Sshhh!…what’s real reason why Comcast is buying NBC? TV Everywhere of course.

G.E.’s decision to sell NBC Universal reflects the shifts in fortune that are battering the media business, especially network television. The broadcast division of NBC Universal could lose big, a remarkable downturn for a network that had earned roughly $400 million in past years.

Problem: the Internet has fractured audiences and few viable business models have emerged for the distribution of content online.

What the new Comcast venture looks like: Comcast will contribute its own cable channels, which include Versus, the Golf Channel and the E Entertainment channel, and a modest amount of cash, about $5 billion, to a joint venture in which it will own 51 percent. G.E. will retain a 49 percent stake, and would likely reduce its ownership over several years and in theory, Comcast-NBC Universal will be a company separate from Comcast’s cable assets.

Some interesting possibilities could be:

It could use its power in film, with Universal Studios, to expand video-on-demand offerings by altering movie release windows to make movies available on demand the same day they are released on DVD.

It could use its power in film, with Universal Studios, to expand video-on-demand offerings by altering movie release windows to make movies available on demand the same day they are released on DVD to all active basic cable subscribers that buy HBO and SHOWTIME or purchase at least 1 on-demand film per month.

Buying Netflix: Stream movies through this service coupling subscription on cable with certain consumer benefits through Netflix, i.e. day and date with DVD or perhaps even a scheme to stream films just released in theaters 1 time only to ‘frequent flyers’ or renters of the service, but at a big ticket price on-demand.

But here is the real reason why Comcast is buying NBC: TV Everywhere. “TV Everywhere” model, which promises to give their subscribers exactly what they want: anytime, anywhere access to any TV content. They have to do this to keep their customer bases and compete. In a TV Everywhere world, the role of the multi-system operator is diminished. Your cable or satellite TV provider will no longer be your only (legal) means of watching the current episode of HBO’s Curb Your Enthusiasm. In a TV Everywhere world, Curb Your Enthusiasm will be available on literally thousands of websites and mobile apps, as long as you can authenticate yourself as a paying cable or satellite subscriber with the HBO package. Comcast risks becoming a “dumb pipe,” providing little more than bandwidth. To avoid that fate, Comcast recognizes that it needs to move upstream and own or control the content itself, thus NBC/Uni. More to the point, a consumer COULD elect to turn off his cable basic subscription and turn around and subscribe to TVE thereby allowing him to see his basic cable channels but on his PC, phone etc. Now that Comcast owns content and some of those channels it can monetize the consumer whether or not they subscribe to the cable in the house or not.

In a TV Everywhere world, it will be a terribly crowded space, with a ton of noise and websites with similar content. The sites that perform best will be the ones that create the best user experience for viewing TV content – and right now, that’s Hulu ( and who knows, maybe Clicker ?). If Comcast buys NBC, Comcast will own about 1/3 of Hulu, providing an ideal launching pad for TV Everywhere it has a very passionate and loyal audience.

This online world is a very splintered and exceedingly difficult to measure, especially when you are asked to sell advertising against the content. The real problem is a lack of tools to properly bring the right economy of scale to online which equates to buying media in a traditional way. Therefore, instead of trying to monetize a cable channel online one by one, with TVE, you can monetize the whole package in a similar way that cable already is monetized. Its a structure already understood by the consumer now. Bundle a bunch of cable channels for a small monthly fee and let consumers have access to them everywhere, including home or NOT.

The Internet while very big, does not yet command the equivalent kind of media rates and fees that Cable or Network gets today. No agreed upon means of measurement exists to give advertisers a definitive ‘rate card’ for the internet. There is no Nielsen for the web, (yet, although it was announced yesterday by Nielsen that eventually, there will be). comScore, even though they do a great job with data can’t extrapolate the data to equate to viewers ‘watching a TV set’. Making the comparison when placing an ad on a video online and the same ad on TV impossible to compare TODAY. Hulu streamed 855 million video stream last month. What does that really mean? Did all 855m viewers who watched those streams watch ALL of each stream or were many of them counted as they ‘surfed’ through Hulu clicking on various videos for a few minutes or even seconds – were they counted among the 855m? What does 855m stream equate to in Nielsen ratings/eyeballs? Does anyone really know? Nielsen despite its shortcomings has some measurable statistics for this, but its still not apples to apples.

