Thursday, August 23, 2012

Is Hollywood really encouraging piracy?

Scientific American isn't usually where people go to hear about what's going on in the movie industry. But columnist David Pogue weighs in on the subject in an article, "How Hollywood Is Encouraging Piracy." His observations aren't exactly new; he argues that consumers want to download and stream content because it's easy, but most movies aren't available legally. In fact, of the top ten pirated movies in 2011, none were availabe for online downloading.

I think Pogue makes a fair point. The music industry went through this first, because music files were smaller and faster to download. Now they have gone from rejecting technology to embracing it, and they make money from downloads and concerts of successful artists. I came of age in the Napster era, not the iTunes era. Most of my peers downloaded music because it was the easiest way to get the latest singles. Now, preteens have their parents' credit cards and use those funds to buy the same music legally. Because it's easier. With music, people hear songs on the radio, buy the music, then attend a concert. Their biggest outlay is for the concert, at the end. Movies are a bit different. In this model, people spend the greatest amount of money at the beginning, for a $10-14 movie ticket. DVDs usually cost less than two movie tickets, so they have value on their side, especially for families and repeat viewers. Rentals can go for 99 cents at Redbox or in excess of $9.99 on iTunes. If you compare box office to DVD and Blu-ray rentals on sites like The Numbers, box office wins, by far.

Pogue has a list of ways that the viewing experience can be improved. I agree that more rentals should give a window of 72 hours instead of 24 hours, for example. But #4, eliminate windowing? I think the movie industry is moving into the future while it's also defending its rear, the traditional sources of revenue. Small indie releases, for example, are deploying theatrical/VOD releases that maintain the higher "first window" price while giving consumers more options, like watching at home. But we are a ways away from major releases doing the same thing.

The music industry may be earning money from online downloads now, but it's a lot less than it used to be, and now concerts are picking up the slack. If Hollywood ever eliminates windowing and some its other distribution measures, it will lose money. I can't imagine it any other way. I do think there will be a time where the changes Pogue suggests will be inevitable. But we're not there quite yet.

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