Movie Rentals and the fall of DVD/Blu-ray sales

One of the most intense business challenges Hollywood has faced during the past few years is dealing with the way the home video market has evolved. In an effort to breathe new life into it, some studios are now reportedly considering the idea of offering $30 home movie rentals after a film plays in theaters for a few weeks. The real question is would you pay that price to watch a movie at home?

Variety says the studios have been individually discussing possible changes to the release window with exhibitors for over a year, though none of them have reached a deal yet. Let’s take a look at what each major studio is proposing.

Disney

The Mouse House is the only power player that isn’t interested in altering the existing structure – largely because they produce the types of films that consistently benefit from it the most. Marvel films, Star Wars movies, and big animated features tend to play well in long theatrical runs, so changing things wouldn’t be in their best interests. But for the rest of the studios, shortening the exclusive theatrical release window (which is currently 90 days) would give them a better bang for their buck in the advertising department. Instead of paying tons of money to launch a campaign when a film hits theaters and then dropping tons more to reintroduce audiences to the movie months later when it arrives on home video, a shortened window would let them save money and keep their film in the back of audience’s minds.

Warner Bros.

WB CEO Kevin Tsujihara wants to cut exhibitors in on digital revenues if they shorten the release window (the time when a movie exclusively plays in theaters) from its current 90-day period down to just 17 days. WB was initially looking to charge a $50 home rental fee for that option, but they’re also reportedly exploring a $30 rental fee to see a film 30 to 45 days after it opens theatrically.

Fox

WB and Fox are both open to different release patterns for different movies, which means “bigger franchise films that tend to have longer runs in theaters might be held back from release on demand.” Things like the DC superhero movies or an X-Men film could earn more in theaters, while smaller movies could bump to home video earlier once they’ve made their impact on the big screen. But Fox, who is looking for a 30-45 day release window, doesn’t like the idea of asking people to pay $50 to rent a movie at home.

Universal

Universal and Fox both think customers would balk at WB’s $50 initial asking price for a rental, so they’re pushing for a $30 fee instead. Universal is not as flexible about treating its films differently, so they want all of their movies to be available in the 20-day range.

Sony

Sony appears to be somewhere in the middle. They’re reportedly “in favor of an early on-demand debut that’s somewhat later than the one being floated by the likes of Universal and at a higher price point.”

As for the exhibitors, if they agree to shorten the release window, they want the studios to keep the window for lower cost rentals at 90 days. They’re also struggling to adapt to the shifting landscape, so they want the studios to try not to change the traditional home entertainment distribution model for between five and ten years. Again, no deal has been made yet, and the details on all of this are still being being hammered out. This is all very similar to a discussion a year about where some major studios were in talk with Time Warner Cable to offer movies at home on demand, but movie theater chains were not happy with that possibility, and the opportunity was never made available to the consumer. That’s when Facebook’s Sean Parker started working on launching “The Screening Room” that would offer major theatrical release on demand at home the same day they hit the big screen. However, that was last year, and nothing much seems to have happened with that in the interim.

Whether you’d pay to see a movie at home or in the theaters has a lot to do with priorities. It clearly makes more financial sense for a family of four to stay home and drop $30 on the latest animated hit. Not only would no one blame them for taking that option, those people who have time/money on their hands and value the theatrical experience, might appreciate the movie watching experience in the way films were intended to be seen, but without any of the noisy distractions that some kids can provide.

Remind us to share with all of you our experience in trying to watch The Matrix Reloaded opening night in the theater.

Meanwhile, studios are now fretting over the falling sales in the home video market, specifically DVD and Blu-rays, but no one seems to know why. However, some statistics may be a good start.

In 2013, Hotel Transylvania shifted 1,029,614 copies on Blu-ray disc in the US alone. A hefty number, yet the animated hit – which has thus far spawned one sequel, with another on the way – was only the 23rd best-selling Blu-ray release of the year in America that year, just trailing titles such as Turbo, Rise Of The Guardians, Django Unchained and Life Of Pi.

2013 was arguably the peak year for Blu-ray sales, with 23 individual titles selling a million copies or more in the US. The best selling title of all, Despicable Me 2, shifted 4.6m copies alone, as well as many more copies overseas. On the DVD format, meanwhile, 45 different films sold a million units in America in 2013, including another 2.7m copies of Hotel Transylvania.

However, recent years have shown a stark decline in physical media being sold, let alone being made available. Go as far back as 10 years and the digital media format was a booming success, where you could go even in to a Best Buy or Fry’s Electronics and see rows upon rows upon rows of both the latest, and some older, movies available for home purchase. What has happened?

Apple has started to surface in this corner of the market as a juggernaut in the home movie release. There was a time where their movies would come out much later, and even only for rental. Now, not only are they making their movies available for purchase, but with their streaming services and devices (such as the Apple TV) they are also making their movies available for download and purchase BEFORE they hit the shelves in the form of physical media. And while DVD and Blu-ray movies made bonus material as one of their major selling points, even Apple is making those same bonus features as part of the download package. Apple’s other big push for this format is that it allows for owners of portable devices to load and watch their favorite films at any time.

However companies behind the manufacturing and selling of DVDs and Blu-rays have been trying to make their products more enticing in various ways. Paramount limited the amount of bonus material available when they released Star Trek Into Darkness on home video. In fact, Paramount was so restrictive about that they went so far as to spread and split up all of the bonus content to different retailers. If you only wanted the commentary you could just buy the movie through iTunes, but if you wanted specific documentaries you would have to buy it at Target, or at Best Buy if you wanted even other bonus material. Best Buy even has available something known as the “steel case,” for those who want to show off their films on a shelf as if it were some prized trophy. But is that enough to change the buying habits of consumers of home video?

[SlashFilm]
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Would you rent a first run film for $30? If you did, would you be willing to wait for a few weeks just for the convenience of seeing it at home? Would having such a service available help or hinder those whose business it is to pirate films? How could this possibly affect the home video market? How do you buy your home videos? Do you prefer the environmentally friendly format of purely digital media for streaming or on a computer, or do you consider yourself “old school” and enjoy having the tangible experience of actually loading your film into the appropriate player? What do you think would be a good solution that might satisfy both markets?
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