COMMENTARY: Movielink - Less than Meets the Eye
Issue: Major Studios Allow Movies to be distributed online
Commentary by: David
This week, Movielink llc. began selling movies online that can be digitally downloaded to a computer. This sounds like a huge step forward. Unfortunately, it is not.
As AdAge notes, the service has a lot of restrictions. For one thing, the movies are not easily viewable on a television (they can be burned on a DVD, but the DVD cannot be played in a DVD player, only on a computer), meaning that most viewers will be restricted to their much smaller computer screens. This makes the service more appealing to business travellers who lug around laptop computers and use them for entertainment as well as work.
More problematic is pricing for the movies which has been set at a premium $20 - $30 per film release. The pricing decision reveals the underlying intentions of the movie studios including Sony, NBC Universal, Warner Brothers, Paramount and Twentieth Century Fox. They seek to bury online films, not to advance them. There is no other explanation to account for premium-pricing a product which has lower distribution costs and less utility than existing formats. New releases on DVD can be had for $15 for many films and these can be played either in a DVD player or computer and stored indefinitely. For the time being, the new technology is less convenient even without the artificial dvd-burning restriction because of the slow download times (movies will take an hour or more to download on broadband connections) and huge disk space required for storage. Beyond this, there is no provision to make these movies viewable on portable platforms like video iPods or Sony PSP.
What we have is an industry introducing a new technology in a way that will make it as undesirable as possible. In what convoluted world does this make sense? The Wall Street Journal hints at the answer, suggesting that this may be part of a legal and regulatory strategy on the part of the motion picture industry. To block legislation that might make distributing films easier over the Internet or prevail in ilegal download cases, the Journal suggests that this deal with Movielink prevents the studios from being accused of simply being afraid of new technology.
One way to stop a speeding train is to shut down the engine. Another is to put a slower train on the track ahead of it. iTunes has demonstrated that if executed properly, there is a huge potential demand for video content delivered over the Internet. $1.99 may not be a bargain price for shows that can be viewed or recorded for free on television, but it strikes many consumers as a fair price for convenience. The Movielink solution (no criticism here to Movielink, a startup company that would undoubtedly have been happy to offer cheaper or less restricted movies online but had to meet studio demands) on the other hand charges a premium for a less useful product.
The real reason for this, of course, is that the movie industry is taking marketing lessons not from the innovative technology sector but from the moribund music industry. Instead of realizing that Internet-delivered movies have the ability to provide a huge boost to the industry even if they ultimately bring margins down, they resist and cling to the past. This is not the first time for this industry. The motion picture studios were fierce critics of the VCR, contending that it would destroy the moviegoing experience. Instead, the VCR had the effect of increasing moviegoing.
Nobody in this young and notoriously undertrained industry’s marketing groups seems to understand that the Internet may be the worlds best sampling vehicle for digitally-deliverable content. The ability to identify and target micromarkets on the Internet could allow filmmaking to flourish in a manner that we have not seen since the invention of motion pictures. But it seems like the vision - and the visionaries - are long dead.
April 17th, 2006 at 11:48 pm
Message is for David..
Very informative entry on Movielink.
Question: Since the Movielink pricing strategy leaves a lot to be desired in order to be attractive to consumers and Movielink has hired Donat/Wald as the AOR (with a strong reputation for ROI)
Do you know what the total Ad spend will be for Movielink including 34 major U.S. dailies, TV, Radio, Internet etc?
How many customers does Movielink currently have (since they seem reluctant to release this info)?
How many customers will it take for Movielink to get a decent ROI on their total ad spend.
Movielink is launching with a few hundred titles. They never seem to say how many titles will be available in the next few months.
Appreciate any insight you can provide me regarding above questions.
Thanks David
Ravinn West
April 18th, 2006 at 12:06 pm
Ravinn,
These are excellent questions but unfortunately I do not have any data for you. Movielink has obviously gotten excellent PR from the announcement of simultaneous DVD/Movielink release for studio films. I would assume that the majority of their media plan would be Internet, although it is difficult to say. That would offer them the best chance for good ROI analysis if their agency is so inclined. But I am guessing. We can see if anyone else weighs in on this.
David
May 9th, 2006 at 3:45 pm
[…] But the announcement is much more important because of the unmistakeable signs it provides that at least someone in the motion picture industry is waking up to reality. This advertising blog has been very critical of the industry for inadequately addressing the challenges and opportunities of the Internet and the implications of piracy. We have previously suggested that distributing movies more widely in more formats earlier and for a lower price might actually expand the size of the industry rather than shrinking it. We bemoaned the possibility that Hollywood was going the way of the music industry and copyright-protecting itself into irrelevance. […]