It’s Deja Vu All Over Again for Hollywood

Over the past several years, motion picture studio lobbyists have been assuring policymakers, investors and the public that they will not make the same mistake that record companies did when the latter waited for years to make music legally available over the Internet. As a result, fans seeking music online had little alternative than to use free music services, many of which were not legal. And while online services like iTunes and Rhapsody finally did create a legal market for music, it was too late for the recording industry to put the free music genie back in the bottle.

If yesterday’s article in the New York Times is any indication, Hollywood has a very short memory. Despite clear indications that viewer demand for physical DVDs is declining in favor of the more instant gratification of online movie downloads, the studios are focusing their efforts on promoting not just the new high definition DVD format, Blu-Ray, but reinvigorating the entire DVD market. The Times reports that the “centerpiece” of the studio’s “market rejuvenation” effort is a DVD that comes with an additional disc containing a digital file of the same movie. A viewer can download the movie to their computer in five minutes and watch it there, or the Times claims, on an iPod (color me skeptical that these digital files aren’t laden with DRM. If that is the case, then iPod play would not be possible without violating the DMCA). In addition, the studios are digging even deeper into their catalogues (anyone for the second season of “F-Troop”?) and increasing their marketing in an effort to “refresh” DVD sales.

At the same time, the studios have done very little to “refresh” their online services, and most of what is available online comes from technology companies like Apple and Amazon, and not the studios themselves. Moreover, as Times tech guru David Pogue writes, these services are plagued with limited selection and “ridiculous time limits for viewing.” In most cases, you have to start watching the movie within 30 days (its not like you have to get a physical copy back to the store so someone else can rent it), and once you start the movie, you have just 24 hours to finish it.

So, in the immortal words of Yogi Berra, it's “déjà vu all over again” – major content companies focus the vast majority of their resources propping up an old business model in the face of changing consumer preferences and expectations. And, the kicker is, as the Times reports, the studios are optimistic about the future of DVDs because, in the words of one Fox executive, despite “the marketing hocus pocus” of the telecommunications industry, broadband speeds will be too slow for many viewers to download movies for the foreseeable future. At least that is what the studios are telling Wall Street. In Washington, of course, they tell policymakers that the Internet is so incredibly fast that it facilitates widespread movie piracy and must be stopped (or at least filtered). Right now, the studios seem neither to care about consistency or (very recent) history.

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