Low-Cost Rental: Value Vampire

5 Nov, 2012 By: Stephanie Prange

The always irreverent and often biting satire “South Park” gave the video rental business a haunting send-up before Halloween.

In the Oct. 24 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 and Hooch. Very quickly, Randy finds his investment evaporating like the spirits of video rental past. Still, he continues to insist that not all areas have the bandwidth for streaming content online as his son Stan streams everything he wants on an iPad while hanging out inside his dad’s Blockbuster store.

Meanwhile, the physical rental market has moved on, but not necessarily to a more profitable future. Bandits target Redbox kiosks to steal the money inside, only to find what amounts to spare change.

The “South Park” writers put their finger on the scary specter of shrinking content value that has been tormenting the studios for years. Netflix’s low-cost streaming and Redbox’s pocket-change rentals combined with tough economic times have sucked value out of content that studios pay big bucks to produce. The studios have been trying to put a stake in that vampire with windows and lawsuits ever since.

But as the saying goes, “If you can’t beat them, join them.” Most recently, Warner — which along with other studios has fought back with the cloud service UltraViolet as a way to inoculate content from low-cost streaming — decided to enlist low-cost disc rental company Redbox in promoting the studios’ preferred version of the digital future.

Whether this alliance of frenemies will help boost the video industry and promote the value of content is obviously not yet known, but it is probably a move in the right direction.

If low-cost services continue to drain the value of the very content they depend on, no one, not even the consumers who enjoy the cheap rentals, will ultimately be well satisfied.

Low-Cost Rental: Value Vampire

About the Author: Stephanie Prange