Furthermore, Hulu still has a long way to go to prove it can monetize its audience as effectively as its parent companies can do with programs viewed on-air. Why? Its uniques are flat. Hulu’s uniques are scarcely better than they were 6 months ago. Unless the unique number jumps in the coming months (which I doubt it will), Hulu will have to meaningfully enhance its value proposition to grow its audience (can you say “Hulu to-the-TV-via-Xbox/Roku/Apple TV/etc?”) says Will Richmond of Videonuze (Nov 30th 2009). He goes on to ask “What happens to Fox’s programs on Hulu should Rupert Murdoch expand his focus beyond his newspapers’ online content going premium? What if Disney decides to launch its own subscription services? What if Google or Microsoft or Netflix (or someone else) decides to open their wallet and make a bigger play in premium online video?” And, these questions become somewhat less mysterious now that Comcast has bought NBC/Universal.TV will NEVER be the same again.

Comcast chart above courtesy of VideoNuze.com

Posted via email from williamsager’s posterous

Advertisements

Avatar cost $300m to make…

but is ‘Dancing With Smurfs’ going to be the most expensive flop ever?

The story of Avatar – the new film from Titanic director James Cameron, and reputedly the most expensive ever made – will ring true to anyone who has ever felt so much as a twinge of guilt about their own carbon footprint.

It is the 22nd century and Earth has run out of its natural resources. It is now little more than a desert, without vegetation, wildlife or minerals.

But a newly discovered planet, Pandora, is a lush, exotic world which possesses everything we need, so a ruthless mining corporation hatches a plan to strip it bare and save the Earth while making billions for themselves.

Feeling blue: Computer-generated aliens in Avatar

Feeling blue: Computer-generated aliens in Avatar

‘To sum it up, it’s about ecology and greed,’ says Sigourney Weaver, who dyed her hair red to play a botanist in the film. ‘It took me a while to grasp what I was getting into, but then I realised no one has ever made a fantasy film like this before.’

Cameron himself is convinced cinema-goers will want to see it at least four times – hopefully quadrupling its box office potential.

‘People will see the movie because they are curious,’ he says. ‘Then they’ll go back to make sure they saw the fantastic things they thought they saw.

‘By then, they’ll be ready to see it for the third time – just to enjoy it – then a fourth time to savour the full experience.’

Certainly, the Hollywood executives who bankrolled this sci-fi juggernaut laden with 3D effects are hoping that Cameron’s optimism is well placed.

Avatar

Sam Worthington morphed into Na’vi, one of the blue-deer-like creatures who populate the world of Pandora

For although the Fox studio indicates that Avatar cost around $180 million – some $30 million more than Cameron’s previous epic, Titanic – Tinseltown gossip says the true cost was a staggering $300 million, thanks to re-shoots and Cameron’s constantly changing ideas.

It’s no wonder that everyone connected with movies is waiting to see what the box office figures look like when Avatar comes out on December 18.

Some believe a movie about an alien culture of giant blue humanoids can never make a profit, while others think it will save the film industry from the threats of DVD piracy and static ticket sales.

Someone, rather unkindly, has dubbed this long, po-faced epic Dances With Smurfs, after Kevin Costner’s over-long po-faced epic Dances With Wolves.

Is Cameron’s ambitious project likely ever to recoup its investment? Titanic, which cost around $150 million to make, was forecast to be a massive flop. And the prediction, when the film came out 12 years ago, was that it was going to lose at least $60 million at the box office.

In the event, it was the most lucrative film ever released, making a staggering $1.1 billion and winning 11 Oscars to boot.

Critics may have carped about Titanic’s hackneyed storyline and saccharine sensibility, but it was a globally loved phenomenon. Avatar

Like all James Cameron films, Avatar is a huge gamble, with audiences at early previews ecstatic at the 3D technology – less enamoured of his environmentally conscious sci-fi world

It personally enriched Cameron – a five-times married movie obsessive with a reputation for throwing the shoutiest tantrums in Hollywood – by an estimated $60 million.

So why has Avatar, which has its London premiere next week, cost so much to make? It is Cameron’s first feature film since Titanic and the price tag mostly reflects the fact that he wanted to make a photo-realistic sci-fi epic film in 3-D.

