hits theaters. There are some caveats: it's a one year trial, and movies will only appear on HBO Max for a month before they disappear (though they may return later). You'll also probably pay far more to watch these movies than it's worth. But it's still a sensible shift given the circumstances, as Warner Brothers (AT&T) made clear it a statement:

“We’re living in unprecedented times which call for creative solutions, including this new initiative for the Warner Bros. Pictures Group,” said Warner Bros. CEO Ann Sarnoff. “No one wants films back on the big screen more than we do. We know new content is the lifeblood of theatrical exhibition, but we have to balance this with the reality that most theaters in the U.S. will likely operate at reduced capacity throughout 2021.”

Yes, it sucks for those whose livelihoods rely on traditional brick and mortar theaters. But these are the same theaters that saw the writing on this particular wall long before COVID came to town, and decided to spend much of their time pouting instead of adapting for the inevitable. Even then, traditional theaters will someday bounce back, buoyed by those who feel a trip out to the movies is an essential cornerstone of everyday life. It's just not going to be until vaccines are commonplace and congregating indoors for prolonged periods is no longer a potential death sentence.

This isn't exclusively about the pandemic, of course. AT&T has been losing traditional TV and streaming subscribers hand over fist after a bunch of expensive mergers, branding confusing, and other executive incompetence. They're running behind giants like Netflix and others, and want the added attention. Scuttlebutt also suggests the company is hoping to use the announcement to pressure Roku into carrying HBO Max and ending their longstanding feud:

Either way, it's another step in the right direction toward no longer embracing antiquated concepts like release windows that no longer make sense in the broadband era. This being AT&T there's almost certainly going to be dumb caveats tied to these releases (ridiculous pricing probably being among them), but baby steps and all that.

Filed Under: day and date, hbo max, hollywood, movie theaters, release windows, streaming
Companies: at&t, hbo

Theater Chains Pout, Boycott Netflix's New Movie To Protect Antiquated Release Windows

from the taking-my-ball-and-go-home dept

As part of its continued foray into film and more flexible release windows, Netflix this week announced it had acquired the Cary Fukunaga film "Beasts of No Nation." Based on the novel by Uzodinma Iweala, the movie stars Idris Elba and examines the impact of civil war on an unnamed West African country. Like the company's acquired sequel to "Crouching Tiger, Hidden Dragon," Netflix is using the opportunity to kick down the doors of antiquated release windows, pushing the film to theaters the same day it will be available on Netflix instant streaming.

Given this would challenge the aging structure of the film industry, you'll probably not be surprised to learn that the primary response to Netflix's move has been of the hissy fit variety. That home video viewing will kill theaters has been the refrain of theater owners for decades now.

So, when Netflix announced it would be offering its Crouching Tiger sequel in IMAX on the same day as streaming availability, AMC, Regal and Cinemark -- which, combined, run 247 of the 400 IMAX theaters in North America -- unsurprisingly announced they'd be boycotting the movie this summer. Similarly, those same chains have joined forces to boycott Netflix's release of "Beasts of No Nation," insisting they need to do so to protect the 90-day delay between a theatrical debut and a home entertainment release.

That inflexibility has opened the door to folks like Alamo Drafthouse CEO Tim League, who somehow grasps the immeasurably complicated idea that sometimes people like going out to the movies, and sometimes they like staying home. League shot down the idea that tinkering with release windows was a death knell for theater owners:

"I’m agnostic about this sort of thing,” said Tim League, the company’s CEO and founder. “I look at films I want to play and I play them regardless of the release strategy." League noted that Alamo Drafthouse had success showing “Snowpiercer,” even though that science-fiction adventure debuted last summer on-demand while it was still in theaters.

"I don’t look at myself as a competitor to Netflix,” said League. “I think that argument is a little bit of a red herring. I watch a lot of movies at home, but there comes a time where I want to get out of the house. I look at cinemas as one of those options that compete with restaurants or baseball games or all of those things I can’t do in my living room."

