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We’ve been talking about how Mark Cuban means to revolutionize the way movies are sold for months. Release movies in all formats (theaters, DVD, and PPV) at the same time, so consumers can choose when, where, and how they see movies. Share the profit with studios and distributors. Now, on his weblog “blog maverick,” he has finally shared his thought process, more or less in full. A quote:

How many DVDs of a title could be sold in theater to viewers who just saw the movie?

How much marketing support could come from DVD retailers and rental outlets to promote both the movie in theaters and for day and date availability in their stores?

How big an order would retailers and renters place that could be used to expand the marketing for the theatrical release?

How much money will be saved by not having to invest in a 2nd wave of advertising for the DVD release?

Would the net value of all the above be more than 1 pct in incremental revenue and cost savings? And if it is, what would be wrong with sharing 1 pct of DVD sales and rentals with theaters?

A very interesting read, but perhaps more interesting are the 90 or so comments at the bottom of his post, which communicate a variety of views, suggestions, questions, and opinions. If you have some free time, sift through them for an increased understanding of the market.

Found via Hackingnetflix

After doing away with late fees (and stock dividends), and raising the price of its online rental service, thus ending the online DVD price war, Blockbuster is still having some difficulty paying back its creditors.

From the Motley Fool:

When Blockbuster (NYSE: BBI) decided it would let its customers forgo paying late fees on overdue rentals, perhaps it was hoping that its creditors would be just as generous. No such luck. On Wednesday, Blockbuster announced that it is in negotiations with its creditors. The company insists that it is in compliance with its debt covenants, but it’s clearly been biting off more than it can chew lately, and it’s easy to see why its creditors are getting antsy.

The news sent shares of the leading — and bleeding — video rental store giant dropping faster than box office receipts for Gigli. The stock surrendered 16% of its value Wednesday after having already given up plenty since being spun off by Viacom (NYSE: VIA). Three years ago, the stock peaked at $30. Now, a share of Blockbuster may not be enough to land you a flick rental.

Click here to read the whole article.

For more on Blockbuster’s financial woes… here.

17 regional Blockbuster stores have defied corporate policy and abandoned the popular “No more late fees” campaign. The move, surprisingly, had nothing to do with the $250-300 million in lost revenue that the policy has cost BB, but rather to customer service complaints on the local level.

“With the no-late-fee policy we were having an extreme problem with satisfying the customer on movie availability,” said Mickey McFarland, director of operations for Capitol Entertainment, which owns franchises in Arkansas, West Virginia, Maryland and Virginia, including nine in Fairfax County. “We did not know when the movies were coming back.”

…

“People just scarfed up movies,” said Kingdom, who rents from Capitol’s franchise in Great Falls. “You could see people leaving Blockbuster with an armful of movies instead of just one or two.”

I guess those late fees served a purpose after all. FYI, the stores are now charging a $0.99 extended viewing fee for each extra day the movie is out past its due date.

Read the whole article here.

What others are saying.

A great marketing strategy by Netflix, got to give them credit:

EASIEST NEW FUNDRAISER EVER!
STEP 1. Hand out free Netflix Movie Cards to your supporters.

STEP 2. Your supporters simply go online and sign up for a 2-week free trial of Netflix!

STEP 3. They’ll get free DVD rentals and your group earns $10.00 for EVERY person who becomes a paying member after the 2-week free trial! That’s easy money!

HERE’S HOW IT WORKS:

Netflix Movie Cards come 8 to a sheet. These sheets are provided to you for FREE from FundRaising.Com.

Your group’s name and 6-digit code are printed on the back of each Netflix Movie Card.

Your supporters go to www.fundraising.com/movies and enter your 6-digit code. (If your supporters skip this step and go directly to the Netflix website, your group will not receive credit!)

Once the hit “submit”, they will be taken to the Netflix website where they will sign up for their 2-week free trial.

After their 2-week free trial is over, they can choose to allow Netflix to begin charging their credit card the monthly fee and continue their subscription, or they can cancel their subscription and owe nothing.

Your group will earn $10.00 for every person who continues the Netflix subscription after the free trial period ends. Your group will receive a check from FundRaising.Com on a quarterly basis. (PLEASE NOTE: Your group will earn credit for first-time Netflix members only.)

$10 per subscriber is a great price, considering Netflix makes about $18 a month for each subscriber. It’s a good enough incentive for us to become salespeople for ‘Flix, and Netflix gets to look charitable in the bargain. God bless America!

