the film distribution model/a failure for consumers

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April 21, 2011 / 11:14
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We are taught never to bite the hand that feeds us. Generally speaking that's pretty good advise, but what if that same hand is slowly starving you, or giving you food that's spoiled? Now what if we have to pay hard cash for this kind of service? Would you ever consider that a healthy economic model? As a film fan living in Belgium, this is pretty much how I feel, and it pains me to see that every attempt to improve this situation is killed from within the industry itself.

Fellow Twitcher Peter Martin launched a rant toward theater owners for allowing people to ruin the theater experience for others so easily. While I whole-heartedly support his opinion, I was even more shocked to hear that not only theater owners were opposing the initiative to get new films quicker to the people, but a list of reputable directors had the nerve to shoot down this initiative in the most mind-boggling way possible.

Previously attempts by Soderbergh (Bubble) were vigilantly countered and a lot of fuzz surrounded Disney's relatively short theater run window for Alice in Wonderland. Theater owners really don't like the idea of films getting spread to the masses shortly after their initial release, which, if you put yourself in their place, is actually quite normal. For years the theater business has enjoyed the luxury of offering films exclusively to the public for a short period of time, and it will no doubt hurt their business when people can freely decide whether to watch a film in cinemas or in the comfort of their own living room.

But this is the Western world you know, we are supposed to live in a consumer society where the consumer's demands impact the supply, and the voice of the consumer is quite clear on this subject. We want our films quicker, in our own home, when we are ready for them. The consumer is not here to artificially uphold an entire industry we don't really want or need (as a collective group). That's not to say that people don't like going to the theater anymore, but if the business is just too costly to run for the group of people that wants it, there really is no room for that business anymore. That's indeed harsh, but an economic reality that lives in just about every industry today.

There are two things in particular that struck me as completely surreal when reading through the letter. The first is that the people who wrote the letter describe the current distribution model as successful, the second is that they describe the system as "working well for the movie industry". In both statements there's an utter lack of respect for the people going out to buy and watch the movies they produce. The past 15 years have shown us that consumers are not happy with the distribution model of the movie industry, leading to illegal downloads, mass importing and a general lack of confidence in the powers that be.

The internet changed the game, not only because it gave way to illegal downloads, but because it took control away from the distribution of information. From the moment a Japanese production company puts a trailer online, audiences everywhere around the world are sparked to see this film. To some degree the movie industry realized this potential as they slightly improved their marketing strategies (yay, more and better ways to influence us to buy their products), but when it comes to actual distribution of the goods, they've remained mostly unmoving, hoping that their old model would stand all the heat.

As a film fan, I can only hope the current model crumbles quicker than a sand castle struck by a tsunami. While the whole world is buzzing about the newest releases, a lot of people are denied the joy of joining in on the conversation. Huge films like Black Swan are only released in Belgium during the Oscar weekend, for others (Ghost In The Shell 2) I had to wait more than 2 years before they made a theater appearance (note that it was already available on DVD in other parts of the world by that time), other films never appeared at all, not even on DVD. For someone willing to pay for watching a film, the industry is particularly uncaring to provide that most basic service to me.

I know distribution of goods is more complex than consumers see it, but over a period of 15 years time not much has changed for us. What's worse, there aren't even that many initiatives from the industry to change their distribution model. Some parts of the world have it better than others (America has VOD services with a pretty decent database of titles) but there still isn't much of a comprehensive distribution system that comes close to the illegal circuit. To cite a recent example: 13 Assassins is out on DVD in Japan, it's available on VOD for those who have access to it, but in Belgium you still need to wait more than 2 months for it to appear in cinemas. At least, the way the schedule stands now, which is hardly a guarantee for a "small" film like 13 Assassins. And if things turn really sour, it will receive a single-week release in a selection of cities that take longer to reach than it takes to watch the actual film. Is this really supposed to motivate me to wait for a local release?

In essence, film distribution isn't any more difficult than putting your film online and offering it to the world, streamed or downloadable, gradually opening up to new markets when subtitles (or god forbid, dubs) are added. The whole world is your customer as long as they can reach your site. This is of course an ideal customer model where we can see a film as soon as it is uploaded, no doubt there are countless reasons why this would not work as well as described here (outside of the fact that they might earn less - a good time to lower the wages of some actors no doubt) and no doubt it is incredibly naive, but it would surprise me that these problems are actual show-stoppers for an industry as big and wealthy as the movie industry.

See, I as a consumer don't understand why I can't get access to the films I want to see, or even want to buy. Marketing everywhere is getting us high on a buzz, then forces us to wait, sometimes indefinitely. This model worked in a time when only the biggest movie geeks were well-informed about upcoming releases, but with information available everywhere for everyone, this model is just too outdated and restrictive. By now I've had my fill of buying 50 dollar Japanese imports and watching them with a printed translation of the dialogs (Tenshi no Tamago - still no official English-subbed version for an animation landmark film from 1985), how insane must one be to continue such practices only to see the films he cares to see?

The worst thing about the letter though is that it reflects the inability of such a huge industry to acknowledge the actual problems it is facing. People have been yelling for a better, more correct and consumer-centered distribution model for the past 15 years, how is it possible to completely neglect (and even bluntly contradict) this and to state that the current model works "fine". Especially when almost every other official press release is targeted at declining sales and the effect of illegal downloads on our precious hobby.

