RedBox and Netflix = Majority

Scott Kirsner over at Cinematech made a discovery today after reading this article from the NY Times.

RedBox and Netflix together represent 54% of the
DVD rental business in America.

These two companies - whose mottos advocate bargain DVD rentals and convenience (so much so that Netflix added a download to rent program) represent the consumer wishes when it comes to their rental entertainment.

I can only imagine that the current lawsuit outlined in the article will only spur consumers to find more RedBox locations near them or open a Netflix account. The Studios are in the unenviable position of having to argue that they aren't making enough money on their movies...

And when the figures are trotted out as to how cheap it is to actually manufacture and replicate a disc - the average consumer will wonder why they couldn't just make a rental version of the movie and a retail version (as some studios are doing).

The studios that are fighting RedBox have a much higher hill to climb. If they actually trot out numbers as to how much it costs to make Hollywood blockbuster movies then we'll all get a peek at how much fat there is built into the Hollywood machine. No one will argue that they have to recover their production and marketing costs.

But when they open the books and people see what the costs are - what was actually charged to the movie's accounts on the studios books - well there's going to be an outcry... Especially from hedge funds that have invested in Hollywood movie making.

This is a can of worms. Squiggly, epileptic worms.

Think Small

From Scott Kirsner's Cinematech:

A lot of times when I've written about some interesting little Internet experiment that has generated $50,000 or $100,000 for the creative person behind it, someone will e-mail me to ask, "Yeah, OK, but how does that support the media industry? A movie studio can't pay its security guards for a week on that kind of money."

Good point.

I'm very confident about digital media's ability to support individual creators, doing the kind of work they want to do, often on tightly-constrained budgets. (Constraints = inventiveness, right?)

I'm less confident that it will support the same gargantuan, diversified companies that raked in the big bucks in the days when there were only four TV networks, six movies released every weekend, a dozen important records issued on Tuesday.

Good.

For too long we've had the homogenized voice of "The Media" telling us what is what in terms of entertainment. That is, what they need for it to look and sound like so they can distribute it.

Ugh.

No more. There's a lot of stuff on the web that I absolutely loathe, but I'm not their audience... and that's okay because the way things are shaking out they don't need me. They can go along and do things they want to do, and I can do things I want to do...

and we can both profit from it.

Before, that couldn't happen. The media had to fit a wide market in order to be successful. You had so many costs associated with DVDs, books, video, audio and so forth that you had to make it palatable for a wide variety of folks. The digitization of the whole process has cut costs to the bone. Put the opportunity to say something unique, controversial or eclectic into the hands of the everyday person. Add to that the opportunity to get paid for it, and you have a whole new way of thinking about media - small.

And while that's going to lead to a lot of crap, it's also going to lead to a lot of unique, talented voices being able to say something that rings true to you.

And the studios are just going to have to deal.

Make that : Deal along a variety of media fronts.

Hat Tip to Cinematech

Scott Kirsner has two posts up over on Cinematech that really illuminates several "problems" (read: opportunities for entrepreneurial types) we are having with content on the web. Even with the breakthrough numbers and press provided by Joss Whedon and Dr. Horrible, we are still running into a brick wall of indifference or cluelessness when it comes to developing original web programming at the studio level.

(Edit to clarify: I say that regarding Warner Bros. only. I like what Sonly TV is doing with ANGEL OF DEATH, and I've been a big fan of Paramount's releasing JACKASS online. It's just that Warners has a lot of material to work with and for them to be seemingly indifferent is disconcerting)

For example, this post regarding Warner Brothers:

"What's most interesting about the article is that Warner Bros. executives either aren't talking much about creating original content for the Internet ... the reporter didn't ask ... or the info simply didn't wind up in the story.

Instead, it sounds like Warner Bros. is mainly focused on using the Internet to distribute movies and TV shows. They're also a bit obsessed, like all studios, with stopping digital piracy."