(found on Netflixfan’s blog)

Barter. The oldest form of currency. I’ll trade you a dozen eggs for a pound of pork. Good deal. What happens when you introduce a wide-scale barter system into contemporary America? Well, BarterBee.com of course. It works a lot like Peerflix, that is to say, people post what they have and what they want. They earn points when they send out media and then spend them to barter from others. However, unlike Peerflix, BarterBee lets you trade movies, music, and video games, not just DVDs. Each transaction costs users one dollar. Throw in a pound of pork and you’ve got yourself a deal!

Read BarterBee’s press release.

What others are saying about BarterBee.

What people are saying about Peerflix and Barterbee.

In a recent kiosk post, I talked about a system currently being tested wherein movies are released simultaneously in theaters, on DVD, on the Internet, and on cable TV. Here’s an article that’s more about that.

The article points to the power of Wal-Mart as the biggest stopping force in the PPV delay game, since their DVD sales are a full 1/3 of Hollywood’s revenue each year and Wal-Mart fears the home delivery method. This ties in with Netflix as well, and their recently shelved On Demand gamble. However, this experiment overrides them all, since it’s all done with independent distributors and film makers.

Observe.

Along with his longtime business partner Todd Wagner, Cuban became a multibillionaire selling his Internet company, Broadcast.com, to Yahoo for $5.7 billion. Cuban and Wagner then created an entertainment conglomerate that includes controlling interests in a movie production company (HDNet Films), a distributor (Magnolia Pictures), an art-house chain (Landmark Theatres), a television and video library (Rysher Entertainment), and a high-definition television network (HDNet). Cuban believes that Hollywood’s distribution system requires radical change. He wants to do away with artificial windows so that consumers can buy a movie, as he notes in his blog, “How they want it, when they want it, where they want it.” He argues that movies should be made available simultaneously on cable television, DVD, and in movie theaters, letting consumers decide whether they prefer to see it at home (even if it means paying a premium for a new release) or in the theater.

…

To be sure, Hollywood has a long history of resisting new forms of delivery. When television first came on the scene in the 1940s, the studios attempted to kill this infant medium by refusing to let the networks show films from their libraries or use their facilities to produce programs. When the VCR was introduced, the studios attempted to strangle it with eight years of litigation. Even when Sony and Warner Bros. launched the DVD, the other major studios did not join them for a year or so. By now, the top studio executives recognize that the electronic delivery of digital movies is inevitable—it is only a question of who will defy Wal-Mart and when.

Neat, huh? Of course, this may be a total failure, because, really, who gives a damn about independent films? But in a perfect world the domino effect would echo throughout Hollywood and digital movies would beam from sea to shining sea in stunning High Definition format.

Variety just keeps the hits coming today! Big news in the format wars, reported by Variety via Cinematical:

After pledging allegiance to Toshiba’s HD DVD format, Warner Brothers has decided to back Sony’s Blu-Ray as well. The people who gossip about this sort of thing are predicting that if Sony releases a kickass version of Blu-Ray around the time it unveils the Playstation 3, then Warners and other studios will likely abandon Toshiba altogether.

So more studios are going over to the Blu side while Wintel goes over to HD-DVD. Consumer electronics vs. home computing? Entertainment vs. information? Good guys vs. bad guys? Call it what you will, it’s still rock and roll to me.

A remarkably informative article from Variety, reporting plenty of new information along with the old. I’ve been talking for a while about the imminent death of Blockbuster and blah blah blah, I’m sure your sick of hearing about it, but now Netflix bigwigs are calling the video rental stores out publicly. A major price cut may loom n the horizon. Its goal: Not to gain new subscribers, not to reward loyal customers, but to put physical video stores like Blockbuster out of business. They want those stores to close, they want that company bankrupt, and they’re not just hoping, they’re doing:

Rather than taking the opportunity to raise prices and focus on profits, Netflix is looking to use its position to put the permanent kibosh on remaining challengers. CEO Reed Hastings said company will test further price cuts over the next six months to see if it can accelerate growth further without sacrificing margins.

“If there is enough elasticity to make additional price points work, this would increase the economic pressure on video stores and additional store closures would further increase Netflix growth for many years ahead,” he told analysts in a conference call.

I’d say “them’s fightin’ words,” but it doesn’t look like Hastings is looking for a fight at all. He’s looking for BB to just roll right over and die like a varmint.

Later in the article, we get an update on the much-anticpated Netflix On Demand offering… the update: On hold indefinitely. Again, not because the demand isn’t there, not because the technology won’t work or the business model is infeasible, but because the studios just said no.

Plans to garner growth from Internet downloads are now on indefinite hold, however, Hastings said, as a lack of available content have caused him cancel a launch planned for the end of this year.

“We face the same obstacles Movielink and Comcast and Apple have faced licensing movies,” he said. “Our shared opponents are TV channels that pay large sums to get multiyear exclusive access to studio films.”