Flexibly focusing on the consumer instead of crossing your arms and making a pouty face when inevitable industry evolution occurs? Ridiculous! Somebody clearly forgot to inform League that change is always bad, and pouting like a petulant child is the only effective and profitable path forward when history and technology threaten to rattle the status quo.

Filed Under: beasts of no nation, crouching tiget, day and date, hidden dragon, movies, release windows, theaters, uzodinma iweala
Companies: alamo draft house, amc, cinemark, imax, netflix, regal

How A Free Movie Made $1 Million In 14 Days

from the doing-it-right dept

Sheri Candler points us to a fascinating case study by Peter Broderick, about how the independent documentary film Hungry For Change was able to leverage the use of "free" to make over $1 million in just two weeks. The summary:

The release of HUNGRY FOR CHANGE was unprecedented. The film:

• premiered online (having never screened publicly before)
• was available worldwide
• was absolutely free (for 10 days only)

The results were remarkable:

• 453,841 views around the world during the 10 day premiere
• over $1.02 million in sales of DVDs and recipe books in the first 14 days

The full case study is worth reading, but these are some of the key points: The filmmakers, James Colquhoun and Laurentine ten Bosch, had done things in the past like allowing free public screenings of an earlier movie they had made. Anyone who registered was able to host their own screening of the film, free of charge. Those who registered got a "screening resource pack" to help facilitate the process. Normally, movies that offer screenings charge for them, but the filmmakers here believed that they would make that up in other ways, and there's evidence to suggest that was true. On top of that, the filmmakers kept their website updated regularly with new content -- making it a good way to continue to connect with fans over the long term, rather than having the movie be a one-off experience.

They also tried different DVD pricing schemes, and found that "free" had pretty cool results, in that it increased both sales and connections with fans:

In December 2010, FOOD MATTERS DVDs were put on sale from the website for one week at half price. This resulted in 4600 sales, the best week in 2.5 years of sales. In October 2011, the filmmakers took a more radical approach with even better results. They allowed all comers to watch FOOD MATTERS for free for 8 days. This stimulated direct and indirect sales of 9800 DVDs, twice as many as were sold when it was offered at half price. Even more impressive, over 37,000 people joined the mailing list during this event.

So, with the new movie, they were even more committed to "free." They decided to release the movie for free, globally, online. The results were really impressive:

Global Reach - The Free Worldwide Online Premiere was an instant hit. On its first day (March 21st) there were 45,211 plays. Tens of thousands of people watched the film each day. The premiere ended with a bang with 58,292 plays on the final day (March 31st). Altogether there were almost half a million views from more than 150 countries across the globe in just 10 days. These are astonishing numbers for an independent film that had never been seen before, had no paid advertising, and was not available through any retail channels.

Subscribers - There were 229,000 sign-ups in 14 days, a significantly greater number than FOOD MATTERS had gained in the previous 4 years. James estimates that less than 30% of the HUNGRY FOR CHANGE sign-ups were FOOD MATTERS subscribers, which means that at least 160,000 were new subscribers, almost doubling James and Laurentine’s already substantial online following.

Revenue - Everyone who viewed HUNGRY FOR CHANGE was given access to three special offers: the DVD for $34.95, the new recipe book for $49.95, or the DVD and the recipe book for $74.95. Each order came with free bonuses and free shipping. In the first 14 days, over 20,800 orders were placed totaling over $1 million in sales. Although most purchasers had already seen the film for free, many wanted to buy a copy for themselves or purchase it as a gift for family or friends.

There's so much in this case study that highlights key points we've made over the years. The filmmakers used the film to connect (and also have used and continue to use their website to further that connection) -- and that clearly drove people to support the film monetarily as well. Even if people didn't necessarily pay immediately, just building that connection to the work and to the filmmakers can end up paying nicely over the long run.

On top of that (as you hopefully know), I love it when content creators come up with creative bundles of offerings. In this case, the idea of doing a cookbook to go with the movie makes a ton of sense, given the topic of the movie. And even if the cookbook might seem "expensive" as a standalone, it sure looks like plenty of people were willing to pay.

