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Topic: Fox to issue rental DVDs sans bonus material

Joe Tommassello
Jedi Master Film Handler

Posts: 547
From: Coatesville, PA, USA
Registered: Jan 2008

posted 03-27-2009 10:12 AM

Bob - I agree with some of what you wrote but there were a few outright errors.

quote: Bobby Henderson
By the time DVD debuted in 1997 most VHS releases were arriving on store shelves with sell through pricing.

Simply not true. As big as it was even "Titanic" was being considered to go at rental pricing because PAR new it would be the biggest seller maybe ever. If you have access to any sales materials from that era you will see titles like "Devil's Advocate" and "A Time To Kill" and "Goodfellas" (and on and on) were all rental priced. Hell up to that time you couldn't touch "Gone With The Wind" for less than $59.95. I may have some old "newsletters" as we called them though they were really a weekly magazine for our customers. I will look. I assure you only a small percentage of theatrical titles were sell-thru priced at least into 1998.

quote: Bobby Henderson
the "Blockbuster Video" factor. They sure as hell weren't paying $100 per tape in the kind of volumes they were buying.

Technically you are correct but it doesn't make the intended point. Blockbuster stores were paying me $65 for most titles at that point.

quote: Bobby Henderson
If they want to try bringing back rental pricing they'll kill off much of the lucrative sell through market. They're not stupid enough to do that.

What does a moderately successful movie sell on DVD? Here's a chart...

http://www.the-numbers.com/dvd/charts/annual/2008.php

The sales figures are at retail. It supports my estimate of an approx. $10 profit per piece to the studio.

I think we all agree Bucket List would be an average hit. Let's use it for comparison.

2 million units x $10 profit (approx. wholesale price minus manufacturing and promotional costs) is $20 million...

Let's say it being average they would only sell 400,000 units at rental price (low estimate)...

400,000 units x $60 profit is $24 million.

At rental they already make $4 million more dollars and that doesn't account for future sell-thru (including that fact that there will likely be a million or two less used rental discs to compete with for the eventual sell-thru dollar).

It's clear that they can make at least the same dollars up front and more on the back end with their old VHS model. Trust me Bob - I lived this for 17 years.

quote: Bobby Henderson
most movies are appearing on premium cable in roughly 12 months or less after the original theatrical release

True - but the studios have the ability to control those windows.

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Bobby Henderson
"Ask me about Trajan."

Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001

posted 03-27-2009 11:31 AM

Two weeks later...

quote: Joe Tommassello
I assure you only a small percentage of theatrical titles were sell-thru priced at least into 1998.

You must not have been visiting Wal-Mart stores often at all back then.

quote: Joe Tommassello
Technically you are correct but it doesn't make the intended point. Blockbuster stores were paying me $65 for most titles at that point.

Sure isn't $90-$100. Wal-Mart sure wasn't paying those prices or selling VHS tapes at those prices either.

quote: Joe Tommassello
It's clear that they can make at least the same dollars up front and more on the back end with their old VHS model. Trust me Bob - I lived this for 17 years.

You're not living the "today" version of it.

The video store business model of the late 1980s and 1990s is dead. Most "mom and pop" video stores are out of business. The big boys like Blockbuster and Hollywood are not exactly doing great either. Video on demand services and Netflix are gouging big chunks out of the traditional brick and mortar video store business. Wal-Mart and others are cutting them off at the knee caps further with $1 Red Box rentals.

quote: Joe Tommassello
True - but the studios have the ability to control those windows.

Not really. They need to squeeze all of the money they can out of a given movie title ASAP. They have no option to milk it over a longer period of time.

I'll say it again: viewers have a lot more entertainment options now than in decades past. If a movie studio wants to screw around and wait an extra year before allowing a certain release onto HBO or Showtime they run the high risk of a fickle, short attention span-prone public of losing interest in the movie and choosing something more new instead.

