April 07, 2006

Movie Downloads The Dumb Way

This week Movielink and CinemaNow announced they were going to make movies available for download on the same day DVD’s hit stores.

In DRM’d Windows Media format.

For $30 a movie.

Dumb, dumb, dumb…

The Windows Media is predictable. I’ve been to the events Microsoft’s been wooing the big movie studios with since the late ‘90’s. They’ve thrown open the big Seattle checkbook and have made the once expensive prospect of getting content into Windows Media format at high-quality free. I realized how serious Microsoft were about winning the format wars when I started meeting with their ‘black-ops’ unit a few years back. Contractors whose job it was to funnel money to major porn companies and get them to switch to Windows Media as their primary format. It worked (money tends to) and if you take a look at the big commercial porn sites see what they’re using and think about how they paid for the hardware necessary to make the switch.

MS are more than happy to pay the encoding fees (and the gorgeous looking stuff this isn’t being done on Dell’s – it’s serious hardware, artificial intelligence stuff in cool-offices in suburban LA) if it means end users get Windows Media. In a world before iTunes, podcasting and YouTube they thought it was just about being more ubiquitous than Real and Quicktime.

The announced pricing’s less easy to explain. Clearly a compromise to keep DVD store owners fears about losing sales at bay, it guarantees the easiest way to get a DVD quality download you can play on any computer will remain the peer-2-peer services. Handily they’ll be providing pirates with really excellent source material.

Dumb, dumb, dumb…

So the movie industry invests in its own demise while waiting to be shown a path by Apple, and the the jizz-bizz - cutting edge! Bold! Innovative! - follows suit.

Everybody knows that you can copy any DVD as often as you want using a cheap PC and you can’t lose sales to people who’ve already bought your product. The counter argument, that people who make copies feed the file-sharers isn’t valid either. You only need one digital copy to feed an infinite number of downloaders and as soon as there’s one illegal copy online – and there always will be – having 1000 more makes no real difference. They’re all the same and equally easy to transfer.

This isn’t a debate on the merits of DRM but stopping people copying digital files is impossible, attempts to do so harm sales more than helps them and from a business perspective DRM is an total waste of time. There’s not a single product with copy protection that isn’t being copied by people who want to and there’s nothing in iTunes that you can’t get for free elsewhere. The people who are buying things are just too dumb or scared to steal them.

The pricing’s also wrong. With profits on a $20 DVD averaging about $11 a unit, and the majority of the costs gone for online distribution where no packaging, duplication, storage or shipping is required, $25 a download is a stick-up. $10 a download would preserve current profit levels and sell four times as many movies. In all it’s so nonsensical that there has to be a reason for it besides massive head-in-the-sand stupidity. Predictably it’s money.

Any way to get a DVD quality movie to a computer will find a market and there’s going to be a huge shift in expectation when Apple define what the movie download business should be later this year. In the same way iTunes has educated the public that a downloaded song is worth $.99, they’ll set a price for downloaded movies that’ll be hard to argue (unless they mess it up and it’s not worth betting they will).

My guess is they want to exploit the market before something better (i.e. Apple) comes along, while being able to say to the people who make money shipping, packing, storing and selling discs ‘We’re trying to protect you’ when they know they’re not. While the DVD trade deceives itself into thinking HD-DVD and Blu-Ray will push back the internet and create a new age of disc sales, content owners know discs are dead already and are getting ready to eliminate them entirely.

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