Log in
  

Blogs
 

November 05, 2013

Heralding a Pyrrhic Savior

The home entertainment industry appears to be borrowing a page from Netflix’s playbook regarding digital revenue — lauding electronic sellthrough (EST), transactional VOD, and even subscription streaming, as market saviors.

But if you analyze the third-quarter data from DEG: The Digital Entertainment Group, EST and transactional VOD rental collectively (again) lagged packaged media’s $1.45 billion in revenue by a whopping 50%!

Transactional VOD and EST totaled $742 million, with widely heralded digital sellthrough generating a rather modest $274 million in standalone revenue. While EST is up 46% year-over-year and boasts significant margins (compared with disc), does the industry really want to crow about a sector that generated just $29 million more in revenue than the surviving ghosts of Blockbuster did renting discs over the counter? Packaged media sales, which are indeed declining, still generated 80% more in revenue than EST.

To put it another way, $29 million is approximately the amount Netflix CEO Reed Hastings, CCO Ted Sarandos and CFO David Wells collectively earned selling stock options in September. And why? Because SVOD’s $815 million “contribution” to the $1.55 billion in Q3 digital consumer spending is misleading.

SVOD revenue largely went to Netflix, Hulu Plus and Amazon Prime Instant Video — not studios and content holders. Content holders receive license fees from SVOD operators over a multi-year period. In fact, Netflix said a record 5 billion hours of content was streamed by its subscribers during the quarter. That’s a lot of content being consumed for just $7.99 a month. Had those hours been from transactional VOD or EST, the fiscal impact (and relevance) would be exponentially higher.

Indeed, when subtracting SVOD revenue from both the 2012 and 2013 Q3 tallies, this year’s total home entertainment consumer spending actually declined.

Netflix, which continues to turn a cold shoulder and pull back marketing dollars from its high-margin disc rental business, said it does so in order not to confuse an increasingly digital consumer.

Home entertainment would be wise not to emulate; and instead up marketing of packaged media with a few changes.

That’s because transactional VOD, which has been heralded by studios for 10 years as the preferred rental option, grew less than 3% year-over-year, suggesting that the hype surrounding SVOD (and kiosk rental) is undermining the $4.99/$5.99 VOD transaction — and packaged media.

The consumer has been in the throes of an economic recession for more than five years. Low cost (and low margin) entertainment sources such as SVOD and kiosks have gained traction (it’s hard to argue against $7.99 monthly and $1.20 nightly rentals) and improved their content offerings. Home entertainment has become a commodity.

Studios, as a result, do need to heed recent comments from Netflix’s Sarandos criticizing inane release windows that allow theater operators to control distribution of new movies for up to four months after launch. Studios should call theaters’ bluff and release $40 bundled Blu-ray Disc/DVD/digital titles (and $20 DVDs) simultaneously with the theatrical launch. Nearly every home has a DVD or Blu-ray player. Then release to digital channels and kiosks four months later. And let the market decide. 

If the theaters refuse to screen movies being released simultaneously at retail (which they will), that’s their right. So is it the right of studios to move their theatrical releases and marketing budgets to home entertainment.

Sarandos says the consumer should have ubiquitous access to content on their terms (without pirating, of course). It’s time studios stop protecting low margin theaters and throw a lifeline to higher margin home entertainment, beginning with packaged media.

 

Posted in: , ,

October 21, 2013

Who Loves Ya, Disc? Not Netflix

Netflix’s indifference towards its pioneering by-mail disc rental business turned another page Oct. 21 when it relegated mention of packaged media to just two sentences (67 words) in the third-quarter investor newsletter.

In the brief paragraph, CEO Reed Hastings and CFO David Wells spent half of it cautioning that the pending first class rate hike by the U.S. Postal Service would add upwards of $4 million in quarterly expenses, beginning in 2014.

Netflix has more than 7 million subscribers who rent discs (and also stream content), contributing an impressive $107 million in operating income on revenue of about $227 million to Netflix’s bottom line. Nonetheless, the segment was eliminated for the first time from the service’s summary fiscal results outlining domestic and international streaming. Disc rental was included in the overall totals with no breakdown of revenue or operating income.

Notably, disc rental's operating margin of more than 47% doubles domestic streaming's 23.7%.

Meanwhile, Netflix’s international segment, which continues to be heralded by management (as well as Hollywood) as the growth opportunity of today and tomorrow, again lost $74 million.

When questioned in the video webcast, Hastings reiterated his typical detached support for by-mail rental, which he said was operating largely as a stand alone business requiring little marketing.