Sigourney WeaverSigourney Weaver is the only well known actor

This ‘live action’ epic is about two-thirds computer generated and one-third real, and uses the most advanced motion capture technology.

There are only 37 cast members – all unknowns except for Sigourney Weaver – but there is a roll-call of thousands of digitally-created characters.

Much of the technology was created just to make the filming possible, and Cameron says his team had to invent dozens of new techno-phrases to describe the processes involved.

In fact, when he came up with the idea for Avatar 14 years ago, he was told it was an impossible dream, because the technology needed to make it come true didn’t exist.

Describing the making of Avatar as ‘computer graphics hell’, he added: ‘We were trying to create a world from scratch, working with computer generated characters that are photorealistic. That’s tough. We set the bar high.’

The project was conducted with Cameron’s customary mania for perfection, using close-up cameras so sensitive they could detect muscles moving under the skin of the actors’ faces.

Each shot was captured by up to eight cameras simultaneously and the images were then turned into aliens. The final effect is said to be so convincing that you could be looking at actors in make-up rather than digitally created beings.

And every scene had to be shot twice on 3D cameras to make the film work in three dimensions.

The film’s production designer, Rick Carter, says the created reality is vital to the success of the film.

‘The real challenge is whether you feel the emotion coming through from the characters.

When you look into those eyes, do you feel the connection is real?’

Titanic

Cameron’s movie Titanic took 2.5 years to produce, cost $200m to make and took $1.8 billion worldwide to become the biggest-grossing film of all time

It was Carter’s job to create the fantasy planet Pandora, according to Cameron’s specifications. One of the many spectacular features is that the planet lights up at night.

Cameron had seen a bioluminescent world when he was deep-sea diving during the making of Titanic, and so, for added realism, hired a professor of plant physiology, Jodie Holt, to help create the plant life on Pandora, which had to be toxic to humans but support vegetation.

Another academic, Professor Paul Frommer, of the University of Southern California, was paid to create a language for the tribe of 10ft tall blue aliens, called the Na’vi, who live on Pandora.

Frommer, a linguistics expert, spent four years working on the language, and said: ‘I could have let my imagination run wild and come up with all sorts of weird sounds, but I was limited by what a human actor could actually do.’

The Na’vi language as he created it has more than 1,000 words, with a grammar of its own. The actors even had a voice coach, the renowned Carla Meyer, to help with pronunciation.

Frommer hopes it will have ‘a life of its own’ in possible prequels and sequels and that fans of Avatar may even trouble to learn it, as some Star Trek fans have studied the Klingon language. A Na’vi dictionary is already available online.

Avatar

Some early scenes, such as the one where Jake wakes up as an Avatar, were shot in real sets – partially, James Cameron admits, to save money

Meanwhile, Sigourney Weaver is at pains to point out that the film will appeal to a much wider audience than sci-fi fans.

‘In its way, it is an old fashioned kind of movie but with a seamless modern technology. It is a big, swashbuckling epic romance – the sort of story that has brought audiences into the cinema for almost 100 years.’

Because humans cannot breathe on Pandora, the SecFor mining company which sets out to pillage the planet creates human-alien hybrids, called Avatars.

The hero, Jake Sully, played by Australian actor Sam Worthington, is a paraplegic former Marine who volunteers to take part, blissfully unaware of the corporation’s plans to steal Pandora’s resources.

However, Jake is accepted into the Na’vi world, and falls in love with Princess Neytiri (Zoe Saldana). He learns to respect the Na’vi culture, which puts him at odds with SecFor, as they gear up to assault and take over Pandora itself in a massive final battle scene.

Worthington, 30, was unknown outside Australia, where he had made a few art films. ‘I met James Cameron to discuss the film and discovered that his personal heroes weren’t actors – they were scientists. That got me hooked.’

Worthington’s take on Avatar is simplistic. ‘It’s a great film, and a story that isn’t so far-fetched because we all know that we’re bleeding our planet dry. Maybe it will make people realise that Earth needs saving from itself before it’s too late.

‘But we’re not preaching – It’s just a rattling good story.’

