Online Movie Business in trouble

[Elandyll]

http://www.imdb.com/news/sb/2008-04-24/

Amazon, Netflix Refuse To Discuss Download Business

Suggesting that the recent writers' strike may have represented a lot of fury signifying very little, two principal online movie retailers have declined to discuss results of their download services. The website ContentAgenda has observed that on Tuesday Netflix chief Reed Hastings and on Wednesday Amazon chief Jeff Bezos each refused to respond to questions from reporters about digital sales or what their companies are paying to generate them. Paul Sweeting, editor of ContentAgenda, commented: "What does it say about the pace of development in the digital media delivery business that two established, successful and savvy media retailers like Netflix and Amazon have nothing to show for their efforts? Nothing good, is what." Last November's writers' strike was triggered by demands by the writers for payment when shows they have written are offered on the Internet; likewise much of the current discussions between the Screen Actors Guild and the movie studios and TV networks centers on payments from digital media, but thus far, analysts have pointed out, there is little to suggest that any significant revenue is being generated from online movie services. In fact, several analysts have suggested that the recent tumble in Netflix stock may have been precipitated by the company's decision to invest heavily in its download service without demonstrating that it will generate sufficient revenue to justify the expense.

[cajun1975]

Funny.

[soniqueboom]

Well for TV writers, it was more about the revenue from the ads that they force you to watch before and/or during a program on a tv show's respective web-site (nbc, etc...) Someone's getting paid, otherwise they wouldn't bother.

[Grubert]

A very interesting analysis by Screen Digest can be found here.

Some select quotes:

U.S. consumers spent $117 million buying or renting movies online last year, according to Screen Digest, while their European counterparts spent $39 million. That’s about half of 1% of what each group of consumers spent on buying and renting movies (digitally and on DVD) that year. Based on current practices, by 2012 that proportion will have risen only to about 5% of total spending.

[...]

Typically a U.S. electronic sellthrough transaction generates $14.50 in studio revenue — less than a DVD sale but without the production and packaging costs inherent in a DVD sale. But with the exception of iTunes, buy rates for such services remain low. The fact is, consumers expect downloads to be cheaper than DVDs and are unwilling to pay such high prices.

[...]

[I]f the studios encourage digital rental in the short to mid term by making it available at the same time — and perhaps even on the same platform — as electronic sellthrough, they risk jeopardizing the longer-term revenue that a viable electronic sellthrough market would generate.Why not just let them watch for free?

A key question remains: With illegal copies of movies easily available on the Internet, will consumers pay for them at all? Music and TV shows are increasingly being offered free to users via legitimate, ad-supported services, and many viewers are likely to tolerate ads and stream a movie from a legal source if it is free.

[...]

The studios cannot afford to be complacent about their digital business. Online movies are a long way from being a key revenue stream, and the huge potential of the online market will remain largely untapped unless the studios adopt bolder long-term digital strategies enabling store owners to provide consumers with a large library of cheap (or free) content directly to their TV screen.

[WickyWoo]

Of that $117 million, I'm willing to bet at least $65-75 were Xbox Live too

[Marine Mike]

I hope that the online movie business never takes off and the writer's strike will have been that much more meaningless.

No one messes with my Conan O'Brien viewing....No one!

(Unless my wife says so )

[WickyWoo]

I hope that the online movie business never takes off and the writer's strike will have been that much more meaningless.

No one messes with my Conan O'Brien viewing....No one!

Well, you should remember that deal will really help the guys who write for Conan and the Daily show, because their stuff is streamed as clips on the websites for which said writers would be paid

[jkwest]

its just a pipedream...

the providers need to get high speed out to more people!!!! Including me!!!!

[Beta Man]

I love my netflix

[Rabidhunter]

Yeah, it really is a pipedream. It looks great on paper, but when it comes down to it, the consumer really doesn't want it. Nothing will beat physical media. There's no sense of ownership, there's no oohh's and ahhh's from showing off your case. High Def movies would be an absolute hastle to download. The list goes on. In the end it's not a very profitable buisness.

Now having the ability to go to a store, download a movie and burn it onto a BD might be a little different.

[NutsAboutPS3]

Every time this subject has come up on this forum I have said the whole idea of movie downloads is a dead duck because there are absolutely no compelling advantages for the consumer. Downloads compare badly with physical media in terms of quality, convenience, and value for money.

One of these days people will listen to me and stop acting all surprised when news like this comes along

[blu-backer]

Unpossible. Digital Downloads are the future and Blu-Ray is doomed. </sarcasm>

[jkwest]

Originally Posted by blu-backer

Unpossible. Digital Downloads are the future and Blu-Ray is doomed. </sarcasm>

Me fail english? That's unpossible!

[dialog_gvf]

... analysts have pointed out, there is little to suggest that any significant revenue is being generated from online movie services

I guess it is time for Microsoft reset their 12-18 window for the death of discs, again, huh?

Gary

[PA_Kid]

Originally Posted by Rabidhunter

Now having the ability to go to a store, download a movie and burn it onto a BD might be a little different.

I was just saying this to my wife. I think the next digital jump may be buying mix-and-match digital to have pressed to blu-ray or dvd.

I know I'm not the only one who hates the fact that I have 10+ different kids dvds that could easily fit on a few dvds or one blu-ray. Or pressing entire dvd series (not just seasons) to 1 blu-ray.

I wouldn't be surprised if the future becomes buying the films from Amazon and then telling them how many you want on one disk. A standard initial menu system would be the only big hurdle.

[sinister184]

good i hope they all crash and burn

[syncguy]

For a mass market takeup of high quality movie downloads, a massive, multi billion dollar upgrade would be required to ISP and carrier networks. I cannot see a business case for this.