“[The disc rental segment] is doing great work,” Hastings said, adding Netflix was “very excited” about the unit’s breadth of content selection, including availability of Showtime and HBO shows — content, it should be pointed out, is not available anytime soon on streaming.

Then, reality reared its ugly head. In reference to a question about British competitor LoveFilm Instant, the CEO revealed his true POV toward disc. Specifically, Hastings said Netflix clearly had the upper hand on LoveFilm Instant (and Redbox Instant) precisely due to its streaming-centric business model. Public perception of Redbox Instant and LoveFilm Instant, on the other hand, is confusing and bad for business, according to Hastings.

The culprit: discs. He said Netflix purposely does not market its disc rental business so as to minimize confusion among an increasingly streaming-educated consumer.

“The [streaming/disc] brand, fundamentally, is not correct because they can't deliver on that promise, as exciting as it sounds to consumers. So that's a big tension,” Hastings said.

In other words, Netflix’s lucrative disc and hybrid streaming cash cow — which is twice as profitable as domestic streaming — is actually a flaw in the digital world, according to the CEO. That it continues to drive earnings apparently is just an aberration.

 

Posted in: , ,

October 01, 2013

A Question Too Far?

Netflix named JP Morgan analyst Doug Anmuth to join BTIG Research analyst Richard Greenfield as co-moderators for streaming pioneer’s Oct. 21 third-quarter video fiscal call.

Anmuth replaces CNBC media and entertainment reporter Julia Boorstin, who along with Greenfield, hosted Netflix’s first-ever video call in July.

Netflix spokesperson Joris Evers said the switch was part of the company’s strategy to “keep trying new things.” He didn’t elaborate or indicate why Greenfield is returning and Boorstin isn’t.

From the outset, the streaming video format was typical for a pioneer like Netflix. Analysts and investors submitted questions in advance to Boorstin and Greenfield, who then organized them into theme questions presented to CEO Reed Hastings, CFO David Wells and CCO Ted Sarandos — the latter making his first appearance on a quarterly call.

The format, which represented a break in protocol from the traditional corporate webcast whereby analysts phone in or email questions to the CEO and CFO, generated its share of controversy. Notably, Wedbush Securities analyst Michael Pachter said the moderators would have an unfair advantage controlling the questions that some might consider deferential  to Netflix.

Greenfield, in an email prior to the first video call, was adamant he would remain independent prior, during and after the event. And by all accounts he succeeded asking straight forward questions, including the impact “Arrested Development” had on new subscribers, clarification on “basis points,” margins, and related financial queries.

Boorstin, who clearly relished her role and was most at ease in front of the video cam, approached the Q&A as she would an interview with a newsmaker on CNBC — trying to find that one question that would result in a notable sound bite.

Indeed, Boorstin’s began the event questioning Hastings about the alleged controversy surrounding the third-party hosted video format — a query that appeared to irritate the CEO.

“I think we should process that after the interview and let's see if it's productive and useful for investors and see what they think,” Hastings responded.

Then she asked Sarandos how many people watch Netflix originals.

Viewer data, along with price hikes and churn, are subjects Netflix executives like to avoid. Netflix, a while ago stopped reporting churn , opting instead to focus on net adds. Boorstin knew this but asked anyway.

The SVOD service, per policy, also refuses to disclose how many people watch original programming like “House of Cards,” “Arrested Development,” “Hemlock Grove,” and “Orange is the New Black,” among others.

The non-disclosure is a sore spot within the TV industry since broadcast networks live and die by Nielsen ratings. Netflix argues that since it doesn’t have to appease advertising, viewer tallies are immaterial.

Price hikes is another matter. When Netflix in 2011 infamously increased by 60% the price of its popular hybrid streaming/disc rental plan, subscribers jettisoned in droves, the media pounced, and Hastings was left offering confusing explanations that sent the stock into a tailspin and had many questioning his leadership.

Undeterred, Boorstin again asked about a price hike and viewer data. And Hastings and Sarandos again denied the existence of any pending price hike or program ratings.

“We are going to keep on asking for numbers. Some day, Ted, you will give one to me,” she quipped.

Pachter said Boorstin’s departure is a negative.

“I thought that [she] gave an appearance of objectivity, which has been removed now,” he said.

Posted in: , ,

September 23, 2013

Emmys Final Score: Cable 1 Netflix 0

In the end it wasn’t even close. Netflix came to the 65th Annual Primetime Emmy Awards with high expectations following 14 Emmy nominations — the first ever for an Internet-based subscription service.