Finally, the fact that so many people were willing and happy to pay for the DVD even after watching the film for free online speaks, again, to the ridiculousness of silly movie release windows. For years, we've been arguing that the DVD of the movie you just saw should be available to buy as you leave the theater. People are more than willing to pay for the DVD, even if they already saw the movie. In fact, it seems clear that lots of people want the DVD right after seeing the film. Striking while the iron is hot makes a tremendous amount of sense, but the classic Hollywood response is to worry about piracy, and make fans wait months before the movie is available on DVD... at which point the people have already forgotten about it.

Either way, once again, Broderick's case study of the movie is really a worthwhile read, so go check it out.

Filed Under: connect with fans, hungry for change, reason to buy, release windows

Funny How Sensitive Hollywood Gets When You Threaten To Mess With Its 'Fundamental' Structure

from the but-the-internet?-bah... dept

One of the key points in the SOPA/PIPA debate involved Hollywood -- and the MPAA's Chris Dodd and Michael O'Leary in particular -- dismissing the worries of folks in the tech industry about the rather fundamental changes that these laws would make to both the technological and legal frameworks of the internet. Anytime such a thing was brought up, it was dismissed out of hand. This was most noticeable during the original SOPA hearings in November, where a number of experts were pointing out their concerns with how SOPA would undermine basic internet security principles... and O'Leary dismissed them with a simple statement about how he just didn't believe those concerns to be true.

What shocked many folks in the tech community was just how easily the MPAA sought to dismiss some pretty massive fundamental changes to both the internet and the legal framework around the internet. However, apparently if you dare touch the "fundamental" parts of Hollywood's business, the same MPAA throws a hissy fit. The EU recently had a public consultation on a variety of copyright-related topics, some of which were more interesting than others. One of the topics was on the question of movie release windows, and whether or not they made sense any more. As we've noted there have been many, many studies that suggest that these release windows are actually a big part of the problem for Hollywood, and they're leaving a ton of money on the table by not making movies available in as many convenient ways as possible.

In fact, many of the (non-Hollywood) respondents to the consultation made this point. There's BEUC (a consumers' group) that sees (pdf) "both platform and territorial release windows as outdated." GSMA called for (pdf) support for "flexible and shorter release windows." And EuroISPA was the most stringent (pdf), pointing out that:

the current windowing system is obsolete and seriously damaging the objective of the Digital Agenda, because it hampers the circulation of digital works and discriminate amongst platforms, to the detriment of more innovative technologies and business models

But you get a totally different story when you hear the MPAA's international arm, the MPA, tell its story (pdf). You see, to Hollywood, release windows are a "fundamental" part of its business model, and how dare anyone think of touching it.

The MPA submits that the freedom to set the exact timing for the release of films in various media and various countries is a fundamental feature of the film industry’s business model

Perhaps Hollywood is right, even if so many studies disagree. But, really, if it thinks it can just claim a certain feature is a "fundamental feature of the industry's business model," why does it then feel that there's absolutely no problem to leap into a totally different industry, and muck around with the "fundamental features" of that "industry's business model"? What an incredible sense of entitlement. The MPAA wants the law to keep its business model in place permanently... but if anyone else even dares to ask why Hollywood is trying to muck with their own business model, everyone gets attacked as being misinformed shills.

Filed Under: business models, europe, fundamental, movies, pipa, release windows, sopa
Companies: mpa, mpaa

Theater Owners Still Oblivious To The Fact That They Can Compete With Home Viewing

from the sad dept

We've been arguing for nearly a decade that movie theater owners were overreacting to the threat of people viewing movies at home eating into theater revenue. After all, they've been complaining about this for decades. As we talked about last year, back in 1959, Mary Pickford, who was a Hollywood star (or, rather, at the time, the Hollywood star) who also cofounded studio giant United Artists and the Academy of Motion Picture Arts and Sciences (the folks who put on the Oscars), claimed that cable TV would kill theaters. Then, of course, Jack Valenti famously said the VCR would be the "Boston strangler" to the movie business.

