The Hollywood plot to turn DVD renters into buyers [UPDATED]
My colleague Ben Fritz reported today that some of the major Hollywood studios are mulling a plan to raise revenue by making people wait longer to rent movies. The goal would be to boost sales by creating a short window for home video sales before titles become available for rent. The strategy wouldn't work unless the big video rental businesses cooperated, obviously, so the studios would have to buy them off by letting them buy discs at a deeper discount than they do today.
Ben's a news reporter, so he couldn't state the obvious problem with this idea. It's crazy.
I understand that the trends aren't encouraging for the studios. DVD sales are dropping, and delaying rentals might -- might -- reduce the momentum enjoyed by lower-margin rental services such as Redbox's $1-a-night kiosks and Netflix's monthly subscriptions. But the studios' plan is based on the idea that consumers are more sensitive to delay than they are to price. It's true that most of the demand for home video titles is exhausted quickly. But it's absurd to assume that buying and renting are interchangeable in consumers' minds, and that people who ordinarily might rent a title would buy it if that meant they could have it sooner. Maybe I'd see the world differently if I were on a Hollywood executive pay scale, but $3 to $5 strikes me as a much different price point than $15 to $25. Think about it. How often do people go to Blockbuster looking to rent a particular movie and, after finding all the rental copies taken, decide to buy a copy rather than rent something else?
If Hollywood wants to encourage buying instead of renting, it has to make purchased product significantly more valuable than the rented one. This isn't a particularly easy problem to solve, given that video rental stores have access to the same discs that everyone else has. Some studios have been selling the major rental chains (presumably cheaper) versions of their movie discs stripped of the extra features, but the implication is that the missing features weren't all that compelling to start with -- otherwise, renters would demand them and the rental stores would comply. Nevertheless, the advent of connected disc players opens up a range of possibilities for the studios to provide more content and a better experience to buyers than to renters.
Such an approach would focus on generating consumer demand rather than frustrating it. In an era of expanding entertainment choices and intense competition for consumers' time and money, any move to make it harder for people to get content on the terms they prefer seems self-defeating at best.
Corrected, 1:27 p.m.: The original post said that, "with rare exceptions, there's no differentiation between the copies Blockbuster rents and the ones it sells." In fact, Blockbuster and other video chains have been buying stripped-down versions of DVDs for their rental services, as the corrected post now states.-- Jon Healey
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