Thursday, October 13, 2011

Are movies relative anymore Pt 1

There is a great amount of debating going on now in the movie industry. In short, it comes down to that famous and overused saying from William Goldman.

Nobody knows anything.

Movies have changed dramatically in the last 5 years. DVD sales have slumped as people prefer to rent from Netflix and Redbox and that approaching gorilla, streaming video. And if the studios are wondering why they're beginning to see sales of movies go flat, they just have to look in the mirror.

First let's look at the business end.

Studios made a lot of money on VHS movies, both for sale and for rent in both corporate video houses like Blockbuster and mom&pop shops. It was a whole new way to get money from their vast libraries of movies. They discovered that not only new movies were sought, but also old ones too.

It was good times.

Then DVD entered the picture, and it was even better as they realized that customers would not only buy the new DVD movies but also would buy the old movies they already had on VHS but wanted the superior pictures of digital video.  This also happened when people began to buy CD's to replace cassettes and vinyl records.

It was good times again.

And then the studios got greedy and said "let's sell movies everywhere!"And DVDs began showing up in your local supermarket by the movie magazines at the checkout. They were everywhere, the pharmacies, gas stations, liquor stores and finally -- the Red Box.

The Red box, usually at supermarkets but now in other stores, was simple, like buying a chocolate bar. Simply slide in your credit card and get a movie for $1.  Yes, one dollar.

But some other people did not like this at all. Who?

The theater owners, that's who. Movies were coming out too fast from the studios. And networks began to show their old shows on the internet. For free.

So who was losing money here? The theater owners who depend on movies playing at their theaters for as long as possible. That's how they make money. And releasing movies too soon takes money away from them.

And that's where we are now.

This week, a movie called Tower Heist with Eddie Murphy and Ben Stiller was set to open Nov. 4 and then be released  3 weeks later via VOD (video on demand) to 2 sample cities, Portland and Atlanta where people could pay $59 to see it at home.

Do you see something wrong here?

Without debating the worth of that particular movie, except to say Eddie Murphy movies have flopped for the last 10 years, the thing here is this:  The theater owners were afraid that could cut into their ticket sales. Most big movies last at least 3 weeks in theaters.

And would you be willing to pay $59 for any movie 3 weeks after it's released rather than wait for a few more weeks to buy it at $9.95?

So the studios now have backed off and everyone is still unhappy because sales are dropping steadily. And studios wonder how they can bring back those heady days of VHS again, this time with the internet being another big gorilla in the room.

There are two things that I can see; first the studios oversold their movies and in doing so made movies less important. Up until the mid 90's movies were still a big-ticket item, they were special and you would go to see movies in theaters.

By putting movies into any store that had a counter, I think that it made movies less special. You can buy a movie and corn flakes at the same store.  And Red Box was renting the for $1. And movies lost their magic.

And secondly, we have a generation that's used to getting things for free (except anything from Apple whose mark-up is outrageous) and that includes movies.

What's the solution? Need I say it again? "nobody knows....

But there's another side to the movie problem... but that's for the next blog.