Yet, now, with home theaters, video on demand, streaming services and (yes) infringement, the theaters are once again insisting that this time theaters are really in trouble.

The BBC has a good article discussing the details of the fears of theater owners, and even mentions both the Pickford and Valenti quotes. It talks up how theater windows are decreasing, and the theater owners are decrying how that's just going to make things worse and worse.

But what's amazing is that not once in the article does anyone mention that theaters compete on more than just the content. This is the core blindness that seems to effect most (but certainly not all) folks in the theater business. They keep whining about how they can't compete with the ability to watch movies at home. But what they're really admitting is that their theaters suck. Yes, the movie itself is a key part of deciding to go out to the theater, but it's the overall theater-going experience that really drives people. Lots of people decide they want to "go out to the movies" before they even decide what movie to see.

Going out to the movies is a social experience, and the problem that theaters are facing isn't that home theaters get the content too early, but that the big theaters have made the theater-going experience suck. The theaters are cramped, uncomfortable, noisy. The food prices are ridiculous. The sound quality or video quality sucks. But that's not the fault of home theaters. That's the fault of theater owners not making the experience good.

There certainly are some who recognize that making the theater experience better is the strategy that will work, but they're in the minority. The big theaters just keep worrying about windows and online streaming and "piracy," and don't seem to make any effort to give people reasons to go to the theater. People want to "go out." People want to have a special experience and enjoy being out with friends. That's what theaters should be capitalizing on. People can stay home and eat, but restaurants still do fine business, because people want that better experience of going out to eat. The same is true of going to the movies, but only if the theaters recognize that they have to make that an experience worth going out to.

And, yet, oddly, none of that makes it into the BBC article. Even worse, the theater owners in the article seem to want to blame everyone else. Check out this discussion, where a top lobbyist for theater owners seems to pretend that theaters are helpless here and at the whims of everyone else:

"Our concern is people won't go for this eight-week window," says Patrick Corcoran, California operations chief of the National Association of Theatre Owners.

"If [studios] are really intent on making this sort of thing work, they have two options: one is to shorten the window, the other is to put it at a lower price, or both.

"The closer it gets to the theatrical release and the lower price it gets, you start to get into this self-competition market that already affects the home entertainment market.

"The theatre business is a fairly marginal business so a few percentage points loss in admissions will end up closing some theatres.

"And if film companies do focus on [home entertainment more], they won't be able to justify current budgets so you will just end up with a lesser film."

Or, you know, the theaters you represent could spend some time focusing on improving the experience so that even if they have options at home with the identical content, it's still worth going out to the movies. But, apparently, that line of thought just hasn't occurred to many theater owners yet.

Filed Under: competition, movies, release windows, theaters, value

Theater Owner Begs Hollywood Not To Give Consumers What They Want

from the can't-compete,-huh? dept

It's always kind of amusing when you see a business owner make obviously false statements as they try to justify why everyone should be worse off, just so they don't have to adapt their business model. It's especially amusing in the movie theater business, where we keep seeing theater owners complain about shortening windows between theatrical release, and when a movie can be viewed at home. As we've noted over and over again, every time a movie theater executive makes such a complaint, they are effectively admitting that they're too clueless on how to compete. Even though they have huge theaters with great sound systems and seating, they're admitting that they either don't want to or simply cannot compete. If that's really the case, they don't deserve to be in business.

RickMan points us to the latest such example, written for the Hollywood Reporter by Gregory Marcus, the CEO of Marcus Theatres, where he runs through a whole series of fallacies in trying to convince Hollywood not to keep shortening film windows. Let's pick through a few:

I just saw Johnny Depp at the grocery store.

Dressed as the Mad Hatter, he was in the Redbox machine available for $1. All I could think was what a shame it was that this wonderful movie was being so terribly devalued.