Some critics say it’s a ‘horrible film’ – overinflated, hard to watch and ridiculous. There are also complaints that the Na’vi just don’t work cinematically and that it’s all a shade absurd.

But Leo Barraclough, of the entertainment industry magazine Variety, says he doesn’t think such brickbats will affect its commercial appeal. ‘It is one of the most anticipated films of recent years and I don’t think it will much matter what the critics say.

‘It is 12 years since Titanic, and James Cameron is a big movie maker, so people are going to want to see it because of that.

‘Cameron is known for quality film making, with energy, intelligence and detail. Avatar has also been marketed very cleverly via the internet and tie-ins with MTV and Coca Cola and so on.’

Avatar

James Cameron’s epic new 3D sci-fi adventure is the story of a distant planet, Pandora, being exploited for its precious resources, and features both live action and pioneering digital animation

More than one million people have logged on to the online trailer, and ticket presales are apparently phenomenal.

Rather unusually, Fox has sought to whet public interest in Avatar with special showings at IMAX cinemas around the world of a 16-minute extended trailer.

The marketing assault includes product tie-ins with McDonalds and the Coca-Cola Company, who are Fox’s promotional partners: Coca Cola, for example, has produced 140 million cans of Coke Zero which, when held up to a webcam, will show a helicopter taking off.

Action figures and vehicles are being made for the global market by Mattel. They all contain i-Tags which show content and info when held up to a webcam. And a video game in 3D is already on the market.

It’s all very clever, but will Avatar make its money back? Whether it’s $180 million, as the studio says, or $300 million as the grapevine has it, the film still needs to sell a lot of tickets.

To put this into context, big effects-laden movies such as Spider Man 2 and Pirates of the Caribbean cost around $150 million to make.

Fox, however, is able to stay calm about its financial exposure – because the costs have been split with two other investors. Dune Capital Management and Ingenious Film Partners are paying for about two-thirds of the production costs.

And Fox will also get a 15 per cent tax rebate from New Zealand, where all the live-action sequences and most of the effects were done, which is expected to return around $15 million.

Cameron has agreed to delay his profit participation until Fox and its investors recoup their costs. Perhaps he is so confident because Avatar will benefit from the higher ticket prices charged by 3-D theatres.

There are high hopes that it will help to continue the 3-D revolution, which is bringing audiences back into cinemas, and that it will push the sales of Blu ray discs next year when it is released.

Fox’s co-chairman Tom Rothman describes Avatar as ‘a creatively ambitious movie that is fiscally prudent’. It’s clear that he is already thinking about a sequel. ‘When you can move the popular culture, particularly with something newly created, that’s a path to tremendous success,’ he says.

Guest Post  by Alison Boshoff – Thanks to the DailyMail.co.uk

Cloudy With NO Chance of Meatballs for $24.95

Someone over at Sony must be watching too many 3 Stooges episodes late at night to think up a promotion like this.

What a terrible value for consumers. I guess their DVD outlets complained so instead of changing their thinking they upped the 24hr. ‘rental’ price. Yes, that’s right. If you’ve got a Sony Bravia TV you too can rent ‘Cloudy with a Chance of Meatballs’ for the incredibly fair price of $ 24.95 for a 24 hour term. Don’t everyone rush at once. And, those renters will be proud to know that they got to see the film BEFORE their friends got it on DVD….ooooohhh. Sony thinks that there’s a rush to see THIS film 28 days before you can see it or buy it on DVD (Jan 4th, 2010) for less than $24.95 and own the plastic disc and box? I feel really sorry for the suckers who rent it on Jan. 3rd, 2010 the day before its DVD release. If they wait just 24 more hours they can OWN it for less.

Sony, why not offer consumers something of value? Netflix list of 20 Sony films for free? 3-6 month pass to EpixHD online? Something on iTunes? Anything? This is ridiculous.

What Content Can NOT be Pirated, Is still 100% Free and Millions of People See DAILY?

It’s not the movies. They are all over everywhere. It’s not music. It’s not photo’s or documents. C’mon…Its TELEVISION! What I mean is this: TV isn’t pirated out of the box because the episodes of LOST or V or the last NY Giant football game (sorry, I’m a fan) debut on TV. I can’t find the upcoming episode of V which is on ABC tommorrow -10/10/09 – on any torrent or newsgroup. It may show up AFTER its debut on TV, but never before. There are no ‘screener’s’ floating around the newsgroups. This being said, the content on these networks becomes all that much more important. And, I believe because its so accessable, that’s one of the reasons its NOT on the newsgroups or torrents as much as the movies and music are.

