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Antioco: Rental Helps Stem Piracy

6 May, 2003 By: Debbie Block

Consumers still have little desire to download movies and video rental is the bulwark against a rising stream of video available online, Blockbuster CEO John Antioco told a group gathered for The Yankee Group's Connected Consumer Summit in New York.

"Customer dissatisfaction leads to piracy," Antioco said. "Video rental acts as a powerful deterrent to piracy because we have largely satisfied consumers' appetite for entertainment and now we are satisfying their growing appetite for digital entertainment by being easily available and inexpensive."

Consumers want cheap, convenient entertainment, particularly movies, and home video is filling that bill, Antioco said. While broadband is a hot topic in the press and the opportunity cable and telephone companies hope will fuel growth, but it's still at least five years from being a major pipeline for entertainment, many analysts agree.

"While the studios may loathe to admit it publicly, they can't afford to circumvent us, nor are they likely to replace the home video with [video-on-demand]," Antioco said. Only 9 percent of profits come from pay-per-view and satellite, compared to 62 percent from home video. "With VOD there is too much to lose," he said.

The Yankee Group released preliminary results of its extensive Youth Market Survey, in which respondents were divided into two groups; 13- to 17-year-olds and 18- to 24-year-olds. Sixty-seven percent of these consumers downloaded music in the last three months, but only 17 percent downloaded movies. Respondents said the main reasons they download are convenience and availability of titles they can't get anywhere else. Even those who admitted to downloading at some time say they would rather rent from their video store, the study found.

Eighty-seven percent of youths surveyed describe themselves as “technologically sophisticated,” yet downloading movies is not a priority for them.Why not? Part of Antioco's theory is that consumers like to shop. Three million consumers pass through Blockbuster doors everyday, but of those consumers only 37 percent have a specific title in mind when they enter the store, he said. Also, consumers primarily watch movies on their televisions not on their PCs. While wireless home networking sounds exciting, Antioco said it often takes "a computer science degree" to make it work.

Antioco has some idea about the habits of younger consumers, but Blockbuster's customers are generally families, he said, and many of the statistics he cited were not age-specific. Younger consumers are more comfortable than their parents with computer downloading and even VOD, Antioco said, but the idea of renting comes from the family and it is very hard to change ingrained habits.

The Yankee survey also posed the question of whether downloading a movie would be an option if there were no video store in town. Forty-four percent of respondents said they would download from a public site, not necessarily from a studio site; 20 percent said they would not watch movies if there was no video rental store.

Antioco summed it up simply. While Blockbuster is aware of the threats of broadband, "we are not overly nervous."

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