Movie studios spend tens of millions of dollars on marketing for the initial theatrical campaign blitz for a movie with the intention of that buzz lasting long enough to support the DVD/Blu-ray release and carry over into other forms of release. That extra money spent on marketing makes it more imperative for the studio to recover its investment ASAP otherwise they'll lose millions more in interest payments. They push to get the DVD released in ever shortening windows to get more out of that initial marketing campaign. And the movie is showing up on premium cable within a year for a greater level of profit. A network like HBO isn't going to pay nearly as much for the rights to broadcast a 2 year old movie as they would something a little more fresh.

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Joe Tommassello
Jedi Master Film Handler

Posts: 547
From: Coatesville, PA, USA
Registered: Jan 2008

posted 03-27-2009 01:40 PM

I am giving you actual figures and scenarios based on historical accuracies and you are countering with generalities. Again I admit I was out of the loop by the end of '98 so I cannot speak with any authority of the years since.

quote: Bobby Henderson
You must not have been visiting Wal-Mart stores often at all back then.

Sure I was. Those titles you saw then for $12.95 were already marked down...probably 90 to 120 days after the initial release.

quote: Bobby Henderson
Sure isn't $90-$100.

Yeah, but it wasn't sell thru either. $90-$100 was the retail price.

quote: Bobby Henderson
Video on demand services and Netflix are gouging big chunks out of the traditional brick and mortar video store business

You're right...and also out of the studios pockets. I used to buy a lot more movies before I got Netflix. The studios may well decide to squeeze some of those dollars out of them. I have no figures to compare on demand to DVD sales. Granted if the studio gets half the $5 on demand fee it's a lot less than the $8-$10 they get from a DVD sale - but the purchased DVD can be passed around lowering the per-view profit on that too and furthering the value of increasing the prices and encouraging a rental window. I don't expect brick and mortar stores to make a comeback but from the performance of Netflix stock - doubling in this down economy in fact - it's obvious that many people believe that is the wave of the future.

quote: Bobby Henderson
Movie studios spend tens of millions of dollars on marketing for the initial theatrical campaign blitz for a movie with the intention of that buzz lasting long enough to support the DVD/Blu-ray release and carry over into other forms of release.

Yes, but that's true whether it will be a rental or sell-thru title.

quote: Bobby Henderson
That extra money spent on marketing makes it more imperative for the studio to recover its investment ASAP otherwise they'll lose millions more in interest payments. They push to get the DVD released in ever shortening windows to get more out of that initial marketing campaign.

True also, but I already demonstrated how a moderate release could likely bring them MORE dollars up front and additional dollars three or four months down the road. (Back in the day "Bucket List" would have been a 600,000 unit seller...I used 400,000 to compensate for the market changes to which you referred and with which I for the most part agree.) Pay television can still get the titles in their approx. one year window and the studio could have picked up the same or more dollars initially and - depending on the sell thru demand - up to 50% more dollars before it hits that market.

Again, this is only for what we consider an "average" hit movie - the kind of thing 99.99% of the population isn't anxious to buy but heard about and wants to see. Blockbusters, Disney Classics, etc. will always benefit from sell-thru from the start.

I am not saying I believe a rental model is an absolute certainty but I am quite certain that the studios will be looking at in lieu of just accepting decreasing sales figures.

[ 03-27-2009, 03:23 PM: Message edited by: Joe Tommassello ]

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Brad Miller
Administrator

Posts: 17775
From: Plano, TX (36.2 miles NW of Rockwall)
Registered: May 99

posted 03-27-2009 02:30 PM

quote: Joe Redifer
I wonder if the rental copies will have a higher bitrate and therefore better picture quality as a result?

I could actually see them going the OTHER direction, and making rental DVDs single layer only.

quote: Bruce Hansen
I don't waste my time with the extras anyway.

You have the making of video. After you have seen two or three of them, you know that they are all the same. The director says how great the actors were, and the actors say how great the director was.

Thankfully I am not the only person who thinks that the "making of" videos are the biggest waste of video since the invention of youtube. The only making of I've ever thought was interesting was listening to Corey Feldman getting pissed because the lead role in License to Drive was given to Corey Haim instead of him...but that was a real rarity. Nowadays I'll bet the actors are legally required to talk about how wonderful everything was. Ever since the making of videos involving Industrial Light & Magic stopped happening, they are as Bobby puts it "EPK puff pieces".