-Coming up:

Wal-Mart and Target – The last DVD standing

 

TV is coming to the iPhone and it’s free and it will ‘rock’ rumor has it.

Word on the street is

images

Hulu will be putting out a free iPhone app very soon that streams full length TV shows using 3G and WiFi. And any hopes of AT&T charging for TV flew out the window.  Guess Apple apple will be sucking wind about charging all of us now through iTunes to watch the same things. Wonder what that will do to iTunes sales of these shows. My hunch is not too much and if anything will make more fans and will increase ratings. Why? Why do I say that giving away ‘Lost’ won’t cause a loss of

sales of the same at iTunes? itunes Because, if you are really a rabid ‘Lost’ fan, you will want to own it anyway, whether you get to watch last night’s season finale or not. Giving it away for free (and on a very small screen) only whets the appetite of those that might decide to sample the show using the app. Come ‘on everyone, haven’t you all

heard of piracy? Calico Jack the Pirate Well, this is simply ‘legal’ . Have you ever heard of the WWF? (or WWE today). They still give away wrestling on TV daily on TBS and charge $ 39.99 or more for essentially the same show on PPV.  It seems like someone in Hollywood may finally be seeing the light.

Création et Internet or the French version of the RIAA

So last week, a copy of the new X-Men movie made the rounds on the newsgroups. Missing many elements of a feature film, it only heightened awareness of the film’s impending debut this summer – not deterred it. In fact, you can easily argue that fans who saw the illegal copy will RUN to the theater and pay to watch the film in its entirety WITH all the special effects included. Fox- it was a very nice ‘deliberate’ slip-up. Deliberate?? Huh? Its actually a brilliant marketing move on their part. How do I know this? All the posts disappeared in the newsgroups 2 days after they appeared. Only the actual newshosts can delete headers and posts. Confirming that someone at Fox MUST have made an arrangement to put up the movie and then pull it down. No other film was ever pulled like that, leading me to believe that Fox most likely paid to have it put up and pulled down. A very inexpensive but brilliant marketing play.

07piracy600

Now for the French. Arrest the downloaders? Huh? How about arresting the UPLOADERS instead? There are far fewer uploaders than downloaders. After all, get rid of the content going up and there’s nothing to pull down and download. Known informally as the “three strikes” directive, it has won preliminary votes by the Parliament and is expected to be approved in both houses Thursday.

The law empowers music and film industry associations to hire companies to analyze the downloads of individual users to detect piracy, and to report violations to a new agency overseeing copyright protection. The agency would be authorized to trace the illegal downloads back to individuals using the downloading computer’s unique identification number, known as its Internet Protocol, or IP, address, which the Internet service providers have on record.

For a first violation, the agency would send a warning by e-mail.

If a user made another illegal download within three months, a second warning would be sent by certified mail. If a third infraction occurred within a year, the service provider would be required to sever service. an Internet advocacy group based in Paris, said some computer users would turn to encrypted downloads and other methods to avoid detection. On Wednesday, a Swedish company, the Pirate Bay, began a service called Ipredator, which lets users use its virtual private network to make anonymous downloads for 5 euros a month.

So, how in the world will this law make any kind of dent in piracy?? Esplain Lucy!

UPDATE:

At the last minute, several members of the opposition Socialist Party rushed in to vote against the plan, according to Christine Albanel, the culture minister, in what she called a “cynical maneuver by the opposition.” The bill was rejected, 21-15.

Jérémie Zimmermann, director of La Quadrature du Net, an Internet advocacy group in Paris, described the outcome as “a huge political blow” for Mr. Sarkozy and Ms. Albanel. “It’s a victory for the citizens and the civil liberties over the corporate interests,” Mr. Zimmermann added. LONG LIVE FRANCE!

The video industry may be encouraging the very behavior they seek to stop.

A very good article from Rob Griffiths at Macworld. Its worth reading because he’s on the money here. Furthermore, what he does not mention is that a lot of the piracy actually stems from the employees at the studios themselves releasing DVD screeners out onto the web.

