Once Again, You Don't Compete With Innovative New Services By Being Lame

from the in-case-you-weren't-paying-attention dept

A couple years back we pointed out how the entertainment industry kept trying to "compete" with new (legal and not-so-legal) online services, but always seemed to do so by being incredibly lame. And, you don't compete by being lame. It appears that this message still hasn't quite gotten through to some yet. With the movie industry facing new challenges concerning online distribution and innovative services like Redbox, here are two stories of old school players trying to "compete" but missing out on the part where they make their offering compelling.

The first comes from Josh in CharlotteNC, who points out that Blockbuster is trying to compete with Redbox and its widely available kiosks (and Netflix with its larger library of downloadable movies) by setting up kiosks in its stores where you can download movies. But... you can only download them to proprietary SD cards, and then it can only play on special proprietary hardware that participants in this program need to have. How is that a better experience then, well, anything? If you want a movie that can be downloaded, why not just let people download it at home? Why have people go out to download it?

Then we have a story sent in by Loydster, about how Sony Pictures is offering owners of new Sony/Bravia HDTV's the chance to download and watch the movie Cloudy With a Chance of Meatballs before the DVD release. While that is actually a nice tie-in between Sony's content business and its consumer electronics business, Sony (of course) has to screw it up. That's because the company thinks it can charge $25 to download the movie. The company seems to admit that it's charging this much because it doesn't want to piss off its retail partners (like WalMart), but it's difficult to see why it's worth doing the project at all if the pricing is going to be so ridiculous.

Experimenting with ways to compete is good... but being so obviously lame is not.
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Filed Under: competition, downloads, kiosks, movie rentals
Companies: blockbuster, sony

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  1. identicon
    Anonymous Coward, 12 Nov 2009 @ 10:21am

    Re: Re: Re: Telling

    Isn't net profit more important?

    Net profit is very important, but it is only part of the deal here. Getting the biggest net profit in each market segment is the most important. That doesn't just mean on a single movie, but over the long term, over all of your products, in all of the ways possible.

    Retail is exposure. Walk into a Best Buy or whatever, and they have racks and racks of movies that people browse, look at, and potentially buy. They often don't buy what they were looking for, but something they just decides like that to buy. Christmas time is especially excellent for that, as people pick up box sets and whatnot that someone on their gift list will love. They might not have seen it shopping online or standing and a kiosk.

    So by maintaining a strong DVD marketplace and maintaining prices where the DVD market remains viable, they are working the net profit across their full line, not a single product. Those box sets are some of the most profitable pieces out there, often based on material that has long since paid for itself, giving a significantly better profit margin than anything else they can do. So they trade off some profit on newer DVDs in order to keep other products in front of consumers. It's a bottom line thing.

    Cutting the retail price of a movie, no matter they method that it is delivered in, would potentially push retailers to stock less material, to lower overall prices, or both, which would negatively affect the overall net profitablity of the company's product line.

    It's the reason why you cannot look at any one part of the movie food chain individually, as it often has a knock on effect to other parts of the business.

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