With majority of those nominations (nine) for political drama reboot “House of Cards,” scuttlebutt suggested Netflix would score big in the high-profile categories, including Outstanding Drama, Lead Actor (Kevin Spacey) and Lead Actress (Robin Wright).

It didn’t. The subscription video-on-demand pioneer, which has marketed itself in part as an agent of change within the traditional TV landscape, took home just one Emmy during the Sept. 22 primetime awards telecast: Oscar-winning helmer David Fincher for Outstanding Directing for a Drama Series.

Clearly, with the monies invested in billboard and related national marketing, in addition to grassroots political-style lawn signs in greater Los Angeles, Netflix had hoped for more than a directorial nod.

And some might say the Emmy directing award should not be confused with similar accolades presented at the Oscars and Golden Globes. Indeed, Fincher only directed two of the 17 “Cards” episodes, including the pilot. “Cards” won two other Emmys for castings and cinematography, which were awarded during the separate Primetime Creative Arts Emmy Awards on Sept. 15.

HBO, which Netflix management has oft mentioned as both erstwhile mentor and foe, again took home the bulk of Emmy hardware, including a combined 27 trophies for “Veep,” “Boardwalk Empire,” ‘The Newsroom” and Liberace biopic Behind the Candelabra.

AMC Networks again scored big for perennial Emmy favorite “Breaking Bad,” which nabbed Outstanding Drama and Outstanding Supporting Actress (Anna Gunn). Notably, series creator Vince Gilligan attributed the show’s longevity in part to Netflix.

"I think Netflix kept us on the air," Gilligan told reporters back stage, alluding to streaming access to past seasons. He should have also mentioned packaged media since season boxed sets of “Bad” consistently rate high at retail. Amazon ranks seasons one through three among its top-selling DVDs.

Regardless, the Emmys once again underscored what cable has brought to TV in terms of quality serialized drama. And while Netflix invented binge viewing and isn’t afraid to spend big on original content, it’s still chasing the cable networks' creatively.

"It just seems like there's a real swing in the cable world," Bobby Cannavale, who edged favorite Aaron Paul (“Breaking Bad”) to win Outstanding Best Supporting Actor Award for HBO's "Boardwalk Empire," told Reuters.

"[Movie] studios don't make dramas, so the best place to do drama is you go to HBO or Showtime, or you go to AMC or FX, and I think that was sort of reflected today."

 

 

Posted in: , ,

September 19, 2013

Margin’s Ugly Call

Outerwall said margins at subsidiary Redbox would fall below expectations in the second half of the year as consumers rent movies for fewer days, among other issues.

By definition, margin is the difference between the cost and the selling price of something. For Redbox, the selling price would be the number of nights it can charge $1.20 for a particular disc at a kiosk. Outerwall’s profit margin in the first half of 2013 shrunk to 6.2% from 8.2% in the same period of 2012. And it’s expected to fall further.

Culprits include Redbox promotions and a shorter rental period per disc, according to CEO Scott Di Valerio. He said the kiosk vendor would report increased revenue in the third quarter, including record rentals in July, but the profitability (margin) of those rentals is lower.

That’s because while more people are renting movies from kiosks, they're returning them the next day, instead of days later. With the margin on a nightly $1.20 rental razor thin, Redbox makes its money through volume (renters) and extended rental nights. Previously, the average kiosk rental generated more than $2 in revenue. When a consumer returns a disc in less than 24 hours, that revenue (and margin) falls.

Pitfalls of Teaser Pricing

Redbox (and streaming services such as Netflix) has shifted the rental paradigm, transforming the $3.99 video store transaction into a low margin commodity. Kiosks and subscription video-on-demand services have reduced the cost of the rental transaction, replacing it with a big-volume business model predicated on the belief that if a movie/TV show rental is priced at next to nothing, people will flock, rentals or subscribers will balloon and profit will follow based on increased volume.

If you’ve ever had someone ask you at McDonald’s, "Would you like a drink with that?," then you get the idea. Redbox is silently asking customers, "Would you like to keep that another night? It’s only $1.20 more." And Netflix every month is cajoling, “It’s only $8 a month. Isn’t the entertainment we provide each month worth that?”

This mindset has been a boon to the consumer, but it’s a delicate balancing act for Redbox and the home entertainment industry. Studios and media companies loudly herald the incremental revenue SVOD is generating via multimillion dollar license deals. Redbox, too, is paying select studios hundreds of millions to secure street date releases.

