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Traditional media companies, like movie studios, are often criticized for their lack of innovation. But an experiment planned by Universal highlights just how tough progress can be.

Last week, it was revealed that the company planned a limited experiment in two mid-size cities in the United States. The experiment: for $59.99, consumers would be able to rent the movie Tower Heist while it was still in theatres and well before it became available as a traditional VOD rental.

Needless to say, the plan didn't seem like a good idea to a lot of people. AllThingsDigital's Peter Kafka, for instance, wrote:

...painting a $60 movie as a bargain is going to be awfully tough, no matter what math you use. And the fact that it represents a premium for a “collapsed” window won’t mean much for regular people. Even regular people with really nice home theaters and/or expensive babysitters.

Of course, there are situations in which $60 might not represent such a bad deal. A group or large family, for instance, might find the $60 price tag to be a bargain, and arguably there is some appeal to a movie night that doesn't require dressing up and driving across town to sit in an uncomfortable seat, in the worst case adjacent to a  yapping movie-goer.

But even if Kafka and critics were right about the general unattractiveness of a $60 movie rental, that unattractiveness didn't matter to several movie theatre chains. Fearful about the possibility that they wouldn't have an exclusive on a new movie, they threatened to boycott the movie nationally. So Universal pulled the plug on its experiment.

That's a shame. Experiments, even those that look like they're doomed to fail, are a prerequisite for innovation, and movie studios like Universal should be rethinking how movies are released and distributed to the public. The motion picture industry, obviously, has historically owed much of its financial success to the movie theatre, but in today's multi-channel, on-demand mediascape, it's not entirely clear that the theatre is the only viable red carpet for new films. Studios, of course, want to maximize their profit, and given the plethora of channels today, it doesn't take a huge leap of faith to believe that exclusive releases to theatres may not be the most profitable path for certain movies.

Without the ability to experiment, however, it will be nearly impossible for studios to figure out what makes the most money, and as a result, what consumers want and are willing to pay for what they want. The Universal experiment that never was is a reminder that for traditional media companies to innovate, they'll have to change more than themselves; they'll need to change their partners and stakeholders.

In the case of theatres, that won't be so easy, but it realistically must be done.

Patricio Robles

Published 13 October, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2406 more posts from this author

Comments (4)

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Luke Abbott

Shame such an idea was killed off. Although this may resurface in another form. I recall around 2008 Sky were trying to do something similar - new films, at home for inflated prices. Unfortunatly we've seen with the music industry, fail to innovate and technology will brush you aside.

almost 5 years ago

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365SM

I Say Yes they are Destroying the Rental Experiments also another issue comes up one limited people can watch according to there timing so I think its a bad Idea.......!!!

almost 5 years ago

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Craig Sullivan, Customer Experience Manager at Belron International

I agree - the lack of experimentation just points to a distribution chain that is tired, and in need of innovation.

To be honest, it isn't about whether it will happen - it's just a question of when.

I worked in film in the past and I can say that the studios are not experimenting enough here, and that they've yet to embrace crowdsourcing, ratings and customer driven selection.

For the companies trying to innovate, they also don't allow for flexibility in buying rights to show this stuff. The whole thing honks - the public won't get shown what they might actually want, it's hard or expensive to distribute digitally or get rights.

My honest feeling is that more independents find ways to disintermediate here - and connect with the public more directly - and leave the studios out of it partly or wholly.

The model is going to change whether they like it or not. They can either be drivers or riders of that wave or be altered unforgettably as it rushes by.

I also wouldn't blame movie theaters - they're not driving what gets produced or getting shown and want to protect *their* revenue. As a consumer in the future, I'd see more films in more ways on more channels if I could tie it all together.

Now that production and editing costs are lower with great HD camera equipment, my prediction is to see many more films that make money outside the studio system. I might want to eventually pick films for screening at my local cinema, through social networks online in my area. I might want to rent from a huge virtual film library, so I can dip into the classics.

Studios and rights holders are not doing these things, or much innovation digitally (or otherwise). Time for disintermediation - roll!

almost 5 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

It's a real shame they didn't try this one out. It might have worked. I think there is enough value in status and 'bragging rights' that people might have coughed up. People seem to find the (lots of) money to keep buying Apple products en masse.

almost 5 years ago

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