The studios were hoist on the petard of their own pining for the heady early days of DVD — a format shift that drove a massive change in consumer behavior from mostly renting movies to mostly buying them, producing a huge revenue and margin windfall for the studios.
Paramount Pictures has signed a deal with YouTube that will add 500 of the studio’s titles to the online video portals growing on-demand rental library. Ordinarily, that wouldn’t be a big story, considering YouTube already has deals in place with four of the other six major studios. But Paramount deal comes as its parent company, Viacom, is still locked in a five-year old copyright infringement lawsuit with YouTube and its parent, Google, which remains pending before the federal Second Circuit Court of Appeals. Insofar as that lawsuit was ultimately about gaining leverage for copyright owners in negotiating digital rights deals with distributors, you have to wonder what happens if Viacom were actually to win the case at this point (YouTube won at the district court level and Viacom is now seeking to overturn that verdict on appeal). Would it make a difference at this point, even to Viacom?
Winnie the Pooh, Cars, Alice in Wonderland and other Disney and Pixar movies are coming to YouTube, thanks to a new partnership between the mouse-eared Hollywood heavyweight and Google’s video site. Movies will be available for rent through YouTube’s premium content section.
Google launched a movie rental store for Android devices today, making thousands of movies available for streaming and download. The store is already available on the web, and a dedicated Android app for handsets will be available within a few weeks.
I think Kafka’s post here is a sensible one, putting the Facebook experiment with movie rentals into context. No doubt, Facebook is a potential competitor to any web business, and Netflix is no exception. However, there’s a problem here of generality, where Facebook is a social network that wants to conduct a variety of commerce plays, but runs the risk of becoming a hodgepodge mix of social connections and marketplace that doesn’t seem to fit anyone. There’s power in focus, as Netflix and Amazon have shown, something that I think Facebook could lose by chasing random new businesses such as movie rentals.
Indie filmmakers looking to YouTube as a possible new distribution outlet might want to think twice, based on weekend returns from the video site’s new movie rental service. Last week, the online video site teamed up with the Sundance Film Festival to make a small selection of critically acclaimed full-length films available for rent for 48 hours. [digg=http://digg.com/tech_news/YouTube_Users_Pass_on_Paying_for_Movies]
But, despite a post on the YouTube blog and pickup from various tech blogs, very few users have actually taken YouTube up on the offer. Based on a quick look through the movies that were made available, it appears that YouTube viewers rented the five films less than 1,500 times in total, or an average of 300 times each. At $3.99 a piece, that means the indie films generated less than $6,000 in total sales over the course of the weekend, or about $1,200 per movie — and that’s before YouTube took its cut for hosting the files.
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Redbox (s CSTR) has found itself at the center of a Hollywood war over the price of movie rentals, and up until now, sides have lined up either with the kiosk rental company (Sony (s SNE), Lionsgate) or against it (Universal (s GE), Warner Bros. (s TWX), Fox (s NWSA)). Paramount (s VIA) has chosen a third option — it’s entering into a trial through the end of the year with Redbox before it makes a final decision.
The deal will give Redbox access to new release Paramount movies as soon as they are released — a sticking point for those opposed to Redbox’s model. The LA Times reports that Paramount’s deal is a rev-share one, rather than an outright wholesale of discs to Redbox like Sony and Lionsgate do. Additionally, Paramount will get access to Redbox rental data of its movies, which the studio will use to determine the impact the $1 a night rental service has on its total home entertainment revenue.
If Paramount decides to fully commit to Redbox, it will be to 2014 and the deal is estimated to be worth $575 million.
Paramount’s move is so packed with common sense it almost makes you wonder why no one did it before. Universal, Fox and Warner Bros. all imposed delayed release windows against Redbox, which responded with lawsuits. Sometimes, things don’t have to be either/or, they can be both/and.
There’s been a lot of chatter recently about the value of movies. Studios are duking it out with Redbox over its $1-per-night movie rentals, and now Amazon (s AMZN) and Apple’s iTunes (s AAPL) appear to be locked in a price battle over digital downloads.
Video Business notes how both digital distribution outlets are cutting prices not just on catalog titles, but on new-ish releases as well. For example, iTunes is running a back-to-school sale with many older titles selling for as little as $4.99 (though I’m vexed by what back-to-schooler would want The Paper Chase). Relatively new releases like The Curious Case of Benjamin Button and Slumdog Millionaire have also seen their prices slashed.
All this price-cutting got me thinking — what is a movie worth? I realize that’s subjective, but that’s precisely why I want know what you think.
Read More about Weekend Question: How Much Is a Movie Worth?
Well, we knew it was coming. Redbox has now filed a lawsuit against Time Warner’s Warner Home Video (s TWX) unit over the studio’s plan to inhibit the DVD kiosk company from obtaining new release movies as soon as they come out. For those of you keeping track, this marks the third lawsuit Redbox has filed against a major studio in response to a release window.
There’s been a lot of Redbox news in the past couple of weeks, so rather than rehashing the same language over and over, here’s a handy historical link guide to the ruckus Redbox has been causing in Hollywood:
Aug. 18, 2009: Redbox v. Universal (s GE) Will Move Forward – Redbox won a small victory in its first case.
Aug. 13: If Warner v. Redbox Was a Movie, It Would Be 28 Days Later – Warner decides it won’t play nice with Redbox.
Aug. 12: Redbox Riles Up the Movie Industry, Files Suit Against Fox – Redbox files its second studio suit over release windowing.
Read More about Three for Three: Redbox Sues Warner
Warner Home Video (s TWX) has decided to join Team Universal (s GE) and 20th Century Fox (s NWSA) in the fracas over cheap movie rentals via Redbox. Video Business reports that the studio will sell DVDs directly to kiosk companies like Redbox starting in October, but only after 28 days from their initial release.
Warner is also clamping down on wholesalers, prohibiting them from selling to the kiosk or mail-order channel, and forbidding them from buying or selling used Warner discs.
As we wrote yesterday, Redbox’s success with its $1-per-night movie rentals has put it at the center of a battle over the value of movies. Both Universal and Fox are fighting Redbox by imposing disc delays. Redbox has filed suit against both studios and it seems like a pretty safe bet it will file one against Warner, given their actions today.
Not all studios are down on Redbox; both Sony (s SNE) and Lions Gate (s lgf) have signed distribution deals with the company.
Making a PR move of its own, Redbox announced today that it’s on track to rent its half-billionth movie this weekend.