Dubious about downloads
By Tom Paine -- Video Business,03/09/2007
MARCH 9 | Despite the constant news stories, the business of legitimate movie downloads over the Internet is slow to catch on. Yet the independent rentailer feels threatened by download technology and, like me, many wonder if this will ultimately mean the end of renting movies on tangible media.
Paine
There are many businesses offering movie downloads and more coming. Some only stream, some download only to hard drives and some are burnable. Yet the business is hardly a blip in the marketplace. In this wired world, one would think it would catch on like iTunes … or has it?
A recent article in USA Today claimed the business model for downloading music has been a failure. That was a surprise to me. Many iPods have been sold, but the sales rate of legal downloads has been underwhelming. The average iPod owner downloads 20 songs per year. That’s $20 spent per iPod, per year. The music is coming from other sources instead, like CDs or file-sharing Web sites.
The reason given for low sales is that digital rights management technologies inhibit consumers. DRM is the technology that restricts what one can do with a digital file. Steve Jobs concurs and proclaimed recently that DRM needs to go.
The implication for our business is huge. The music industry may eliminate DRM and downloads may or may not increase. If unprotected music downloads get into the public domain, it does not necessarily mean the business model fails. Legal downloading will continue because it is convenient and less risky than pirated downloads. Costs to produce an album are relatively low, so legitimate downloads in a world of multiple copying could still prove profitable and yield a reasonable return to the record companies.
The movie business model differs.
Films require major investments upfront, and you can bet that studios will never allow digital copies in the marketplace without DRM. The business already struggles with piracy and illegal downloads. DVD, HD DVD and Blu-ray are all copy-protected. Studios are not going to open the door to legitimate downloads being copied with no restrictions.
If DRM inhibits the consumer from downloading a 99¢ recording, imagine how they will feel about a $15 or $20 movie that is restricted.
Interestingly, the majority of music downloads are for singles, otherwise unobtainable, but the preference for albums is the tangible CD itself.
When Wal-Mart recently announced its movie download service, an analyst from Forrester Research commented on the cumbersome portability of downloads and the technology required for watching them on TV. He said we already have that technology. It’s called a DVD.
I have long thought the technological revolution facilitated a multitude of solutions to problems that do not exist. Renting, buying, trading, loaning, borrowing and selling DVDs have proliferated all over the world. It’s easy, reliable and the quality of the product is excellent. One wonders if there will really be much mainstream consumer demand for movie downloads. Tom Paine is owner of six-store DVDNow! in Redmond, Wash.
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| Submitted by: | Jon A Sam 5/2/2007 6:04:04 PM PT |
| Location: | Chicago |
| Occupation: | Theater Owner |
I find it amazing when reading about new technology like "voodo" which
basiclly claims to "bring movies direct to your Tv". Didn't we get that in
the 1970o's with VCR? Also, my directTv allows me to order movies
without the long wait a download presents. Why is all this new technology
considered so "life changing". I am happy I am not the venture capitalist
that dumped the millions into these companies. They are going to be road
kill before they ever can turn a profit.
| Submitted by: | Visitor (spam@spam.spam) 4/11/2007 3:52:35 PM PT |
I disagree
| Submitted by: | Hank Grebe (hgrebe@azureus-inc.com) 4/11/2007 3:10:49 PM PT |
| Location: | Palo Alto, CA |
| Occupation: | Producer |
The Azureus VUZE website makes it possible for independent filmmakers and DVD publishers to publish full length SD and HD content either with or without DRM. It is a higher quality model than podcasting and is sure to catch on as bandwidth and home DVR hardware options evolve. Take a look for yourselves at www.vuze.com.
| Submitted by: | Tim George (primetimetim78@wmconnect.com) 3/15/2007 8:34:07 AM PT |
| Location: | Brunswick, MD |
| Occupation: | video store owner |
Thank you, Tom. I''m a fellow rentailer. Our society is getting so tech hungry and pampered, but eventually a line will be drwan. Downloading movies and trying to get them to the tube? Sounds like a big pain in the ass to me. Online renting is just as rediculous, unless you watch 5 or 6 movies a month or like to watch obscure stuff thats hard to find in the video stores. People are going to realize that going out to the video store is not a chore, it''s a fun thing to do......just like it was in the 80''s and 90''s.
| Submitted by: | Rick Hanley 3/14/2007 9:27:08 AM PT |
| Location: | New Jersey |
| Occupation: | Self reliant |
So download will never happen? And yet you are clearly intelligent and a successful business person. Go figure human beings.
Before the year is out, Wal-Mart and others will be selling catalog films by mail order, 60,000 titles in the case of Wal-Mart. So the future will continue to get more competitive. Imagine the price point on the catalog films that Wal-Mart sells.
Download will continue to gain, not at light speed but fast enough to hurt some players.
| Submitted by: | Brian Andrews (brian@hungryflix.com) 3/9/2007 5:40:20 PM PT |
| Location: | www.hungryflix.com |
| Occupation: | Online distribution |
I'm not sure if you are asking the question or making a statement here.
I'll assume you are siding with the opinion that movie downloads have
not caught on yet and, therefore, will not catch on in the future.
This is, in my opinion, a very short sided view. Yes, as we sit here in
2007, the legal movie and TV download business is a very small. It is a
fraction of the entire home video market. That is not news.
But, we are in the embronic stages of this market. You have to realize
that physical media will be going away. It will be used as an archival
method but not a delivery method. While the number of legal
download sales for music is still small it is growing by leaps and
bounds. When middle America moves away from purchasing at Wal-
Mart the shift will happen.
There are three keys to making this happen. First, we need more
flexible DRM. This should not be hard. Don't treat paying customers
like criminals. Let people move content around. Let them put it on
multiple devices. Don't cripple it. Second, we need great content.
That is a given. How far off is the same day release?
Finally, we need the killer device to push the content to the TV. This
device must be easy to use and have tons of storage.
How much hard disk space do you have in your home? I have 3 TiVos,
2 with 30gb and one with 80gb. I have an iMac with 250gb internal
and a media center Mac connected to three 200gb drives.
And guess what? It is still not enough storage. This is going to be the
key factor in movie downloads, along with great content and more
flexible DRM/fair use laws.
Apple TV, slingbox, G-tech...these are all version 1.0 devices. When
the content can be seamlessly downloaded from the web and
seamlessly appear in the family room or bedroom TV, then
downloading will surpass DVD.
It's not here now but it is coming, and it is coming fast.
Thanks,
Brian Andrews
CEO
www.hungryflix.com
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