While the premium VOD model itself doesn't really appeal to me (30 dollars, 60 days after a film is released in theaters, really??) it sounds like an important step in the good direction. The model itself will probably fail because it is incredibly overpriced for a relatively weak service, but it might spark some new life in finding better and fairer distribution systems, restoring some faith in the minds of those who pay for their 300 million ventures about some Smurfs in the jungle.

Then again, maybe I should just consider myself lucky that I know enough English to import my films from Hong Kong or Japan directly, otherwise I probably wouldn't even be an avid film fan. And maybe I should just believe those who tell me to "find another hobby" if I don't agree with the supply. One thing I know for sure though, if everyone out there with a grudge against the distribution model would turn against the film industry, they'd be in a lot more trouble than they are now.

Comments

Jeroen Bensch

comment number
date
April 21, 2011 22:09

What follows is an incoherent train of thought.

To me, the problem lies in the fact that these industries are "old". I'm talking about the print and movie industry. Not only how long they've existed but also how long their boards' members have existed. The business models are old and the people are old.

The print and the movie industry have, for as long as they've been there, had a business model that consisted of controlling channels. It's all about channel management and middlemen. Who gets what, where, when, via whom and at what price. What made it easy (and necessary) was that all of their content have always been physical objects, such as reels and journals and books.

This is now changing and they're absolutely lost. They have no idea, at all, how to behave in this new world. They hate the new world of digital. They hate it because they don't have the necessary expertise. The music industry also didn't have this expertise.

The music industry got into trouble when the typical household Internet connection would get you a 4MB mp3 in 20 minutes. The movie industry wasn't threatened yet. The music industry was (and is) in a bad shape because the Internet cut a lot of middle men but they realised they couldn't stop this. They didn't have the expertise and turned to Apple. Apple saved them with a kickass business model but they also set the terms. The music industry gave up control.

The movie/print industry is not letting this happen. They realise that they're dealing with digital goods now but they don't want to surrender to one or two big companies for distribution. That's why, in my opinion, they're trying all these smaller-scale solutions lately. In a way it seems like they're trying to rebuild some sort of channel management, this time digitally.

Another something to consider is that maybe a B2C business model won't generate them more money. They could be selling directly to you, but they aren't. Why? We are nobodies and can come up with 3 solutions to selling movies online in 5 minutes if we want. Why aren't they doing the same.

Film studios sell their movies to distributors, distributors take these movies and create movie packs with them. They set terms like the time-frame in which you can broadcast the movie and how many times within the time-frame etc... They sell these movie packs to TV studios. The way it works is when a TV studio wants to buy a movie they have to buy the whole bundle. The A-rate movie they want is packed with some lower class B-rate movies. That's why you get the good movies on one channel of the TV studio and a stream of crap on another one of their trashier channels, because they paid for the movie they really wanted but also for the crappier one that came with it, so why not schedule it on a crappier channel and make some money with the advertising blocks during them.

TV channels want exclusivity. They want to see you watch their commercial blocks by wrapping it in movies/series you'll only see on their channel. When they buy a movie from a distributor they demand that no other competing channel can buy and broadcast it. Of course this drives up the price a lot because it starts a bidding war between channels. The distributors make more money. The movie industry knows this and can start selling their movies to the distributors at a higher cost because there's a lot of money being made down the channel.

The distributors agree to paying more for movies, but the TV studios demand exclusivity so the distributors tell the movie studios that if they want to keep making a lot of money they need to make sure the people can't watch it other than on their TVs via the TV studios because the studios are going to start offering a lot less for a movie if they know the people can also get the same content in other ways. Other ways that draw people away from their channels, resulting in less viewers, resulting in cheaper commercial blocks, resulting in less money for the TV studio, giving them less money to buy movies and series with.

After the business analysts spend a couple of weeks behind their calculators, I can understand how the movie industry might actually be making more money from their current "channel-management business" than when they would distribute directly online. All because the TV studios at the end of the line demand exclusivity, driving up the prices throughout the channel. There is an insane amount of money being made right now.

If the film studios choose to set up their own distributions online, gambling their current income by selling movies for a couple of dollars to individuals, pulling the exclusivity-rug from under the TV studio's feet... the movie industry will significantly lower the price they want to pay for movies and they'd lose big time.

OK the post is getting pretty long but I hope you start seeing how everyone in this whole media landscape is much so up the next one's ass and that they've developed a morbid fear of any disruptive-to-their-industry companies, like Apple and Netflix. I even think they want to see their small-scale online initiatives fail just to prove that there's no money to be made with digital distribution. Like the New York Times pricing its digital subscription (on a per-device-basis even. Nuts) higher than what it costs to deliver paper all the way up the paper industry's channel and back down their channel to your doorstep. It will fail and it will be their perfect excuse.

I realise I haven't even mentioned the DVD business.

The movie industry does not get it.

To close I'd like to give you this link: Don't Make Me Steal

Niels Matthijs

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date
April 22, 2011 08:24

I guess what boggles me the most is that they went for short-term gain rather than a long-term solution. It's pretty much certain that any online distribution model will cut down on their profits (which were pretty high to start with), but by now they've created a whole generation that's used to just downloading their films online, for free, sometimes even before theater releases. I won't be easy to counter that in the coming years, and certainly not with 30 dollars/view models.

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