As a consumer of audio and video in many forms—CDs, DVDs, and online purchases—I find it interesting to watch as the various media businesses adjust to life in a digital world. On the music side of the world, it seems that (slowly but surely) they’re starting to “get it.” Consumers don’t like to be hassled by digital rights management (DRM), they want to pay a fair price, and they want to use their music on devices they own without worrying about format, rights, or permissions issues.

For the longest time, the music industry insisted on copy protection for online music sales, even though (higher quality) CD versions of that same music were (generally) shipped without any form of copy protection.

So at first, everything you bought from the (then) iTunes Music Store was protected by FairPlay, Apple’s generous (but still restrictive) DRM solution.

In June of 2007, though, the first chinks in the DRM armor appeared, with Apple and EMI announcing iTunes Plus, DRM-free music at higher bit rates for $1.29 per song, versus the 99 cents per song for the FairPlay-protected versions.

Then, in September 2007, Amazon launched its own MP3 download service. Unlike the iTunes Store at the time, music in the Amazon MP3 store was (and remains) completely free of DRM. As a consumer, I was intrigued, and tried it out. While the Amazon MP3 store can’t rival the rich experience you get in the iTunes Store, it’s not a bad solution, and its download tool automatically adds my purchases to iTunes.

Finally, to put the proverbial nail in the DRM coffin, Phil Schiller announced at this year’s Macworld Expo that the iTunes Store was going DRM free—at the expense of Apple’s one-price-fits-all strategy. Over the next few months, the entire 10-million-strong iTunes Store music catalog will migrate to DRM-free versions (at higher bit rates)—Apple claims that more than 80 percent of iTunes music is available now in iTunes Plus format.

image

As a music consumer, I’m thrilled with this—no more do I need to carefully manage my authorizations for music playback amongst the various machines I use. I can burn anything I want, back up my songs without having to re-rip them, and generally not think about what happens to my music if the iTunes Store ever vanishes. With one click of a button, I can upgrade my entire library and be done with DRM…in theory, at least. (Of course, there are some issues with the upgrade plan, but it’s still better than DRM-encoded music.)

So it seems, finally, the music industry gets it. Given the chance, consumers will pay a reasonable price for unprotected, high quality music that they can use as they wish. Unfortunately, the video industry hasn’t yet apparently seen even a flicker of such enlightenment in the distance. You can see evidence of their confusion all over the iTunes Store, starting with iTunes Plus.

What about video?

iTunes Plus applies only to music in the iTunes Store, not to video (or audiobooks, for that matter). So while my music will be “free,” I’ll still be messing with authorizations for the video content I purchase from the iTunes Store. That’s unfortunate, and strange, given that the large size of movie files means they’re typically harder for consumers to distribute than relatively small music files.

imageWhy is an HD movie different than an HD TV show?

Beyond iTunes Plus, you can see more confusion in the handling of high definition (HD) content on the iTunes Store.

You can, for instance, purchase a TV series in HD and watch it on your Mac or Apple TV…but you can’t purchase an HD movie at all, and you can only rent them on an Apple TV, not a Mac. Why? What’s different about an HD TV series and an HD movie?

From my chair at least, nothing. I know, behind the scenes, they’re controlled by two very different entities, but as a consumer, such things shouldn’t matter. When I want to purchase HD content, I want to be able to use it on whatever device I wish, and transfer it easily between all such devices I own. The current model is just completely confusing, and makes no sense.

Of video and piracy

It really makes no sense when you consider that the video industry is taking these protective steps against those who are probably least likely to steal their content—consumers who have decided to purchase through the iTunes Store. We’ve made a conscious decision to buy our audio and video through the iTunes Store, and yet the video industry treats us as though we’re all pirates foaming at the mouth, ready to upload our freshly-purchased content to every pirate server in the known universe.

image

One way to really alienate your customers is to treat them all like thieves and criminals. (I’m not sure the music industry has fully learned this lesson either, given some of the RIAA’s tactics…but at least record companies are making strides on DRM.)

If I want to steal a movie, there are many ways to do so quickly and easily, as seen in the image at right. Using Tropic Thunder, the movie in my sample image above, it took all of one Google search to find literally dozens of different versions of the film, with varying levels of quality and features.

