CinemaNow Download-to-Burn Format Presages Video Future

BusinessWeek reports online today that CinemaNow will sell a $9.99 downloadable version of Universal Pictures’ new home video release "The Fast and the Furious: Tokyo Drift" that can be burned to a digital video disc and run on standard DVD players.

It marks the first time that a major studio will release a DVD in retail stores and on a download site at the same time. As for CinemaNow, it offers other movie releases in its download-to-burn format, and those sell approximately five times as much as download-to-rent and download-to-computer films.

From a product-management 101 standpoint, the move makes perfect sense. Giving customers flexibility and choice in how they access and play content — on their computer, a portable DVD player, a DVD player attached to their television sets, and so forth — unquestionably will prove popular with consumers, starting with a tech-savvy vanguard that has been campaigning for this sort of thing for some time.

It’s less clear, even now, whether the motion-picture industry sees the move as being in its immediate and narrowly defined interests. Typically, studios release movies as DVDs in retail stores first, then wait six weeks or more before making them available for download, and, even then, most downloads restrict the playback to PCs, preventing the use from burning a copy for use on a DVD or elsewhere.

The reasons have to do with the efficacy, from a revenue-generation standpoint, of existing distribution channels. According to PricewaterhouseCoopers, retailers sold about $18 billion worth of DVDs in 2005, compared with about $10 billion in box office revenues. While DVD sales have slipped in recent months, they still contribute a lot of money to studio coffers, and compromising that revenue base is not something Hollywood is inclined to do.

Yes, as the BusinessWeek article mentions, the application of copyright technology also has been a challenge, but it’s a secondary matter. If the business drivers were compelling to the movie industry, the technology challenges could be and would be rectified. Existing and emerging approaches could solve the problem. In this case, the old adage is true: Where there’s a will, there’s a way.

What’s really at issue is the reluctance of the motion-picture industry to alienate powerful channel partners, namely DVD retailers. It’s been a lucrative relationship, for all involved, and none of the principals wants to see it end prematurely.

This is a major dilemma for the movie industry, though, because there’s no question that leading-edge customer demand is pushing aggressively for online downloads with flexible copyright protections. For reasons having to do with the nature of the aesthetic qualities and appreciation of the product, I do not think the movie industry is facing the same wholesale technological disruption that was visited upon the music industry. Still, significant market pressure is being brought to bear.

As venture capital Roger McNamee has said:

Most major media companies define their technology strategy in terms of digital-rights management. Their view of the world is about controlling access to what they own. The next 10 years are about exactly the opposite. It’s about the creative people and their fans getting together. Whatever it is you like, it will be increasingly available. It’s time to give customers what they want.

It’s now our job and the industry’s job to actually do it. The old business models are brain-dead, and the body will die soon.

Therein lies the dilemma. The body might die, and might well be moribund, but the motion-picture industry wants to squeeze every last ounce of life from it before shifting to a new model, with new distribution channels. If it gets the timing wrong, one way or the other, it risks severe repercussions, the sort no public company wants to experience. 

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2 responses to “CinemaNow Download-to-Burn Format Presages Video Future

  1. This isn’t so much about DVD retailers as it is about just one retailer, Walmart. The Hollywood Studios have everything to fear from Walmart, as the company uses DVDs as a loss-leader to get customers into the stores to buy other, higher-margin goods. When Disney made a film available online on the same day as the DVD, Walmart punished it by cutting its orders for subsequent product. It doesn’t need to learn that lesson twice, even with Steve Jobs on the board. And while Walmart isn’t in the DVD retailing business, it depends on DVDs to stimulate customers to visit its stores. The Studios know there is no rush to go to digital downloads, no matter how much Steve Jobs ups the ante. Downloads can wait while they keep their main customer happy. We’ll get downloads. Eventually. In the interim, we can buy the movies cheaply from Sam and rip them to the terrabyte of NAS in the hall closet. Don’t hold your breath waiting for downloads to happen in the very near future, because it’ll take a couple of years more before the download business is viable for the studios. For now, Walmart rules the roost.

  2. anoynmous_coward

    nice reply but like in the games “dept” of wally world
    some games, ie lots of games, are squeezed out. Many
    of them are moving towards downloads and the bigger
    distributors are following suit, wally world be damned. :)

    economics, times, and distribution patterns shift. wally
    world is going to wake up one day to ruling a roost no
    one is at anymore…..

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