Hollywood’s Distribution Model

by Krishna on April 19, 2009


Slate has an article on why we have not yet seen an online subscription-based service for movies:

Couldn’t the studios just sign new deals that would give them the right to build an online service? Well, maybe—but their current deals are worth billions, and a new plan would mean sacrificing certain profits for an uncertain future. Understandably, many are unwilling to take that leap.

[…] working through these [existing] contracts in order to build the perfect streaming service will take time. Reed Hastings, Netflix’s founder, told the Hollywood Reporter last month that it’ll be 10 years before we see a streaming service that offers any movie at any time.

TechCrunch retorts:

how can anyone really expect any of the online movie services to flourish under such restrictions? They shouldn’t, because none of them truly will until Hollywood changes these rules. And with billions of dollars at stake, Hollywood probably isn’t going to do it anytime soon. In fact, I’d venture to guess that the only thing that will force their hands is if services like BitTorrent, which people use to distribute pirated movies, continue to gain popularity as broadband access and speeds improve.

I am not a fan of BitTorrent, but it is ridiculous how the movie and TV industry are simply leaving tons of money on the table by not going fully digital. Consider the different ways in which they can make money:

  1. Subscription-based streaming movies.
  2. Targeted advertising in movies based on user profile and user viewing history.
  3. Extra Low-cost downloadable content such as ring tones, blooper reels, star interviews, etc.
  4. Allow bloggers and websites to embed video with advertisements, or license content at inexpensive rates.
  5. Monetize through greater interactivity on the site, such as games and contests.

If you really dig deep, contractual issues are not the real problem. The true culprits are the makers of poor movies and TV series, because they will not be able to make enormous revenues by slick marketing and endless repeats on TV. Quality will become more important because only it has the potential to keep selling even after people have watched the original content once. Right now, those who have less confidence in their capabilities are the ones who are holding back on full digitization.

[Photo licensed from roland]

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