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Joe Tommassello
Jedi Master Film Handler

Posts: 547
From: Coatesville, PA, USA
Registered: Jan 2008

posted 03-27-2009 03:09 PM

I usually half-heartedly watch the extras on my discs. Once in a while you find a great commentary track. One I really liked was "From Dusk Till Dawn". Tarantino and Rodriguez were really entertaining.

I do love the supplements and commentaries on classic films but on all these new titles I wouldn't miss them a bit. They indeed seem to be - for the most part - puff pieces.

Somewhere I have a VHS copy of Universal's very first "electronic pressbook". It was for Conan the Barbarian and is introduced by Steven Spielberg who explains the concept and jokes how he wants it to be perfected (not sure that's the exact word) before the release of his upcoming film E.T. The Extra-Terrestrial the following year. Many of today's DVD supplements are nothing more elaborate than that first attempt.

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Bobby Henderson
"Ask me about Trajan."

Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001

posted 03-27-2009 07:13 PM

I think the movie studios need to put more thought into what viewers will find interesting when they want to produce extras for movies on DVD and Blu-ray.

Unfortunately, the studio heads seem to think any home theater enthusiast loves the sort of mindless, celebrity fluff you see on E!, Entertainment Tonight or the typical HBO First Look promo. I think the folks who regularly watch those channels/shows probably don't watch extras on DVD at all and hit the "stop" button as soon as the credits roll (or even before then).

I think the extras that are more interesting are those which feature the technicians and artisans working behind the camera. The extras should be about them, not so much about the actors/celebrities. Besides, the on camera talent probably doesn't want to be around for that dry nuts and bolts crap anyway.

At the very least, I think a movie on DVD or Blu-ray should include the trailers and teasers used to promote the release.

quote: Joe Tommassello
I am giving you actual figures and scenarios based on historical accuracies and you are countering with generalities.

You gave a "what if" scenario about The Bucket List using imaginary figures -not the actual disc sales figures from that movie. You're arguing against my so-called generalities with nothing more than generalities of your own.

quote: Joe Tommassello
You're right...and also out of the studios pockets. I used to buy a lot more movies before I got Netflix. The studios may well decide to squeeze some of those dollars out of them. I have no figures to compare on demand to DVD sales.

If a movie studio wants to raise the price on a title with mediocre appeal, Netflix (or any video store for that matter) could counter the move by purchasing fewer discs. If the movie is a title not many people care about then the video store isn't going to get very many complaints about the low supply. The movie studio ends up shooting itself in the foot on the deal.

Netflix already has a common complaint of not carrying enough copies of certain movies (especially Blu-ray titles). A lot of Netflix customers have merely accepted the problem of some movies staying stuck in the rental queue for weeks on end.

There's also another problem in that a rental pricing model would depend on all movie studios doing business by that model. Otherwise the studios would just get played against each other, with studios who charge less for their discs getting more shelf space in the video stores. This would certainly play out with titles that aren't high demand event movies.

Based on the format wars with DiVX/DVD, HD-DVD/Blu-ray and even DTS/SRD/SDDS it's pretty clear movie studios rarely agree on doing anything unanimously. A video store that gets price hikes from one studio may simply choose to stock more discs from a rival studio.

A rental pricing model would add an additional 3-6 month block of time in the way of a movie going to retail. That extra delay could cost the studio the opportunity of charging standard prices for the retail product. The title would be older and probably already playing on channels like HBO. Movies the same age from other studios would going through their first round of retail price cuts (like the $20 DVD being dropped to $15). That previously rental-priced movie would have to enter the retail market at a substantial discount to have any chance of being competitive.

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Joe Tommassello
Jedi Master Film Handler

Posts: 547
From: Coatesville, PA, USA
Registered: Jan 2008

posted 03-31-2009 01:55 PM

quote: Bobby Henderson
I think the extras that are more interesting are those which feature the technicians and artisans working behind the camera.

