The ailing chain is touting today’s availability of “The Blind Side” at Blockbuster stores, by mail or on demand. Netflix and Redbox, which recently agreed to a 28-day rental window in exchange for improved terms, does not yet have access to the movie, which notched an Oscar win for Sandra Bullock earlier this month.
The question: How much will this new window help the chain, and rental stores in general, compete against popular Netflix and Redbox? Blockbuster is making a big deal out of the fact that it’s the only “multi-channel provider” with access to big movies on street date. But is it really that great a selling point with consumers?
Studios would prefer consumers buy their movies on disc or via download. Barring that, they would prefer consumer rent movies on demand or at a Blockbuster; the economics are better that way. (Netflix operates on a subscription-based model; Redbox’s bargain pricing is considered a threat to sales, VOD and revenue-sharing rental chains like Blockbuster.)
As for digital: The release carefully notes that existing deals remain in place. The updated deal only applies to DVD and Blu-ray.
So no, bloggers, the studios aren’t really giving Blockbuster scandalously preferential treatment. They’re just agreeing to continue supplying the ailing chain with discs at a time its future looks shaky.
UPDATE: LATimes reports that the new revenue-sharing arrangement improved terms for both parties.
Blockbuster release (via paidContent)
Who really wants MGM, and what are they willing to pay for it? Six years ago, the Sony-led consortium that bought the Lion overpaid for a library that had already been mined exhaustively. Not that many people were willing to admit it at the time.
Now that the DVD bubble has burst, however, people are taking a closer look at the troubled asset. Drowning in $3.7 billion debt, it is unlikely to draw anywhere near $5 billion it last commanded.
The next round of bids are due tomorrow, with Time Warner apparently still in the hunt. Relativity Media’s hedge fund backer Elliott Associates is apparently out, though it’s not clear to me how interested it was in the buy.
The bigger question is what film libraries are worth these days. The DVD glory days are over, with more people opting to rent rather than buy movies on disc. Video on demand is growing, but still very small.
Will VOD and other movie delivery technologies help make up for DVD declines? The future’s still unclear, the experts admitted at the Film Finance Forum earlier this month. But they also said that companies overreacted to the DVD decline, slashing valuations of individual film earnings too far.
Which leads me back to my original question: What, then, are film libraries worth?
At the time, his comments seemed incredibly self-serving: Warner Bros. was already trying to impose a window on Netflix and other subscription-based rental services. If stores renting movies on a disc by disc basis followed suit, Netflix wouldn’t be operating under a competitive disadvantage.
So Hastings talked about the advantages of such a scheme. “If we can agree on low-enough pricing,” the LAT quoted Hastings saying, “delayed rental could potentially increase profits for everyone.”
And maybe Hastings could get more access to movies for streaming purposes, which is what HE really wanted. Under the vagaries of studio window policies, Netflix has access to movies for a limited period.
Sure enough, that’s what happened. Netflix, Ben Fritz reported in the LAT, got a price break, and more content for its streaming service. Don’t be surprised if other studios broker similar deals with Netflix, and potentially Redbox as well.
The question remains, however, whether ailing chains like Blockbuster will take a similar deal. Even if they did, however, I would expect indies to try and find ways to subvert any DVD sales window studios attempt to impose on rentailers industrywide.
The most amazing thing about Video Business is that it lasted as long as it did.
By the time I worked there in the late ’90s, the mom and pop era of videostores was already over. The battle between Hollywood Video and Blockbuster, which I wrote about for the L.A. Times, was well under way and DVD sales at big box stores were taking further toll on the indies. And these indies were the raison d’etre for the video trades, subsidized as they have always been by studio product ads.
With fewer retailers to deal with — and direct relationships with the big chains — studios had less reason to spring for those ads. Video Business tried to reposition itself — envisioning studio execs and those toiling in emerging technologies as a broader expanded audience — without much success.
The parent company saw the writing on the wall years ago: When I requested additional resources for the website, the then head of the company likened VB to a broken down old car. And this was before the DVD market started to falter.
Still, VB persisted under various RBI regime changes. Brass trimmed costs where it could, but the past year was clearly a struggle. When RBI announced last week it was going to start shuttering mags it could not sell, I immediately thought of VB.
Despite all that, the actual shuttering seemed sudden. The Jan. 4 edition was the last. Home Media Magazine, the one I always thought would be the first to go, ended up the survivor.
Those fretting that Comcast will immediately and drastically close theatrical windows once it takes over NBC Universal should take a breath.
Yes, Comcast has been a leading proponent of video on demand, and would like to shorten the theatrical window AND the cable window. But now it will have a big stake in the content creation side as well. And one thing studio execs do NOT want to do is diminish the much larger revenue streams from exhibition and homevideo sales.
Rather, they are engaged in a delicate balancing act, trying to adjust to consumer demand for content in home more quickly while also protecting established revenue streams. (For more on this, read my Variety story from last week here.)
Brian Roberts is not a digital revolutionary. He is, by all accounts, a button-down businessman who wants more control over his company’s destiny. And that he will have control over both sides of the equation. Will he push for premium VOD ahead of disc releases? Probably.
Walmart.com, already embroiled in a price war with Amazon and Target over major book releases, has stepped up the ante on major holiday DVD releases. The big box chain is offering the top 10 preorders for $10 online: The titles range from “Star Trek” to “Julie & Julia”; promo also includes latest installment in the “Air Bud” canine franchise, “Santa Buddies.”
Quantities are limited, natch, but the site does offer a price promise that leaves the door open for further price reductions. If Walmart.com lowers the price even further before the DVD release, purchasers will receive the DVD at the lower price. (Caveat: this promise does not apply in states including California.)
Amazon and Target haven’t responded in kind… yet. UPDATE: In the time it took to post this, Target added a link to its site suggesting it would was going to match the price.
The DVD prices aren’t quite as low as the book bargains, but are significantly lower than usual discount prices for hit DVDs.
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.
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.