Studios May Delay Netflix/Redbox Movie Rentals Even Longer; Offer Fewer Watch Instantly Choices on Netflix
Posted on Wednesday, November 3rd, 2010 by David Chen
At Blu-Con yesterday, a diverse crowd of industry professionals gathered to discuss the future of the movie business. Despite a few prominent successes at the box office this year, the industry is in a state of financial turmoil, with DVD sales cratering, Blu-Ray sales not compensating, and the rise of rental companies like Netflix and Redbox, offering consumers a way to see a movie for cheap. Executives from 20th Century Fox, Lionsgate, Sony Pictures, Universal Pictures and Warner Bros. joined a panel to discuss the current state of the home video business. As some of the quotes below the jump will indicate, they probably don’t know what the hell they’re doing.
The Los Angeles Times reports on the panel and says that much of the talk centered around release windows. According to Craig Kornblau from Universal, “We want to advantage methods that are more profitable…We don’t have an obligation to give consumers what they want when they want it.” I’m actually somewhat sympathetic to this viewpoint. It might be best for the consumer to be able to purchase a digital copy of Transformers: Revenge of the Fallen the day it comes out in theaters, but if that eliminates a huge revenue stream for the studios, it means that they might not have as much money to make the next Transformers film.
That being said, studios need to explore ways to give consumers what they want in a way that will be financially advantageous. But the efforts that have proven most successful are the ones that studios are doing their best to shut down. Take the massively successful Redbox and Netflix, for example. Universal, Fox, and Warner Brothers don’t offer their movies for rental on those services until 28 days after they’ve been released on DVD. They believe that offering them immediately would affect DVD sales performance (Sony disagrees). Moreover, this artificial window may get even larger in the future. According to Ron Sanders from Warner Brothers, “To be honest, I think it’s a little short today versus what we probably need…That will get revisited as those deals expire.”
Kornblau also thinks that Netflix’s “Watch Instantly” service is eating into sales. “While there are things in the Netflix system that are clearly cannibalistic [to sales], there are things we can change…They can pay us more or we can reduce the quality of what we give them.” Nice thinking, Kornblau. I’m sure people want the quality of their Netflix Instant Queues drastically reduced. That’s certain to drive sales and not completely piss people off.
Perhaps the one good thing to come out of the studios flailing/experimenting is a new premium VOD service that Time Warner is launching next summer. Consumers could pay $20-30 to see a major film while it’s still out in theaters. This I have no problem with; see a premium demand and offer to fill with state-of-the-art technology it for a premium price. Too bad the rest of the business can’t be like this.