2011 is still relatively new and a number of interesting stories have come out in the last few days that show where the movie industry stands in terms of adapting (or not) to the way consumer behavior is impacting the entire distribution picture.
First up is the Los Angeles Times, which has an omnibus story (1/18/11) on the rough year that was for the entertainment industry, which was down almost across the board. For studios, the picture is rough because DVD sales were down 13% last year as people stopped buying and continued renting, either from Netflix or Redbox (and others). So while more people are seeing the movies, each transaction brings in less revenue. Those with money aren’t building their home video libraries but instead are buying mobile gadgets on which they can watch streaming video or their latest rentals.
To bolster that point, a new study from the NPD Group shows that movie rental kiosks like the ones operated by Redbox and Blockbuster surpassed traditional store-based rentals last year and now account for 31% of rentals, second only to Netflix’s 41% share of the market.
Netflix continues to be the apple of absolutely no-one’s eye in Hollywood, with many executives complaining openly (Hollywood Reporter, 1/14/11) about how the prices that company pays for content is significantly below what they’ve traditionally gotten from cable networks. The one bright spot for Netflix continues to be catalog titles and canceled TV shows, which it seems to be the only buyer for and which helps bring in some money to the studios. But Netflix is going to have some rough going in the near future as it tries to offer more streaming titles, which cost more to license but don’t have the mailing costs that mount up rather quickly.
Older movies are also bringing in more revenue as a result of custom DVD-burning operations a number of studios have introduced recently. These made-to-order services allow customers to choose from hundreds of movies in a studio’s library that haven’t yet been released to DVD because they lack the necessary level of mass popularity and have the movie burned to DVD n a one-off order. While the money might not be huge on each title, the volume has begun adding up to be a significant income generator for the studios that have opened their archives in this manner.
One move Netflix made recently as part of that transition to a streaming focus caused some upset among customers. The company announced that devices that were used for streaming (mobile devices, game consoles) would no longer allow people to add a movie to their DVD queue from that device. Netflix says it wasn’t a widely used feature anyway but the outrage about that removal of functionality has been notable.
That streaming is the future is also the logic behind the $10 million in financing just secured by SnagFilms, which is looking to spend that money to expand beyond the documentaries that it started with into fiction feature films. With the credibility SnagFilms already has as well as its ownership of IndieWire, the site could become a major distribution player for independent films if it’s willing to pay filmmakers at a decent level, which is what I’d suspect some of that money is going to be used for, especially if the site is already profitable as reported.
How these things continue to develop in 2011 is going to be fun to watch.