I agree. I enjoyed the "Dark Knight" extras about filming in IMAX.

quote: Bobby Henderson
You gave a "what if" scenario about The Bucket List using imaginary figures

That's not true. I used actual disc figures backed up with a link to the data. Based on the star power and box office I estimated the sales in 1997 or so figures that a VHS rental release would have generated...then subtracted a full third to compensate for the spread of electronic delivery options. Still the VHS model would have generated more. An educated guess from a 15 year video industry veteran is not imaginary numbers.

You do bring up an interesting variation. While I wouldn't call "Bucket List" a title with mediocre appeal, there are many that would fall into that category and, yes, in the 80s and 90s many of those were priced in the $50-$60 range (cost to store, not SRP). That would never fly again because there are too many other options for cheap entertainment.

The studios gambled and won in the 90s betting that stores would have to have as many copies of hits no matter how much they cost. It was the B titles that suffered as a result. My better customers - where applicable - bought MORE of the hit titles to compensate for either the shallow pockets or short-sighted purchasing decisions of specific competition...and ended up growing their businesses. Netflix would still have to buy hit titles at comparable levels to remain fiscally healthy. Prices may increase (again) but everything goes up in price.

Netflix could triple the number of pieces they buy and they will still get complaints. Every mom and pop that ever owned a video store will tell you if they bought two or twenty pieces of a title there would still be people complaining about not getting it fast enough.

As far as intitiating a new pricing structure...one studio would have to be bold enough to try it first and with the right progression of titles. If they succeed the others will jump on board quickly.

Lastly the pay TV window need not be altered. True they would have a lessened sell-through window (presumably 8 or 9 months instead of 12) but - as you state repeatedly - the $$$$ are the bottom line and they could pocket more money faster if they can shift the market into rental pricing.

Again - I am not saying I expect this but it wouldn't surprise me if it gets tried sometime.

Note - Bob you make an an interesting point in another thread. I think it's the one about the increased Netflix pricing where you note that the price of standard DVD new releases isn't getting any lower...in fact I think in many cases they are getting higher. The studios are shifty...they raise the wholesale cost but leave the SRP alone - or they lower the marketing or back-end incentives. I had been thinking for some time that new release DVD on-sale prices seem to have creeped up a couple of dollars.

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Bill Gabel
Film God

Posts: 3873
From: Technicolor / Postworks NY, USA
Registered: Jan 2002

posted 04-01-2009 05:33 PM

Fox Home Video ran into some trouble this week with the release of "Slumdog Millionaire". They mixed up the rental (without extras) version with the purchase (with extras) version. People who bought the film got the version without the extras but the package had them listed. Fox has setup a Hotline number for the complaints.

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Adam Martin
I'm not even gonna point out the irony.

Posts: 3686
From: Dallas, TX
Registered: Nov 2000

posted 04-01-2009 09:12 PM

That's a really, really involved April Fool joke!

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Joe Tommassello
Jedi Master Film Handler

Posts: 547
From: Coatesville, PA, USA
Registered: Jan 2008

posted 04-07-2009 03:47 PM

Boneheads! I don't see the point in making two discs. It has to cost more money and DEFINITELY did this time considering the screw-up. Now I could see if they had a release packed with so much supplementary material that they wanted to have a "movie-disc only" version...essentially the same as the "Disc One" in a multi-disc set. This would be good not only for rental outlets but for those of use who'd rather save $5 or more than pay for a second disc of extras we don't care to have.

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Bill Gabel
Film God

Posts: 3873
From: Technicolor / Postworks NY, USA
Registered: Jan 2002

posted 05-05-2009 02:44 PM

Add Disney to the list of issuing rental DVD's without boud materials.

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Joe Tommassello
Jedi Master Film Handler

Posts: 547
From: Coatesville, PA, USA
Registered: Jan 2008

posted 05-05-2009 04:31 PM

Yes, but Disney is going to give all outlets the option to carry both versions. That may bring blu-ray new releases down to a price point where I'd consider buying them since I don't want all the extra junk anyway.

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