Copyright Law

Denying DVD consumers what they want

By William Patry, Esq

An article in the LA Times discusses initiatives by some studios to perpetuate in the DVD rental market the classic tiered release schedule for movies. Apparently, too many consumers want to rent DVDs, rather than buy them immediately upon release. The solution floated to take care of this frustrating expression of consumer demand is to get the rental stores, including Netflix to delay rentals for a few weeks, making them available for purchase only during this period.

Reed Hastings, CEO of Netflix is apparently happy to go along with this if the numbers can be worked out so that he can make more money too:

Depending on the details, however, a sales-only window might not hurt the bottom line of major rental companies. To get them on board, studios probably would have to offer them a lower wholesale price than that paid by retailers, currently $18 for most standard DVDs and $25 for high-definition Blu-ray discs.

"If we can agree on low-enough pricing," observed Hastings, "delayed rental could potentially increase profits for everyone."

The only ones out of luck are consumers. An article in Sunday's NY Times magazine section ("Consumed," by Bob Walker, page 22) discusses studies done by redbox about its clientele. Redbox's president Mitch Lowe discusses how redbox's kiosks have the capacity for 600 DVDs, and how the company experimented with offering wide selections, including foreign and classic films. What redbox found is that it's kiosks are not destination stops -- not surprising since they are in grocery stores and the like -- and that its consumers are impulse renters, of the big hits. The typical renter is a family, on a budget, 20 percent of whom have not been buying or renting DVDs because doing so was either too expensive or too much trouble (undefined what that means). And, the study adds, while some users of redbox also use Netflix or other services for a wider selection, "lots of redbox users don't rent anywhere else." Squeezing such customers seems counterproductive.

Full post as published by Moral Panics and the Copyright Wars on October 23, 2009 (boomark / email).