Well, so much for that. Another great technology killed in the name of the mighty $. As they say, we live in a material world and Netflix is a material girl. Just think of the big studios as a sort of macro-economic sugar daddy, and you’re half way to understanding how the whole thing works.

There’s some stuff in the Variety article about the format wars, Blockbuster’s financial woes, and some other stuff, too. If I were you, I’d just read the whole thing.

Occasionally, I’ll go to Motley Fool for a more business-like take on video technology. Their analysis are usually spot on, thought provoking, and sensible. But who does the Fool go to when they want to get another perspective? The Motley Fool message boards, of course. A lot of it is blithering, but much of it is quite apt; and, every now and then, it’s something so neat that I quote it here on Kiosk. So, here it is, a selection from the Motley Fool post of the day:

Let me start by saying that I don’t think people will watch a lot of video on the new iPods, but they’ll watch a ton on their computer. Also, it was only a brief mention during Steve Jobs presentation, but there will be a cable that allows the iPod to play the video onto your TV. Apple is going after On Demand, Blockbuster, TIVO, NetFlix and DVD’s all at the same time.

Look down the road a year or two from now. The infrastructure is now in place. More networks will start adding shows. HD ability should also be coming. I’ll be able to subscribe to a TV series instead of taping it, TIVOing it or trying to catch it live. It comes free of commercials. I can take it with me and watch it anywhere using my iPod; on the TV in my living room or bedroom, on my laptop on a plane, on the TV in my hotel room, at my parent’s house, etc.

Also, the back catalog of shows will be added over time. Today, networks are making nothing on old TV shows unless they get syndicated. Now the back catalog can be available to anyone. Cable networks (The History Channel, The Discovery Channel, TLC, A&E, HGTV, SCIFI, TNT, ESPN) will start adding content. Movies will be available, but maybe for a higher price. Anybody notice how many new DVD’s lately are seasons of TV shows?

Want to build a deck? For a $1.99 you can see the last year’s show on HGTV.

Want to sell your house? Catch a few episodes of Sell This House on A&E.

Need to write a school paper on dinosaurs? For $1.99 you can watch a show from the Discovery Channel.

Click here to read the post in its entirety.

Like me, this gentleman does not believe that people will watch a whole lot of TV on their actual iPods. The general consensus is that it’s just not practical. However, he astutely pointed out a few possibilities I had not hitherto imagined. One is an increased use of TV as research. As it stands now, ordering a tape or DVD of an educational program is a pretty big pain in the ass. You have to get the address or telephone number, mail a check, and then wait for shipping. Plus, those things don’t come cheap. If all the episodes were available on Apple.com for $1.99, well, you can see the applications.

The second idea was one he just glossed over: subscribing to a show. You subscribe to a magazine, after all. You subscribe to a news letter. So why not subscribe to a show and get every episode zapped onto your iPod? You’re paying a lot for cable already, but so what? Cancel your cable subscription and just get the shows you want. 99.9% of what’s on cable is crap you have no interest in whatsoever, yet, you’re paying for it anyway. A subscription to one show would cost less than buying each episode, obviously. I’m thinking maybe $19.99 a season. If you watch 10 shows (more than I watch), that’s $200 a year, about a quarter of what you’d pay for digital cable and the premium channels.

Well, you might ask, what if there’s a big TV event that you must see? Shell out the two bucks for it. They don’t happen all that often. What if you like a show, but not enough to subscribe? Well, just watch your friend’s subscription. Sharing subscriptions would probably become common (maybe common enough to doom the entire enterprise? Who knows?) And of course everything would be commercial free and at your leisure.

Sounds like a good deal to me.

Apple’s new Video iPod is an interesting animal, or fruit, rather. People are saying that Apple, again, has redesigned the entire playing field , and are molding the world of TV in their own image. The ability to watch cable shows without your TV may be a scary one for cable providers. On the other hand, maybe not?

According to the market watch report:

“People pay $30 or $50 a month for unlimited cable television for a couple hundred channels that they can watch 24 hours a day,” Hoffenberg said. “Now all of a sudden, when one hour of TV is a dollar or two, it changes the value proposition for television.”

However, cable could also benefit if the video iPod doesn’t take off.

Paying for individual TV episodes may prove to be a stubborn roadblock for many people to get beyond, because the “free” on-demand model is becoming so accepted.

“If anything [the video iPod] might encourage people to use VOD, once some of these current network shows are available on a non-linear basis,” said Jim Penhune, an analyst at Boston-based Strategy Analytics, a provider of consulting services for the cable and broadband industry.

It’s all very complicated and has a lot to do with numbers and stuff. Also trends I’m sure. Oh, and consumer attitudes. For me, the real question is: Do I even want to watch Lost or Desperate Housewives on a 2.5″ screen for an hour?