Yet, this business model is dependent upon SVOD and Redbox continually growing their subscriber bases and/or maximizing the time a disc is gone from the kiosk and in the home. Any deviation from these prerequisites, and the bubble bursts.

“Unfortunately, this demonstrates the leverage in the Redbox model, but on the negative side,” said B. Riley & Co. analyst Eric Wold. “The more you can push customers to multiple nights, larger baskets, etc., the more you leverage that cost.”

Analysts say Redbox needs to adjust its promotional strategies going forward to offset the single night shift and negative margin hit. Consensus suggests Redbox is not operating on the margin fringe as much as it is operating a business model that requires a certain level of risk predicting disc demand ahead of time, which doesn’t always pan out correctly.

“They make outsized profits when revenue is higher than budgeted and lower profit when revenue falls short. It’s a tough model to predict, but I think they need to manage a bit more conservatively,” said Wedbush Securities’ Michael Pachter.

As for Netflix, as long as they can grow their subscriber base and leverage their ballooning stock price, the party will continue. However, someday the music may stop,

 

Posted in: , ,

September 10, 2013

Wall Street (Again) Fumbles Movie Rental Story

The day (Sept. 10) Netflix shares set an all-time valuation record (above $311) based on news Virgin Media would enable its subscribers to separately access the streaming pioneer, a pair of Wall Street analysts declared death on Redbox’s disc rental business model.

Both extremes underscore the effects of Wall Street’s war on packaged media, including movie sellthrough and rental, and its desire to declare digital distribution winner — however prematurely.

Virgin Media said it would rollout Netflix to its 1.7 million multichannel video distribution subscribers in the United Kingdom  — access they have to pay for separately. While it was noteworthy that for the first tme a MVPD agreed to expose its subscribers to Netflix (over-the-top streaming services are seen as direct competition), the reality is that most of those subs can already access Netflix.

It would appear that Virgin Media knows that, and is more interested in being an ISP — selling subs the broadband connectivity required to stream TV shows and catalog (not new release) movies. But that didn’t stop investors from driving Netflix’s stock further into the stratosphere — ignoring billions due in content license agreements and profit at break even.

Then Pacific Crest Securities analysts Andy Hargreaves and Corey Barrett issued a note saying Redbox’s parent, Outerwall (formerly Coinstar), faced a looming financial squeeze due to its kiosk movie rental subsidiary.

Specifically, Hargreaves and Barrett contend fewer people are renting DVD and Blu-ray Disc movies, which they say will drop Redbox revenue up to 30% annually over the next few years.  They buttress their POV with data from The NPD Group that showed disc rental revenue fell 37% over a five-year period through 2012.

The analysts say Redbox rental volume would need to increase about 5% annually to support Outerwall’s current stock price — a premise the Pacific Crest duo deem unlikely.

What Hargreaves and Barrett ignore is the fact the NPD data referred to total disc rentals, which also included by-mail and video stores. It’s no secret what Netflix thinks about its by-mail disc rental business — despite the fact the segment generated nearly 50% of the service’s operating profit in the most recent fiscal period.

Meanwhile, Redbox revenue increased 4.5% to $479 million in its most recent fiscal quarter. Its share of the disc-rental market passed 50% for the first time.

B. Riley & Co. analyst Eric Wold, who is bullish on Redbox, said the Pacific Crest note makes the false assumption that declining disc rentals are primarily due to consumer migration to digital channels such as transactional VOD and streaming.

“While I agree that overall revenue generated by the DVD/Blu-ray market will decline in the coming years, that is not due to a technology switch from discs, but rather a switch from older rental channels [Blockbuster, video stores, etc.] to the comparatively smaller Redbox channel,” Wold said.

Indeed, Wall Street scuttlebutt that transactional VOD will supplant disc rentals is nonsensical. If the $3.99 to $4.99 nightly rental fee for a new release movie at Blockbuster or video store is considered a premium, why would someone pay just as much (or more) to access a movie at home through their cable channel when it can be rented at Redbox for $1.20 ($1.50 for Blu-ray)?

As disc rental revenue declines due to shrinking physical access (beyond kiosks), the number of rental transactions should remain unchanged. That’s because Redbox doesn’t care what people used to pay for disc rentals, it only cares that people rent a movie from a kiosk.

“For the population base that could not afford renting discs for $5, offering VOD for $5 and also requiring broadband access (vs. a $20 DVD player) doesn’t make their lives any better,” Wold said.