Scott goes on to document the fits and starts of Warner's web initiatives (starting two years ago - do you realize how many that is in corporate dog years?!) like Studio 2.0.

So, Warners is more interested in leveraging properties they own than creating new content. Okay. Fine. But...

What's interesting to me, is that a division of Warner Bros. - WB Television holds some of the rights (with SURVIVOR creator / Exec Producer Mark Burnett) to GLOBAL FREQUENCY - a show that - quite frankly - should be made for the web. And yet no one has thought to ramp it up and bring in all of the product placement and corporate tie ins to make the show a reality. I've always thought that GF should have a reality tv vibe to it - handheld camera, POV shots, Security Cam shots, a rock and roll score (a William Orbit mix, natch), and incredible tie ins like actual phone calls to people who sign up as "agents" of the GF.

One big frikkin ARG webserial that could mix actual news footage into the storylines, etc...

Is anyone there at WB listening? Hello? Is this thing on?


Anyway, Scott rightly wraps up his WB post with the following, which will mean something to all of you who sleep with your DVX-100 under your pillow and Final Draft on your hard drive:

"What about new ways of creating content? While 'The Dark Knight' is going to be one of the biggest big-budget hits of all time, there must be ways of telling stories for the Web and mobile devices that don't require a $185 million up-front investment (and that's before marketing).

No?

If Warner Bros.' top execs aren't thinking hard about that opportunity, I'd say that leaves a pretty big opening for independent content creators, wouldn't you?"


You would think so, but...

For the one-two punch, Scott writes about how it's hard to get a film onto Itunes if you're a filmmaker:

"So how do you get your movie sold on iTunes?

It’s not easy, and Apple doesn’t make things any easier by supplying absolutely no official information to filmmakers who’d like to sell their work on iTunes. (By contrast, here’s CreateSpace’s crystal clear explanation of how to sell your work on Amazon Unbox – the best non-iTunes option that exists today.)

Here’s the scoop: Apple’s strategy thus far has been to only work with aggregators, or services that will collect a number of indie films and then deliver them to iTunes. They don’t want to work directly with filmmakers. But there is no aggregator yet that will take just any finished film and deliver it to iTunes, in the same way CreateSpace (which is owned by Amazon) will take any finished film and sell it on Amazon Unbox."

To put my indie perspective on this, I have to say it has ALWAYS been hard to sell one film to a buyer like Itunes (although not technically a buyer they act as a network) or even for a foreign territory. Many buyers buy movies in blocks - for exactly the same reason you would think, it's cheaper that way. Ive seen several cases where the distributor had only a few films to sell and it wasn't enough. See, it takes as much paperwork to buy five or fifteen films as it does to buy one - so why buy the one?

The trick for distributors will be (as their role in the process changes) to become packagers of movies - even more than they are now. Scott lists the people he knows who have "cracked" Itunes, but I think their will be more. I also think that there will be several services which will catch up (Unbox, Netflix, CinemaNow), but let's face the fact that 50,000 video downloads a day is a pretty impressive figure and Itunes is in the lead.

It makes a ton of sense for distributors to approach Itunes with movie packages and filmmakers to become part of those packages. The thing is - with number tracking of downloads, filmmakers will run less chance of getting screwed in the deals.

To recap:

- Some of the big studios aren't sure of what to do when it comes to the web and developing original content. That means opportunity for indie guys.

- Itunes is now a gatekeeper when it comes to generating revenue online. You would do well to partner with other filmmakers or distributors who have developed a relationship with Itunes.

I am now going to get some more coffee, and read the rest of my Sunday Morning news before getting to work.

Cinematech Does It Again...

Giving this mad pulp bastard a healthy reading list for the summer.

Damn you, Scott. Can't you just let my readers wallow in ignorance like most Hollywood executives?

No?

Okay... we have homework kids. Thought you wouldn't have that anymore after you finished school?

Hahahahahahahahahaha.....