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TK's MORNING BUZZ: VOD Will Hurt Retailers Years Down the Road, But That's No Reason to Kill It -- Now or Then

17 Aug, 2001 By: Thomas K. Arnold

I can already hear the complaints from independent retailers: "The studios are going to put us out of business. This is terrible! Can't someone stop them?"

These and other harsh cries of pain/frustration/desperation are sure to fill the air as word spreads that the major studios will distribute movies over the Internet under a collective plan with the working title "Moviefly," is finally taking wing.

Video Store Magazine reported yesterday that five major movie studios have finally reached agreement and will create a joint venture. Sony Pictures Entertainment, Universal Studios, Paramount Pictures, Metro-Goldwyn-Mayer and Warner Bros. say they will supply the joint venture with new as well as catalog releases.

The joint venture will use technology Sony developed over the past year to offer movie downloads over high-speed Internet lines for play on computers, using digital rights management tools and movie players from Real Networks and Microsoft.

Other cable- and Internet-based video-on-demand services exist, but none of them has exactly set the world on fire, primarily due to a lack of big studio support.

Retailers may bitch and moan that this is just another example of the studios turning against them, but I beg to differ.

It's called progress and, while years down the road video-on-demand will undoubtedly hurt existing retailers, that's no reason to try to kill it -- now or then.

Ultimately, consumers will be the ones who decide how they want to watch movies in their homes. There's a good chance many will continue to rent or buy them, particularly now that DVD has made packaged media exciting again.

But even if consumers embrace this new technology faster and more thoroughly than anyone expects, you can't blame the studios. The studios want to deliver movies into consumers' homes and they owe it to themselves to do so as efficiently and effectively as they can. If there's a better way than the current model -- and I'm not saying Moviefly is it -- then the studios are going to go for it and they have every right to pursue alternate means.

You have to remember, studios are under no obligation to keep retailers in business. Yes, I know -- independent retailers helped build the video business and gave studios their biggest cash cow in the history of home entertainment.

But that doesn't mean studios are indebted to retailers forever and should forego and forsake a potentially better way simply for loyalty's sake.

This is business.

Comments? Contact TK directly at:TKArnold@aol.com

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