First of all, it's not devalued. Price and value are not the same thing, and it's economically wrong to claim they are the same. Furthermore, it's not "devaluing" something if the market is pricing it more efficiently and accurately. Just because one part of the market artificially inflated the price through exclusionary and anti-competitive practices, don't blame the market for more accurately pricing things.

Windowed release patterns are brilliant. Release a movie to different outlets over time so it can be sold to the same person multiple times. First see it in the theater, then buy or rent it, then catch it on cable or TV. Shorten the window and risk losing the ability to sell the product multiple times.

When trying to convince the world that your system is better, it helps not to flat out admit that the system you like is the one that forces people to pay multiple times for the same thing. The reason windows are collapsing is because more and more people realize such windows are ridiculous and make little sense. And when that happens, they start routing around the legal ways of getting the content, and get it through unauthorized channels.

The real problem here, of course, is that Marcus is either too afraid or too confused to know how to compete. Even if all movies were released -- in an authorized fashion -- for free, I would bet that a smart theater owner could thrive. That's because a smart theater owner would recognize that people go out to the movies for the overall social experience. The better the experience, the better you can do. Everyone can always eat dinner for less money at home, but they go out to eat at restaurants for the experience and the ambiance and the fact that others do the work and take care of the details. The same is true for movies as well. But Marcus, here, is suggesting that his theaters are run so poorly that no one would want to come. That seems to be a problem for the board of directors of Marcus Theaters in reviewing the guy who is in charge of their strategy. It's got nothing to do with release windows.

Please don't say, "We need to give the consumer what he wants," because the historical implication was, "or your competitor will provide it," not "or the customer will steal it." The proper response cannot be to cede to the thieves' demands and earn less along the way.

If you don't realize that file sharing sites are competitors, you're never going to be able to adapt.

If I were the studio execs, I would focus on catching and punishing thieves and look for less destructive opportunities to grow my business.

Yeah, because so far, that's only served to draw more attention to file sharing and increase the rate at which it's done.

I'm sure it sucks to be in Marcus' position, where the old artificial scarcity he milked for profits is shrinking ever so slightly. I'm sure it must be tough to have to adapt and give people more reasons to actually come out to the theater. But his arguments make no sense for anyone other than himself. Shortening windows (or getting rid of them completely) provides more benefits to the consumers, and it's a move that the studios should have done long ago. It gives them more bang for the buck in terms of their marketing efforts, and it better segments the market. That theaters are unwilling to adapt to compete in a changing market is a problem for those theater owners alone.

Filed Under: gregory marcus, movies, release windows, theaters
Companies: marcus theatres

Redbox Follows Netflix's Lead, Delays Fox and Universal DVD Releases by 28 Days

from the misguided,-again dept

A couple of weeks ago, Netflix announced that it had reached a "deal" with Fox and Universal movies studios, in which it agreed to delay the release of their DVDs to its subscribers by 28 days. Netflix did the deal in order to maintain its access to movies for its streaming service, and the studios think it will help them sell more DVDs. The studios tried to get DVD rental service Redbox over a similar barrel by threatening its access to their DVDs. Redbox had already caved to Warner Bros., and has now done a similar deal to Netflix's, with Fox and Universal. And, just like all the earlier deals, this one's pretty stupid on the part of the movie studios. Let's go over why.

Redbox offers two main benefits to its customers: convenience and price. Its machines are everywhere these days, and its $1 per night price capitalized on the widespread consumer displeasure with Blockbuster and other rental chains' high prices and late fees. The Redbox customer is price sensitive; so is it really very likely that delaying the release of a movie by a month is going to get them to decide to shell out $15-$25 per movie to see it immediately after it's released? The same goes for Netflix subscribers. If they're already paying for their subscription service, why would they run out to buy a new release -- particularly when they already have to wait to get some new releases anyway. The studios think they can force customers to change their behavior by controlling access to new movies. All this plan is going to do is to illustrate to them that the part of the market they're aiming for with these delays really doesn't care enough -- or cares about other factors more -- to behave any differently.

Filed Under: movies, release windows
Companies: netflix, redbox, universal