Hollywood's Completely Broken

The problem now is that DVD's are widely seen as an inferior format. Superficially, they have all the disadvantages of Bluray with inferior quality even to online streaming. Sure, they're pretty cheap, but not cheap enough to justify the lack of both convenience and quality. If online streaming killed DVD sales, Bluray was certainly an accomplice.

The reason Bluray hasn't gained as much traction as Hollywood hoped is that, in practice, its even more inconvenient for users than DVD's were. Bluray's are saddled with DRM so onerous that movies can take minutes to load and only a player with an internet connection to obtain updates has a chance to play the newest titles. Bluray discs almost universally have inferior user interfaces to DVD's, and the consistency is awful. BD-J discs often break basic player functionality such as auto-resume. On top of it all, Hollywood has continued to pile on more and more warning screens and advertisements. One of the selling features of the Bluray format, according to Hollywood, is that Bluray discs can download fresh new trailers online and show them to users instead of simply playing old trailers loaded on the disk. Yes, only Hollywood would call a program that downloads ads and makes you watch them a feature!

Compare this to online video. The quality is still inferior to Bluray, but it won't be that way forever, or even much longer. Arguably, the quality edge Bluray has is already pretty slim on the majority of display's people are using.

Hollywood should be serious about keeping Bluray competitive with online video. They make a lot more when you buy a movie on Bluray than they do if you watch it on iTunes. However, they clearly aren't. How do we know? They keep updating the encryption on Bluray discs, forcing people to keep up with updates to their players even though the updated encryption is frequently broken before the Bluray's using it officially go on sale. Every time a user has even slight difficulty playing a movie they just paid good money for, you drive another nail into the coffin of the Bluray format. They keep piling on trailers and warning screens. It still takes minutes to get to the movie with many Bluray's. Onerous anti-piracy ads are still being shown to the very people who have just paid for their content! Bluray menu interfaces remain inferior to those of DVD's, and consistency has not improved.

The obvious answer for Hollywood is to treat their best (i.e. most profitable) customers like their best customers, but this is simply not being done. Instead, they're looking for the next big thing to fix everything. 3D Bluray's! 4K video! 3D fatigue has already had an impact on cinema sales, but it'll be great in the home! (Disclosure: I own a 3D projector and have yet to watch more than 10 minutes of 3D to verify that it works). Yes, 1080p isn't good enough! 4K will be the savior of Hollywood, nevermind that the average viewer can't tell 720p from 1080p! The number is bigger, so they will come.

It's pretty hard to feel much sympathy for Hollywood these days.

The central idea of this article, which is that slowing DVD sales due to the explosion of streaming options are slashing profit margins, is fascinating to me primarily due to the relative absence of blame-shifting onto 'piracy.' There was a mention of it, but it seems Hollywood has finally moved past the 'Piracy is causing all our woes, DMCADMCADMCA' delusions of the late 90s/early 2000s. As a Slashdotter from back in the day that saw such scolding played out on the front page I find it strange (yet optimistic) that they finally saw the real writing on the wall.

However, even though the central conceit of the article is interesting to me I find the language just goddamned terrible. I guess if you're looking for properly-flavored industry news then sentences like "[h]is first picture was the tentpole smash Rise of the Planet of the Apes, and he already had three television shows on the air" and "[m]ore recently, he released the smash Identity Thief, with Melissa McCarthy and Jason Bateman" are right up your alley. I'm suprised the author didn't describe some upcoming SMASH deal as BOFFO.

These days, it seems the best movies are low budget, and worth buying a DVD of to keep. The big expensive "block buster" movies are very often watch once, enjoy for the moment, and forget. That can be cinema, netflix, torrents, who cares? The movie isn't actually worth caring about.

This is why the stuff we learn from Netflix's experiments with funding shows, which changes the pipeline, will do. Soon we'll have the Netflix funded movie production and it will be another shift in the bedrock of whose ass you have to kiss to get a movie made.

I feel sorry for the folks who were revered for their expertise before and are now worthless. But it is the way of these things. What the folks in the studios realize is that movies are still going to get made, but how they get made is going to change. And until the 'new' way has run a few movies through the pipeline and the new makers have figured out what it takes, its going to be scary.

First, we're dealing with people who are LOADED. Why should I care if they can't afford to pay Tom Cruise, the director, the producer, and a bunch of other people 20 million dollars each? Oh darn, they'll only get paid 4 million dollars each.

This is a classic case of old, technologically-inept white men whose business model was predicated on gouging the public for decades. The internet is killing DVD sales because of convenience and theatre revenues are down because the public is getting tired of superhero remakes and don't feel that the price of admission is worth 2 hours of watching 3 actors standing in front of a green screen and interacting with a bunch of CG extras, so they download it instead. All of a sudden Hollywood can't continue their price-gouging, and because they're basically Luddites, they fear change and can't adapt.

