Disney Sees Red Over Ruling on Download Codes

Ever since sales of DVDs and Blu-ray Discs began their long eclipse behind the rise of more convenient digital alternatives the Hollywood studios have sought ways to extend the life of the high-margin disc business by finding ways to integrate disc sales with the broader digital economy.

The most systematic effort was the UltraViolet initiative. By creating an UltraViolet account, consumers could register their purchase of a DVD or Blu-ray Disc and obtain access to a digital version of the same movie, which they could then stream to connected devices without a DVD or Blu-ray drive, via participating streaming services.

Disney, which never joined the UltraViolet consortium, had its own version it called Disney Movies Anywhere (now re-christened simply Movies Anywhere and incorporating most of the former UltraViolet studios). Disney packaged its discs with an insert containing a code, which, when entered by the consumer in her online Movies Anywhere account allowed her to stream the movie through participating online services, or to download the movie onto up to eight registered devices.

DVD rental kiosk operator Redbox has likewise struggled with consumers’ declining appetite for DVDs and Blu-rays. It’s main strategy has been to keep its rental prices extremely low, which has often put it at odds with the studios, who by and large would prefer to see the low-end rental market wither away. But Redbox, too, has sought ways to make itself digitally relevant. Read More »

Music Streaming And The Two Drink Minimum

Ask the owner of any bar that hosts occasional live music how they make money and they’ll tell you it ain’t from the music. The music is there to draw a crowd to sell more liquor to, which is where the profits are. The cover charge helps defray the cost of the band so it doesn’t all come out of the liquor receipts. These days, the music streaming business is starting to look a lot like those gin joints.

While Spotify, Pandora and Apple are drawing pretty good crowds, none of them are making money from the music. And they’re starting to live_music_signcast about for other ways to make money. Pandora recently plunked down $450 million to buy live-event ticketing service Ticketfly, presumably hoping for some synergy between those who listen to music on Pandora and those who buy tickets to live shows and concerts. Spotify is trying to leverage its music audience to build a business around non-music content, such as online video.

Apple insists it can eventually make money from music streaming, but with Apple it’s always at least as much about finding new users for its devices, where it makes nearly all of its profits, than about any particular service.

All have invested heavily in data and analytics, initially for internal use but almost certainly with an eye toward turning their data into a product in its own right. Read More »

Apple Makes Music Fans An Offer They Might Refuse

As expected, Apple’s new music strategy is to try to be all things musical to all people. Or almost all people.

The newly christened Apple Music, unveiled Monday at the World Wide Developers Conference, includes a $10 a month streaming service that offers on-demand access to Apple’s 30 million song library, along with cloud storage and playback of your own music collection and the option to let Apple’s experts curate personalized playlists for you. It also includes a free, ad-supported internet radio service featuring featuring celebrity DJs and what Apple is billing as the world’s first 24-hour global radio station, Beats One. It also includes a reboot of Ping, Apple’s failed social media platform, now called Music Connect and featuring artist pages.

Apple_Music_iPhoneYou can also, of course, continue to purchase downloadable tracks and albums from the iTunes Music Store.

About the only thing Apple Music does not have is the sort of free, ad-supported on-demand tier that has helped make Spotify the world’s largest on-demand streaming service.

The lack of a free on-demand tier is partly Apple’s preference: It didn’t spend $3 billion to acquire Beats’ subscription-only music service last year to get into the free streaming business. But no free tier was also part of Apple’s pitch to the record labels, publishers and artists, all of whom have been agitating to get more people paying for music online, notwithstanding consumers’ demonstrably limited appetite thus far for paid streaming: Give us what we need to crush our rivals, Apple suggested, and we’ll do for paid streaming what they couldn’t. Read More »

Walmart Does That VOD Vudu

Let’s stipulate that the $100 million price tag being bandied about for Walmart’s acquisition of Vudu is exaggerated, or includes various earn-out targets that likely will never be met, making the ultimate price something less than nine figures. Walmart hinted at as much in its press release, indicating the acquisition would “not be material” to its first fiscal quarter despite being scheduled to close within that period, suggesting there are triggers and contingencies in the deal that will play out over time, if at all.

Yet the fact that we’re even talking about a price that could reach into the $100 million ballpark suggests there’s something more going on here than meets the eye.

Or maybe not. Perhaps, as has been suggested, Vudu,  somehow, simply blew smoke up Walmart’s ass and convinced it to overpay for a marginal VOD provider. Or perhaps, as Streaming Media’s Dan Rayburn argues, Walmart simply doesn’t know what it’s doing in digital delivery and is setting itself up for another massive VOD fail.

But I think that’s too narrow a view of what Walmart is up to.

From Walmart’s perspective, Vudu has a number of valuable assets that make it more than simply a VOD provider with some nice content licensing deals. One of those is the HDX encoding format, which Vudu introduced back in 2008. With HDX, Vudu claims, it can deliver genuine 1080p video over the Internet in 4.5 Mbs of bandwidth. The format is optimized for LCD and plasma screens over 40-inches in size and incorporates a process Vudu calls TruFilm, which simulates the cinematic experience in a home theater by preserving film grain and other textural qualities of film. Read More »

Miscalculating movie release windows

Speaking of windows, Disney has touched off quite the firestorm in Europe over its plan to release “Alice in Wonderland” on Blu-ray and DVD just 12 weeks after its March 5 worldwide theatrical debut instead of the usual 16 to17 weeks. Holland’s National Board of Cinema Owners is up in arms, and has organized a boycott among that country’s four largest theater chains, representing some 80-85% of screens. Three top chains in the U.K. are threatening to follow suit, vowing to keep Tim Burton’s 3D extravaganza off 95% of the 3D screens in the realm unless Disney backs down.

Good luck with that. I don’t see Disney backing down on this one. It obviously picked this fight with theater owners now because it knows it has the leverage to win. “Alice in Wonderland” will be one of the biggest-grossing theatrical releases of the year, with or without wide distribution in The Netherlands, and it has “Toy Story 3” in the wings, which will be even bigger. In crude terms, the theaters currently threatening boycotts need Disney’s movies more than Disney needs their screens, and both sides know it (U.S. theater operators have more leverage, of course, which is why Disney apparently has cut some sort of deal with NATO that would let it “experiment” with windows on one or two movies a year so long as it doesn’t make a habit of it).

The real question is: why is Disney so intent on getting “Alice in Wonderland” out on DVD and Blu-ray so soon.

In an interview with CNBC last week, Disney CEO Bob Iger said the early “Alice” release would allow the studio to “put the video out before the doldrums of the summer and to put it out when the movie is very fresh in consumers’ minds.” Read More »