How long will studios continue to defer to exhibitors on theatrical windows? Does it make sense for them to do so as other windows collapse further down the distribution chain?
In the past few weeks, NATO, the trade org for theater owners, has won concessions twice. First, Paramount delayed the homevid debut of “The Goods” to make amends for a speedy release of “G.I. Joe.” More significantly, Sony abandoned its plans to release “This Is It” on DVD for the holidays due to pushback from theaters.
Sony argued that the movie was different given its limited theatrical release, the LAT reported yesterday, but theater owners did not see it that way, and the studio ultimately backed off.
“We didn’t want it to be an issue,” Sony’s Jeff Blake told the LAT. “At the end of the day, we wanted a big theatrical run and they certainly stepped up and supported that.”
The music biz and vid biz have already learned the painful lessons of loss leadering. Now it’s the book biz’s turn.
The price war that has erupted in recent weeks is particularly dramatic — and spurred by lower e-book prices — but otherwise very similar to the ones that the record biz and vid biz has dealt with for years. Big box chains and online heavyweights price big hits low to draw traffic, and, presumably, bigger ticket purchases. This discounting tends to be especially heated during the holiday season.
So I had to smile at the WSJ story about rationing of these discount hits. A Boulder, Colo., book store buyer, who planned to stock up on the discounted books from Wal-Mart, Target and Amazon expressed surprise that they were limiting the number of copies that individuals could purchase.
But he shouldn’t be surprised: The chains have done exactly that for discounted CDs and DVDs. In fact when video sales started taking off in the ’90s — during the VHS era, mind you — chains like Best Buy regularly ran disclaimers “no dealers please” in their circulars. (Of course this was when people read Sunday papers, but that’s another story.) The chains were just as infamous for discounting hit music CDs, making it hard for mid-size chains like Tower to compete.
Ten years after the Napster Revolution, digital media is wreaking havoc on Hollywood and the book world. All the old assumptions and biz models are being tested. It’s amazing to watch. Even I did not realize how much studios had been collapsing DVD to VOD windows this year — and the trend has only accelerated in recent months.
I’ve said it before, and I’ll say it again: This is going to be a VERY interesting holiday shopping period for studios. Very curious to see how many discs consumers buy and how many choose to rent discs or order up the same movie on VOD.
Been talking with lots of exhibitors lately and it reminded me of an earlier freelance life, when I chatted with vid retailers on a regular basis. Interviewing these business folk is worlds apart from talking to managers, producers and studio execs. Kinda refreshing.
In any case, here’s my Variety story on ShowEast honorees.
Contrary to popular belief, journalists don’t always start a story with a preconceived angle. Sometimes we learn what the real story is only after digging into it.
Case in point: My story about L.A.’s changing screen scene in today’s Variety. I already knew the basics — moviegoers prefer newer to older screens — but didn’t fully appreciate the ramifications until I looked into it more deeply. A neighborhood’s retail health depends on these theaters; new theaters like Regal’s downtown multiplex can affect businesses throughout the city. Santa Monica, for example, has seen movie attendance slide as newer multiplexes have sprung up on the westside; the city wants to reverse that trend with new state-of-the-art facilities.
I still hate the thought of Westwood’s Fox (left) or Crest going under. There’s something really great about going to movie premieres at the Fox, and, as nice as the Regal theaters look to be, it just won’t be the same.
But I understand the economics behind this potential shift downtown better now. For more, check out my story here.
Apparently studios are considering a sales-only window for DVD releases as a way to combat sliding sales and fight back against cheap Redbox rentals.
There are many reasons why this is a bad idea.
1. Rental stores will be able to buy discs and rent them, just like they did in the early days of home video. According to Netflix CEO Reed Hastings, who disclosed the plan during yesterday’s earnings call, retailers might be willing to wait if studios price rental discs cheap enough.
2. But consumers eager to watch the movies will just do so other ways — through pirated versions or VOD. How much will it increase or protect sales? Hard to say.
3. They risk pissing off consumers who are used to renting the movies right away. Pissed off consumers might then feel justified viewing contraband.
4. They can’t stop retailers from renting movies under the sales window due to a little thing called the First Sale Doctrine.
Hastings interest in this scheme should not be overlooked. At least one studio — that would be Warners — is trying to impose a later rental window on Netflix, arguing that its subscription based business should not be considered the same as video stores than rent on a disc by disc basis. Also not to be forgotten: Hastings really wants to focus on streaming movies; that’s been his goal since he founded the company. The technology wasn’t there yet then.
But it sure is now.
For more on studio plans, read Ben Fritz’s LAT story.
Been meaning to weigh on the book price war, but was caught up in a few assignments and didn’t get to it.
Here’s the thing: Price wars are not new. Chains use popular books and videos as loss leaders for bigger purchases.
Independent stores and content providers don’t like it. But does it destroy the fabric of our nation? In its request for a Dept. of Justice investigation, the American Booksellers Assn. predicted just that. Consider:
We would find these practices questionable were they taking place in the market for widgets. That they are taking place in the market for books is catastrophic. If left unchecked, these predatory pricing policies will devastate not only the book industry, but our collective ability to maintain a society where the widest range of ideas are always made available to the public, and will allow the few remaining mega booksellers to raise prices to consumers unchecked.
Last year, holiday disc sales fell short, as the careening economy took its toll on gift giving. DVD sales are still down, although it’s unclear how bad the situation is.
All this sets the stage for the most important time of the year for homevideo: The big summer hits are about to roll out on disc. “Transformers 2” comes out Oct. 20, for example, followed by “Ice Age 3” the next week, “Up” Nov. 10, “Star Trek” Nov. 17 and so on. Will they all sell? Or will consumers opt to rent instead? Rental’s making a big resurgence, thanks to the recession and cheap Redbox kiosks.
Wal-Mart apparently has some doubt: The chain reportedly cut back on shelf space for DVD. And, as the WSJ notes, the chain accounts for a third of DVD retail sales in the U.S.
To hedge their bets, more studios have decided to follow Warners lead and release pics simultaneously on DVD and VOD. Sony and Universal collapsed the VOD windows for “Angels & Demons,” “The Ugly Truth,” “The Taking of Pelham 1 2 3,” “Julie & Julia” and “Bruno.” Warners will do it on “Orphan,” “Four Christmases” and “Terminator: Salvation.”
If people are going to rent rather than buy, studios vastly prefer they view movies on VOD. It’s simple economics: Studios get a bigger cut of each VOD transaction than they do with disc rentals. The shorter the VOD window, the more enticing a rental prospect that delivery platform becomes.
For more, see my Variety story from yesterday.
I tried to write this story several times when I was at Variety, but it kept getting pushed back due to one exec departure after another. And frankly, at the time Yahoo was more interested in me writing a story about the success of “Primetime in No Time” than a broader one on its originals.
In the meantime, a new CEO has come into the company, a search outsource deal with Microsoft finally struck, and a renewed interest in reinventing itself as a media company. The company has been ramping up its original programming, both in terms of web shows and editorial content.
Rest assured, however, that Yahoo is NOT attempting to revive Lloyd Braun’s ambitions to create TV style programming for the Internet. For more, check out my Variety story here.