The struggle to devise new models for digital distribution of movies continued in earnest this week, but without much forward motion, as major players in the online-video business backpedaled on some big plans.
Netflix has been taking a lot of grief for seemingly ill-planned business decisions, and the much-derided launch of “Qwikster” — a way for the company to separate out its DVDs-by-mail business from its streaming division — was finally scrapped early this week, but not until the company took a lot of grief from customers who’ve been frustrated and alienated by its behavior lately. Some observers are wondering if the company even has a viable plan to survive the next few years.
Movie studios have a love-hate relationship with Netflix. Last year, they demanded and won concessions where DVD release dates were concerned, delaying Netflix availability of new titles. And content owners are determined not to let Netflix run away with the emerging revenue stream for streaming movies the way iTunes was allowed to become dominant in music, with Apple essentially dictating terms to digital publishers and record labels.
In order to stay in control, Hollywood is trying to get out in front of whatever the next big trend in consumer behavior will be, without alienating its current business partners. The path forward isn’t always obvious.
Smaller distributors like IFC Films and Magnolia Pictures are using video on demand as a precursor to theatrical release, with both of them leading up to the inevitable bow on DVD and Blu-ray. As an example, Magnolia’s current prestige pic Melancholia, which earned some of director Lars Von Trier’s strongest reviews ever at the Cannes, Toronto, and New York Film Festivals, is already available as a VOD selection even though the U.S. theatrical release won’t begin until November 11. (An unpromoted stealth release in an out-of-the-way L.A. shopping-mall multiplex this summer ensured that lead actress Kirsten Dunst will be eligible for Oscar consideration.)
Universal had its eye on that VOD action, and annoucned a plan to let Comcast subscribers in two test markets pay $60 to watch the forthcoming Tower Heist just three weeks after its theatrical release in November. But Universal, too, alienated some key customers — the theater chains that play its films. The studio caved this week when some theaters (including the National Amusements and Cinemark chains) said they would refuse to book Tower Heist.
If plans to rethink the theatrical window seem to be on hold, the studios are still looking to control their own digital-distribution destinies. One idea is UltraViolet, the cloud-based system announced at CES this year by a coalition of six studios — Lionsgate, Paramount, Sony Pictures, Fox, Universal, and Warner Bros. — that allows users to buy a movie in a retail store or online and keep it in their “digital library” for viewing on multiple devices. The model is intended to push consumers back toward owning, rather than renting, their movies, largely to fight the continued devaluing of content to all-you-can-eat status.
On that note, the owners of online-video site Hulu — they include News Corp., Disney, and NBCUniversal — said yesterday they were scrapping plans to sell the site to the highest bidder. “At least some of the media owners have come to see more strategic value in holding on to Hulu and using it to shape the online-video landscape,” reported The Wall Street Journal, citing “people familiar with [Hulu’s] thinking.” (Then again, hold the phone. Business Insider is now reporting that Google may buy Hulu after all.) The big question is whether this kind of cautious, status-quo thinking helps protect the industry, or holds it back.
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