Kiosk.net

PaidContent.org has skillfully extrapolated some info out of this Hollywood Reporter article regarding the economics of TV downloads:

According to JPMorgan Chase analyst Spencer Wang, one-episode of a hit show on network TV would generate about $12 million in gross ad revenue (assuming 17 million viewers). By comparison, even in the worst-case scenario — with 20% of TV viewers opting for downloads, 100% of which overlap with existing programs — downloaded episodes of such popular series can generate an estimated $15 million in revenue. The main reason is that the $1.44 in download revenue per user (or 70% of the $1.99 per download) is greater than the estimated 57 cents in advertising revenue per user generated under the current model. The content owners take from downloading is nearly the same that a commercial-fee TV series episode generates from a DVD boxed set.

This was news to me. I always sort of assumed that Apple would be nickel-and-diming them for the lion’s share, and the content creators would just be happy with an alternate stream of revenue.

I always thought Netflix would be the one to break this new technology, but now sources are pointing toward Amazon.com launching an online VOD service aimed at selling more DVDs.

Multiple unnamed sources have all testified to Amazon’s impending VOD service which would let users download movies for a fee, and then use that fee as a credit if they choose to purchase the DVD of the movie they just streamed.

The article also goes over a few related points including Netflix’s VOD scheme, Comcast’s On-Demand service, and the silmotaneous release model debuting with Soderbergh’s “Bubble.”

Setting up the infrastructure for downloadable full feature movies not only allows for clever multichannel sales like the proposed Amazon model, but also paves the way for another idea we’re quite fond of here at Ars: simultaneous releases, in this case theatrical and online. As release windows shorten and move closer and closer together, it seems inevitable that movies in the future will be released through alternative channels alongside the theatrical release, and Internet delivery doesn’t even have to deal with pressing and shipping physical media like DVDs.

Of course this is only a semi-substantiated rumor in my mind, so take it with a grain of salt. This is definitely a cool idea though, and an excellent application of VOD technology if it is true. With a powerful media PC and a good quality stream, this may be a very successful endeavor by Amazon, always a trailblazing company.

An article in today’s New York Times describes what could be a “new convergence” of media- internet and television. The article was a bit dense and industry-focused, and I’m not sure if I understand it completely myself, but I’ll do my best to sum it up for you here. (Here’s the link, click it while it’s still free.)

Premise: Google acquires dMarc broadcasting for $1.24 billion.

DMarc uses software to help place ads on radio, and it could conceivably do the same for Google’s armada of Web ads. The deal, along with other experiments by Google to reproduce its advertisers’ notices in newspapers and other print outlets, suggests that Convergence 2.0 is moving in interesting and previously undeveloped directions.

So for starters, the article isn’t really about convergence so much as placing advertisements. Yet, we go on to discover that by using customer’s bills/mailing addresses along with IP addresses, online content providers may start doing something interesting soon: they may begin to provide regional programming online, i.e. content that is specific to a global region that can only be accessed from a computer within that region.

What good is this? Ads, of course! Now the local pizza place can put an ad up on cable TV as easily as putting an ad on Google, or the yellow pages. A point of confusion here: do they mean as long as the viewers are going online for their cable TV? Does this assume readily available internet-based broadcasting?

Possibly it refers to online TV purchases such as the kind available on iTunes and other stores? One affiliate makes a bold claim, that he wishes to sell episodes of CBS shows on the affiliate website. Miss an episode of CSI? Go to WRAL.com and pick it up for $1.99 while you check up on local news.

Official statement:

“The next thing that we’re all buzzing about is this concept of selling programming to people over the Internet,” said Mr. Goodmon, whose flagship station, WRAL, is the CBS affiliate in Raleigh. “If CBS wants to sell ‘CSI,’ we would like to be able to sell it for them - in partnership with them - on our Web site. I think we’re in the best position to sell and promote that material on behalf of the network.”

The advertising on such shows would be extremely cheap, according to the article, only a few dollars per spot, or $300-500 for an entire campaign.

This strikes me as a bit odd for a few reasons. First, when you download a show from iTunes, it is typically commercial-free. This isn’t to say that commercials can’t be added, but I think one of the selling points of these online shows is their ad-free nature. By adding in local commercials, boradcasters may be killing the goose that lays the golden egg. And it seems likely to me that online ads will be unceremoniously skipped- especially if it’s in Quicktime, or a format that easily facilitates fast forward and rewind. You don’t even need TiVo. A Realplayer or Windows Media format may be better for something like this, but personally I wouldn’t want to watch a TV show in Wind–buffering 50%–buffering 78%–ows Media.

I’ve got low expectations for all of this. Anybody can feel free to chime in here and let me know if I’ve missed something, but judging from the article, I don’t think I have.

Time for a little physics lesson: For each action there is an equal and opposite reaction. This bares true in the movie biz too, as you’ll soon see.

Premise: The box office slump of (summer) 2005

Cause: People began to notice that most movies were complete and utter shit.

