Received the following email from B. Scott Andersen and I thought it should be brought to your attention:
Slashdot has a pointer to an article on TechCrunch
http://techcrunch.com/2010/06/17/hollywood-dvd-rentals/
that quotes Paramount Home Entertainment President Dennis Maguire about Paramount’s reversal of their policy of “windowing” (delaying) new releases to DVD rental outfits like Redbox. The following is from the article:
Why is Paramount taking such an old school stance? Because they actually did some tests and realized these stupid windows will do nothing to help them sell more DVDs. Imagine that.
And it’s not just that — giving new releases to services like Redbox have actually helped Paramount make more money. Here’s the two key quotes from Maguire:
“There hasn’t been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money.”
“Those people who want to rent are going to figure out ways to rent, and us restricting them from renting isn’t going to turn it into a purchase.”
In other words trying to keep product out of people’s hands is a losing move. People will figure out a way to rent/borrow/steal it anyway. You might as well take their money. The author of the TechCrunch article is more harsh. Quoting from MG Siegler, “Further, the idea that restricting movie rentals for 28 days would lead to more sales (what this is really about) is asinine.”
Book publishers take note! Paramount has figured out that delaying or obstructing sales of their product reduces sales and revenue. It sounds so simple and straightforward when you say it THAT way. Apparently, it takes decades of experience in the book publishing industry to come up with enough hand-waving and weasel-words to obfuscate that simple concept.
The book industry is actually in better shape than Paramount in some ways. Assuming for a moment that the sale of an eBook is like a rental. Paramount sells its DVD once to Redbox and the subsequent revenue stays with Redbox. Book publishers get that money every time they sell the eBook. Instead of looking at eBooks as lost hardcover sales they should be looking at them as extremely expensive rentals. These rentals have almost no distribution costs, have revenue that feeds directly to their bottom line, and have virtually no problems with returns (compared to paper). Instead of crying over the money they believe they should have made, perhaps it would be better to just take the money on the table in front of them.
Looking back, perhaps one of those big movie studios should have bought Redbox or NetFlix. Then they have that revenue, too.
— Scott
