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Monday, July 20, 2009

Worth Reading This Monday: Turning Distribution Upside-Down... Make More Movies?...Redbox + Studios

- Filmmaker and futurist John Ott has this very thought-provoking post on what would happen if theatrical screenings became the equivalent of concert tours, and if movies were released in other formats first to build up demand for those screenings. Ott writes:

    ...Why not reverse the cycle and make the other distribution formats the advertising (much cheaper) and build to theatrical events. You could theoretically have so few screenings (such scarcity) that the filmmakers or actors could make personal appearances. You wouldn't have to shell out for the theatrical tour until you knew, from statistics on download and home video sales, that the movie had a sizable audience (and you would also have geographical stats, so you could tell where the highest concentrations of those fans were).

    The infrastructure for theatrical screenings currently exists. Most money is already made in shorter and shorter windows, theatrically. Why not confine it? That's a scarcity that the digital revolution has left untouched.

- The media analyst firm SNL Kagan apparently concluded that studios should make more movies, not fewer. (Something CinemaTech has been advocating for a few years now...) In a scenario based on 611 major studio releases between 2004 and 2008, a 15-movie slate would have done much better than slates with just five or ten titles.

- Interesting Wall Street Journal piece today on the relationship between Redbox and the studios. The central question is, will Redbox cannibalize DVD sales? From Sarah McBride's piece:

    One studio-commissioned study showed that 9% of people who visited Redbox kiosks ended up renting a title they had previously planned to buy, and 25% said they would buy fewer DVDs this year because they could rent them at kiosks.

    Redbox says its research shows many customers take a "trying before buying" approach and end up buying the DVDs after renting, and that its customers purchase DVDs at the same rate as Blockbuster Inc. and Netflix Inc. customers.

    Every time a customer rents from Redbox rather than Blockbuster, the studio is missing out. While other companies cut the studios in on revenue each time they rent a movie, Redbox doesn't. With Redbox, the only income studios see is when the retailer buys the movies for its kiosks.

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  • I think that looking at the Redbox situation as an issue of revenue sharing vs. first sale doctrine is a mistake. Either way the studios get paid. If rev share wasn't cheaper/less capital intensive for the video stores, they'd still be happily shelling out $80 for a VHS cassette. The issue in my mind is the $1 bargain basement price that Redbox is offering. Not only is it as great deal for consumers, but it limits what the major studios can charge for VOD. If we went back ten years and $3 was the minimum cost for a rental then $5 VOD would make more sense, but who would pay a $4 premium for digital content, when the kiosk has the same movie for a buck?

    By Blogger Davis Freeberg, at 2:02 AM  

  • By Anonymous Anonymous, at 3:25 AM  

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