Effect: Hollywood collectively claims that they will begin making less shit, more good films, in about as many words.

Most might say “yeah, right,” but in a Variety article, we see that effect already begining. Sony, and others, have announced that they will be making significantly fewer films next year, thus cutting the chaffe from the B.O.

Sony believes a cutback in production is vital to clear the clutter in the marketplace. Disney is intent on pushing further resources into animation, ESPN and ABC to create new content for newly expanding digital platforms. Warner Bros. wants to focus more on big “event” movies and cut back those discomfiting “middle” films. So it goes across the board.

Ah, yes. It all makes sense. Spending more effort on box office smashes and “Oscar” films, getting rid of the glut of crap in the middle (Duece Bigelow 2? White Noise???) . It almost makes too much sense for the movie industry.

Oh, and Disney has purchased Pixar, (or maybe it’s the other way around?). Smartest move Disney ever made. Releasing Bambi III and raising the ticket prices at Disney Hong Kong was not going to cut it next year without the next “Incredibles.” And now, Steve Jobs is one of the most influential board members at Disney. Couple that with most of the major figures at Pixar gaining important roles in creative capacities at Disney and you have damn near a renaissance in the works. I have high hopes for the next few years.

UPDATE: Pixar bigwig Lassater has already canned the potentially awful and brand-diluting Toy Story 3.

Me and my silly assumptions. I’ve been waiting for Netflix to weigh in on the DVD Format Wars, when all along it was becoming more and more apparent that they, like most companies, will be supporting both, at first at least. Netflix will begin distributing HD DVD titles in March when they debut, and will be pumping out Blu Ray discs ASAP as well (another 6 months down the line). Supporting both formats appears to be the safe play, and a play that most will make. Even Microsoft/Intel (and XBox?) has agreed to support both formats when they come out.

Official statement, ACTIVATE:

“High-definition DVD is the next wave of excitement in home entertainment and we’ll be there at its inception,” said Netflix Chairman and CEO Reed Hastings. “With far sharper images, better sound and more features, we expect high-def will greatly enhance DVD’s consumer appeal and extend its popularity over the next decade or more.”

As you may or may not have heard, Netflix has hired former U.S. Postmaster General William J. Henderson as their new COO. Here are the top 10 effects of Henderson’s change of careers:

1) Price of 3-at-a-time plan increased by 2 cents every year or so.

2) Netflix.com unavailable on Sundays.

3) Users now required to kick boxes as they move up their Netflix queue.

4) Reed Hastings becomes instantly “disgruntled.”

5) Was Hastings ever really “gruntled” to begin with?

6) “Batman and Robin” added to “rain, sleet, dark of night” schtick.

7) Fair’s fair. Antioco is becoming a mailman.

New mail slots all changed to precise width of a DVD.

9) Netflix distribution centers now being used to house empty cans and bottles, which will be returned for $.10 profit each.

10) Starting today, citizens who use too many “postage paid” envelopes to pay their bills will be “throttled,” their bills delayed by up to 5 business days.

Disney, evidently realizing that every good film their company had “produced” in the last 5 years has been a product of Pixar, is now in talks to acquire the company.

The newspaper report said the terms under discussion would have Disney pay a small premium to Pixar’s current stock market value of $6.7 billion. The deal would be a stock transaction and make Pixar Chief Executive Officer Steve Jobs the biggest individual shareholder in Disney, the newspaper reported.

Pixar’s The Incredibles was the #1 best selling DVD of 2005.

Disney’s Iger is considering the silmotaneous release model.

Well, it’s been a long time coming, but Steven Soderbergh’s film Bubble is about to be released- almost simultaneously on DVD and in the theaters. Is this the first shot fired in a cinematic revolution, or just a strange experiment? Only time will tell.

From the Motley Fool:

Bubble won’t burst your local theater franchise just yet. The reality, though, is that the gap between a movie’s theatrical release and its arrival on cable and DVD is narrowing. If the theaters’ investments in digital projection and other content work well, they might be able to hold onto what appears to be a declining customer base. If not, even more people may stop asking “What’s playing at the movies?” in favor of “What’s new at home tonight?”

Consumer Report’s “Money Advisor” has recently published an article ranking DVD-by-mail services. Although the article is not as thorough as many showings by Consumer Report, it is an unbiased source of review. For numerous biased sources of review, check out the HackingNetflix discussion thread below!

The analysis ranked Blockbuster as the best value thanks to its 2 free in store rentals per month.

McDonalds is testing a new drive-thru DVD kiosk, a spin off of their original red box.

The drive-through DVD rental machines work the same as the in-store kiosks which McDonald’s debuted in 2004. A customer pulls up, chooses from that week’s top 30 rental movies, and swipes his or her credit card or inputs a coupon code. Out comes the movie, for $1 a day plus tax, and it can be returned to any Redbox anywhere.

To read more about the McDVD revolution, check out what I’ve said here.