Quite ironically, a stolen movie is actually easier for the consumer to use than a legitimately-purchased copy of the same movie. A stolen movie won’t be DRM-protected, may be encoded at a higher bit rate (better quality) than a purchased version, and can be easily played on any device capable of playing back video. Why is it that pirates are rewarded for their actions, while legitimate consumers are punished and treated as if they are pirates? By making it difficult for honest consumers to purchase and use their products, the video industry may be encouraging the very behavior they seek to stop.

The pricing issue

My final annoyance with the video industry and the iTunes Store has to do with the pricing of TV series—another behavior that may drive otherwise honest consumers to take dishonest actions. The new season of 24 started recently, and for better or worse, it’s a series I enjoy watching. Given how much time I spend in front of the machine, however, I thought that maybe I’d purchase the 24 Season 7 HD season pass from the iTunes Store.

Then I saw the cost, a whopping $68, and changed my plans. Nearly $70 for something that has no physical media, would be very difficult to resell (is it even possible?), and is encumbered by DRM! You can’t even burn it to a DVD for use away from a computer or Apple TV (even the non-HD version is expensive, at $45, and non-burnable, like all iTunes Store videos). So I’d be paying $70 for basically nothing more than the right to watch the video on my Mac, iPhone (non-HD, of course), or Apple TV. (Even old versions of TV series are outrageously priced—the seven-year-old 24 Season 1 (non-HD) is still $40!)

As it turns out, I can actually watch 24 for free (and legally) on Fox’s Web site—and in full-screen mode, the video looks quite nice even on my 23-inch LCD. Sure, it’s not available on all my devices, but if what I really want to do is watch something on my Mac, free sure beats $70.

image

If I really want 24 on all my devices, and I find the $70 to be a huge burden, another quick trip to Google finds that all four episodes of the new 24 season are readily available online. Legal? Not even close. A tempting alternative for those who aren’t able to afford $70, or perhaps live outside the geographically-restricted area where they could buy 24 even if they wanted to? You bet.

So by pricing the season at a somewhat ridiculous price point, Fox has not only lost a sale, but has probably encouraged people who would otherwise give it money to go find alternative solutions. For me, I would’ve gladly paid about $30 to $35 for the season pass—the ability to watch on any device would be nice, and I’d love to feel like I’m supporting the series.

Instead, I’ve chosen to do what I’ve done the prior years—record 24 on my Tivo, and then watch it (skipping commercials) on the big screen. Not as convenient as having it available everywhere, but $70 is simply well past my cutoff point for a convenience cost.

Some shows get it, it seems. You can buy 16 30-minute episodes of The Daily Show for $10, or about $1.78 per hour of entertainment. Contrast that with 24, which will cost you $3.80 per hour (I’m using the actual show lengths here, i.e. 21 minutes or so for The Daily Show and 44 minutes for 24). But The Daily Show is an exception; current seasons of most TV series seem priced to dissuade purchase, rather than to encourage purchase.

I firmly believe that if the prices were to be halved, volume would increase dramatically—and it’s not like there’s much direct cost in producing the downloadable version of an already-filmed TV show, so almost all the money the studios would earn through increased volume would be profit (less what they must pay out in commissions, of course). So why are they asking such outrageous sums for current (and non-current) TV series?

Hopefully the video industry will see what the music industry has done and take steps to adjust its rules on HD content, its stance on DRM, and its pricing policies. As things stand now, however, video producers are treating their customers like thieves, and encouraging them to find alternative solutions that are less costly, unencumbered by DRM, and more agreeably priced. Some alternatives are legal, others are not…but no amount of protection on iTunes Store videos is going to change that fact. Pirates will pirate, and the current iTunes Store video rules hurt only those who seek to legitimately purchase their content.

gran-torino2

Despite every single Pirates best efforts, Hollywood had a record boxoffice.

calico-jack-the-pirate

According to The Hollywood Reporter Hollywood had a record box office year. This despite cries and complaints from the MPAA about piracy is going to kill this business.  According to the article, In 2008, about 1.36 billion tickets were sold in the US and Canada, which is actually down from the 1.4 billion tickets sold in 2007.  Thanks to a 4.7 percent increase in average US ticket prices to $7.20, and despite a prediction of a “really hard year” from the National Associate of Theater Owners, 2008’s box office earnings narrowly edged out last year’s by two percent. 2007 was also a record year for profits, though, growing 5.4 percent over 2006 by grossing $9.63 billion. Now, that’s not so bad, is it?