 


 

Posted in: , ,

September 03, 2013

A Blockbuster Is Hard to Find

In this week’s magazine, our editors and reporters looked in their neighborhoods for rental options. Most found a Redbox location within easy driving or even walking distance.

Blockbuster outlets seemed an endangered species, only happened upon on accident or via a long freeway trip.
And when our editors were able to get to a Blockbuster, it was a quandary to figure out how much a given rental would cost — though the selection was more broad than the Redbox kiosk option.

It is hard to see a former rental Goliath wane, but time may have passed Blockbuster by, leaving only ghosts like those at the Blockbuster in last year’s “South Park” episode. In the Oct. 24, 2012, episode, one of the kids’ fathers, Randy Marsh, buys a Blockbuster Video outlet for “only $10,000,” expecting to make a killing, only to find his customers are literally ghosts from the 1980s, wearing leg warmers and asking for films such as Turner & Hooch.

Whether Blockbuster is an anachronism or not, Redbox has taken steps to make sure its shrinking store footprint is filled. Our editors found Redboxes where there were formerly video stores, such as Blockbuster. The kiosk giant has skillfully filled in, and taken over, the disc rental market as Blockbuster has pulled back.

While our selected visits to Redbox and Blockbuster outlets may not paint the entire picture for the physical rental market, I think the exercise certainly points the way to — and points out — the successes and failings of the current physical rental landscape.

I hope you learn something (and perhaps get a chuckle or two, as I have) from the staff accounts we have supplied. The home entertainment rental business has changed a lot in the years since its inception around 1980, but one thing remains the same. Consumers are always looking for something to entertain them, in a convenient, wallet-friendly package. Whether it be Blockbuster or Redbox or a digital offering such as Netflix, or a disc or digital copy they own, consumers are looking for their own version of a “Blockbuster Night” that doesn’t break the bank.

Posted in: , , ,

July 25, 2013

The Curious Case of Netflix Originals

 

The Wizard of Oz had a good thing going until Toto got in the way.

Netflix and its original programming could be be operating in the same vacuum of wishful reality.

With 14 combined Emmy nominations led by “House of Cards,” “Arrested Development,” and “Hemlock Grove,” Netflix’s original series would appear to be the subscription video-on-demand pioneer’s emerging Ace card as it attempts to transform the TV landscape and grow subscribers.

Except that after door-to-door campaigns in West Los Angeles (to help secure nominations), online, billboard, taxi ads, and free publicity at the White House Correspondents' Dinner, among other chatter, no one really knows just how many people have actually watched the shows — a reality that began with Nordic black comedy “Lilyhammer last year.

That’s because Netflix won’t release the numbers — no matter how many times moderators Rich Greenfield from BTIG Research and CNBC’s Julia Boorstin asked, cajoled and pleaded with CEO Reed Hastings and chief content officer Ted Sarandos to do so during Netflix’s July 22 investor interview webcast.

The official line is that since Netflix doesn’t have advertisers, it doesn’t feel compelled to divulge ratings the way ad-supported network TV programs do. It’s a clever excuse and tactical strategy right out of the playbook of fictional House minority whip Francis Underwood (played by Kevin Spacey) in “Cards.”

“From this moment on you are a rock. You absorb nothing, you say nothing, and nothing breaks you,” Underwood tells his bodyguard.

Indeed, if scuttlebutt and conjecture equaled Nielsen households, Netflix certainly has a few winners on its hands. But hype isn’t hard data, and so the question festered.

Sarandos said all of Netflix originals are drawing “TV size audiences,” adding that those obsessed with data should look to Netflix’s renewal of a second season as a “very positive sign” regarding viewership.

“If we are renewing programs people aren’t watching, then we are creating a huge opportunity cost in our content spend,” which he said would result in Netflix not having the money to spend on content subscribers do want to watch.

Then the CCO threw a curve ball.

Sarandos said that each original series had outperformed the previous original during its initial seven-day streaming period. That meant that largely panned gothic horror series, “Hemlock Grove,” drew larger audiences than “Cards,” and just-released women’s prison dramedy, “Orange is the New Black,” outdid them all, including the reboot of Fox dark comedy, “Arrested Development.”

The seven-day window is significant since Netflix makes all episodes of its originals available on street date.

Indeed, Hastings admitted “Development” resulted in a small bump of new subscribers, which analysts speculate meant about 100,000 new subs. A modest tally considering the show’s ardent fan base and pre-launch word-of-mouth.