So they'll inevitably turn to the courts instead of letting their business adapt to the free market that they all espouse to love.

It's basically the situation that the American car companies found themselves in a few years ago. People are getting tired of their shitty products and aren't buying them any more. Instead of making better products that people would be willing to pay for, they curl up in the fetal position and cry.

> “What are the implications of that?”

> He looked at me incredulously, as if to say, Haven’t you run a studio? Then he said very emphatically, “The implications are— you’re seeing the implications—the implications are, those studios are frozen. The big implication is that those studios are—not necessarily inappropriately—terrified to do anything because they don’t know what the numbers look like.”

What does this actually mean?

Is there simply high uncertainties in P&L predictions, due to the difficulty in predicting international sales? There's a hard limit to the number of foreign movies some countries, notably China, allows so there could be massive fluctuations depending on whether it's good enough to send to China; and international tastes might be hard to predict. Or is it because the profit forecasts for every movie they do a P&L for falls short of what they can accept, and they put a magic "international sales" estimate in to push it over the line?

This has a profound impact. I know longer know or even care what's coming out, or what's impending on DVD release. I know there's a new Star Trek movie, and the Hobbit came out a bit back, but I'm no longer edge-of-my-seat excited to see this because I haven't been being bashed about by promos for months. I'll wait for it to appear on Netflix, or maybe the Redbox thing. I saw Iron Man 2 on Netflix, so I figure I'll get to see part 3 there too.

I think the basic problem is that contemporary movie studios are publicly traded companies whose goal is to grow by 10% a year (or at least hit market growth rates). In some businesses, that's just not possible because of limits to the size of the market; book publishers, for example, have only rarely grown at market or above-market rates.

Books are an interesting example for a couple reasons: book publishers have been real businesses far longer than movie studios. In addition, studios for a long time set up businesses that relied on people repeatedly re-buying the same movie on different formats. Books have never really gotten away with that (although we might be seeing some re-buying like behavior in the shift from paper to digital). Now there's not an obvious successor to DVDs, and movie studios might become, or be becoming, more like book publishers.

* Further background reading: Edward Jay Epstein, The Hollywood Economist.

Just for a comparison, I've pirated one album since I subscribed to spotify (yeezus to check it out when it leaked).

1) That the golden age for DVDs only lasted about 10 years. I think the golden age of cinema lasted from late 1920 to early 1960's. Acceleration in technology results in accelerated culture change and accelerated market changes. We're use to it in tech, but I didn't think much of other industries.

2) Along those lines, I was surprised this was such as revelation to the author. As soon as I saw Netflix go streaming, I knew this was the way I wanted my movies delivered. And the attitude in the OP seemed to be, "Hey, we can't make great movies and take risks on movies because you guys aren't buying DVDs." Innovative films never seemed to be big-budget anyway. And for an industry that's not use to change like technology is, they seem to fail to see that with new technology comes new business models, and new opportunities. I wonder how tech can educate hollywood on this.

My guess is when DVDs first became the craze there were only a handful of titles, as more titles were added people bought more - often going out to buy their favorites and classics for the sake of nostalgia. In this way Hollywood was making money by just re-releasing a lot of old content.

Now that all that 'catching up' has occurred and customers have already gone out and bought their favorite films, only new releases remain - and those are either a. underwhelming or b. not yet 'classic' status enough to bother owning.

In other words, Hollywood is making shit products. They're just surprised that we're not buying them anymore.

>If a studio’s margin of profit was only 10 percent in the Old Abnormal, now with the collapsing DVD market that profit margin was hovering around 6 percent. The loss of profit on those little silver discs had nearly halved our profit margin.

This actually explains a lot about the studios' rabid antipiracy campaigns and their unwillingness to make everything available streaming. DVDs aren't a huge slice of the pie, but as a percentage of profit, it becomes a huge deal.

Hollywood would have to adapt, which means doing things in a very different way than they've done it so far, and that's not something they'd like to do. They'd rather try and hold on to what they have now for as long as possible.

Many people still subscribe to cable. I don't, but on some months I spend upwards of $100+ on movie tickets and Blu-Ray disks (Yes, I buy them.) Other months I realize I can do a zillion other things (go to a zoo or play golf) for what movie tickets cost.

Things are going to change, but the unique concentration of talent and intellectual property based around L.A. will be a force to be reckoned with for years.

And the author doesn't seem to internalize what's become common knowledge in the music industry: the shiny savior disc (CD/DVD) was really masking the deeper disruptions in consumer behavior.

Our family buys DVD's and watch them.

DVD's are a pretty costly way to sell movies. Retailers take a big slice. You have to create packaging, deal with inventory, distribution costs etc.

Regarding tech advance crushing DVD sales, 50% of profit.