No question that piracy in some ways can hurt a box office, but how much remains to be seen. It is also quite possible that the availability online allows and fosters conversations about a film (good or bad) and one can argue that this is itself publicity and marketing (word-of-mouth) for a film. Add in the social networks, fan pages, widgets and IM/test discussions, etc.

So speaking of piracy, I think I’ll take a peek at what’s up in the newsgroups all over the world, specifically looking for Academy Award screeners. I’ll post my findings here in the next day or two. Stay tuned. oscar-academy-award

The Death of the retail DVD. Now you see them, soon you won’t.

A lot has been written about online video and its bright the future. One thing is for certain, online video has got some maturing to do, but it is here online today. Right now you can watch nearly everything you can see on cable, online in one format for free or for a fee. For the studios that ship thousands of DVD’s of first run films to the stores (and there are less of them) they are shipping less. For the independents, they are shipping even less and to add insult to injury, must take returns back of unsold plastic with DVD’s. And then you’ve got shelf space where less is being devoted and therefore more studio titles occupy that space rather than independent titles. But overall, online is slowly nibbling into these sales. How do we know? Look at the music CD business.

When we moved from cassettes to CD, the music industry reaped those dollars. Finally now, musicians are beginning to understand how to use online to actually make more money with their music than the traditional ways. Ian Rogers, ex-head of Yahoo Music has got it right. He’s dead-on. Using Topspin, he recently pointed out two examples of how this works with two artists at Topspin.

The first example is David Byrne and Brian Eno’s new album Everything That Happens Will Happen Today. By distributing digitally and keeping most of the profits themselves, the gross revenues of the album matched what they could have expected to get as an advance from a music label within the first 50 days. The second example is a lesser-known artist in his twenties, Joe Purdy, who has sold 650,000 tracks on iTunes and was able to buy a house from the proceeds.

Ian says:  “Digital sales don’t make up for physical? From the artist perspective they certainly can, and quickly. David and Brian keep the majority of the profits, and (via Topspin at least) are paid within sixty days of the fan purchasing (no wait for recoupment and complex royalty accounting). When your costs are low your royalty rate high and your channel direct, the marginal profitability from the artist perspective can be far different than in the old model, to be sure.”

Look at Radiohead and Nine Inch Nails.

So, ultimately DVD’s will go the way of the dinosaur. Just as CD’s have. Where’s the economics of sending these in a truck across the country, including packaging and shipping costs and returns? So how will an independent movies producer/company and or studio survive?  It has to be online. The writing is clearly on the wall. DVD’s simply will not continue to be sold in stores. Take a look at ESD (electronic software disrtibution).

msft-store

Example: Microsoft. They just moved all of their software online, into a MS ‘store’. What’s this mean? The days of buying packaged software loaded onto CD’s are numbered. The online store sells all Microsoft software from Office to Xbox 360 games. Instead of shipping the software in the mail, you download it over the Web. Just like you can download apps directly to your iPhone from the iTunes App Store, the Microsoft Store takes the same approach for its own PC and server software. (It does not distribute mobile apps or software made by other companies).

The obvious fear for most users buying ESD products is not having the software on physical media to re-install the product at a later time. Microsoft Store solves this by letting you re-download the product until mainstream support for the product ends. Typically this is 5 years after the product is released. You always have the option of copying the downloaded products to physical media if you want to have it available longer than the mainstream support lifetime.

And this can also be solved with movies and TV shows. Especially when you allow consumers to ‘own’ a digital copy to watch anytime, on their TV without actually having the digital file. How is this done? That’s my next post. There is a secret stealth company coming in early 2009 that will allow consumers to ‘stream’ anything they want (new or old), with or with out commercials (you can pay for it w/o commercial or watch for free with them) and keep the tv or film forever locked away in their own media vault (not on thier own PC, but remotely).

Its the future. Stay tuned. And its real. Using this, why in the world would anyone have to buy or rent a physical DVD again?