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Era of Rental Windows Has Arisen

8 Feb, 2012 By: Thomas K. Arnold

A few years ago, a wise studio executive — the home entertainment unit president of one of the six majors — told me that the industry is heading “to the point where one day, it will be all about windows.”

I think we’ve arrived.

The announcement by Walt Disney Studios CEO Bob Iger plans to impose a 28-day rental delay on new-release disc titles means four out of the six majors are holding back new releases from Netflix and Redbox, the top two rental outlets, in a concerted move to prop up the sellthrough market.

Given past experience, I highly doubt the two holdouts, Sony Pictures and Paramount, will hold out much longer. Sony already delays certain releases.

The strategy underscores the importance of windows and lends credence to the old saying, “timing is everything.”

Formats don’t matter nearly as much as when a movie becomes available on that format. Blu-ray Disc, DVD, download, streaming, VOD, iTunes, UltraViolet — the competition is no longer among formats, but, rather, maximizing the potential of each format through staggered release dates and, when the dust settles, hopefully create a roadmap certain types of movies will follow when their theatrical runs are over.

Redbox and Netflix will likely always be at the proverbial bottom of the barrel when it comes to getting new releases. Vending machines and subscriptions may be a gold mine, but not for the studios.

For Hollywood, the real money lies in getting a share of the spoils from each sale — be it direct dollars, say from each Blu-ray Disc or DVD they sell to Walmart, Best Buy or Target, or lump-sum payments through licensing content for digital distribution.

First Sale is well and good, but the retailers get the prize — which is why studios have never cared for the rental model, not when it was brick-and-mortar nor now when it’s done over the mail or through kiosks. They’re not in control, and when you’re not in control. you’re not sitting in the locomotive of the money train.

Fortunately for the studios, there are all sorts of other distribution mechanisms either available now or in the pipeline, in addition to the good old packaged-media standbys of DVD and Blu-ray Disc.

And if it’s all about windows, there’s nothing Hollywood would like more than to shut the window for good on rental.

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About the Author: Thomas K. Arnold

Thomas K. Arnold

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