Perhaps “Cards,” which appears a lock for an Emmy, was nothing more than a polished serial hyped by many and observed by few.

 


 

Posted in: , ,

April 17, 2013

UltraViolet Just Got Smarter — and Easier

At last, some action on the UltraViolet front.

What I consider the best idea to come out of Hollywood in years has been stalled of late, mired by a complicated operational structure.

The concept — buy a movie once, then access it from the cloud anywhere, at any time, on any device — is marvelous.

The execution — navigate through a maze of proprietary websites and registration requests — is marvelously flawed.

But as Mark Teitell, GM of UltraViolet’s Digital Entertainment Content Ecosystem (DECE), tells us in our April 15 6Q feature, we shall soon have a new mechanism that strips away the complexity of UltraViolet and actually makes it simple and easy for consumers to use.

The UltraViolet Common File Format (CFF) will make downloading functionality consistent across all UltraViolet retailers and service providers. As Teitell told our senior reporter, Chris Tribbey, “It empowers consumers to transfer or copy downloaded files on any UltraViolet-compliant device or app, without re-downloading or using bandwidth.”

DECE is currently in a beta and interoperability testing stage for CFF deployments, and the final product is expected to become available in the United States later this year.

That’s a critically important development — even more important to the mainstream success of UltraViolet than the stepped-up marketing push Teitell promises also is around the corner.

Years ago, colleagues used to joke about what they called the “People magazine” syndrome. What was hot one week was not the next.

Since then, our attention spans have gotten even shorter. It truly is the “one click” era, where we expect new worlds to open to us with a single click of a button.

We don’t want to be told that for this movie we have to go to this website, while for this movie we have to go to another.

We want it simple, and we want it now.

Once CFF is available, there’s only one more sticking point left for UltraViolet: Get Disney on board. It’s high time the studio joined the consortium and made its movies available through UltraViolet.

Sitting out on a transformational opportunity such as the one presented by UltraViolet makes no sense, and I sincerely hope Disney comes around and joins the party.

It will be good for Disney, and it will be good for the industry.

Even more importantly, it will be good for the consumer.

Posted in: , ,

March 21, 2013

It’s Going to Take a Village to Save This Business

The most interesting thing about consulting firm Deloitte’s latest “State of the Media Democracy” survey is that soaring tablet use will drive an increase in movie rentals at the expense of sellthrough.

According to Deloitte, 28% of survey respondents said they would rent a movie this year, while just 12% said they would buy one, either on disc or through a digital download. At the same time, tablet ownership shot up 177% over the past year, with tablet owners 70% more likely to stream movies than those who don’t own an iPad or similar device.

The conclusion that there’s a correlation certainly strikes me as a valid one. And for studios that continue to rely on sellthrough for the bulk of their daily bread, this is, indeed, cause for concern. Hollywood throughout the years has done everything in its power to pump up the sales market. Back in the early days of home video, they fought tooth and nail against the nascent rental industry, which the studios correctly charged was taking money out of their pockets.

The Walt Disney Company’s much-ballyhooed moratorium strategy put dollar signs in everyone’s eyes as they realized that consumers could, indeed, be induced to buy movies, and in huge quantities. But it wasn’t until the advent of DVD in 1997 that the studios finally came up with an insurmountable weapon that ignited the sellthrough market quickly and furiously — and ever since the market peaked in 2005, they’ve been trying to figure out how to regain the momentum.

Since then, however, we’ve become a much more transient society. Our inherent nature to own, to collect, to hoard, has diminished. We lease cars instead of buy them; we read the news online instead of buying newspapers and magazines; and when we do buy things it’s products that enable us to do things, like smartphones and tablets, instead of products we can actually use on their own merits.

These days, the things we can do with smartphones and tablets are practically endless. The commercial of the couple spending every second of their day on matching Kindles is beginning to ring true: Our smartphones and tablets have become integrated in our daily lives. Heck, I see it with myself, a 55-year-old geezer who texts like a teen and goes everywhere, even the beach, with his iPad.

So for studios that still, more than anything else, want to sell content, what’s the solution? As I’ve said many times before, we need to find some way to sync the consumers’ desire to watch movies with our desire to sell them. I’m convinced UltraViolet is the best way to achieve this, but it’s still way too complicated — and the fact that Disney isn’t on board is having a real chilling effect on its immediate potential.

It takes a village to raise a child? Heck, it’s going to take a village to save this business — all of us, working together and putting all our focus on understanding the consumer and his wants, needs and desires.

Posted in: , ,