Dish to Unveil Blockbuster Streaming Service

Dish Network Corp. will announce pricing next week for its Blockbuster streaming-movie service, which will compete with Netflix. Bloomberg reports.

Though the service will be offered initially to Dish subscribers, non-Dish customers who only want Blockbuster’s offering will eventually be able to do so. Dish to Unveil Blockbuster Streaming Prices

The number of people watching video on the Internet is expected to nearly double by 2015 to 1.5 billion while the amount of video they watch on the Web is also seen doubling to more than an hour a day, according to Cisco Systems. 


Not all that video will be of the subscription sort, of course.  Cisco forecast

Universal, Blockbuster Express to Test Earlier Movie Release Window

Universal Studios Home Entertainment movies will be available at Blockbuster Express kiosks 28 days after initial release in theaters, on the same days those new movies are made available for retail purchase, NCR Corp. and Universal Studios say.

The market test will attempt to assess whether the ability to rent a movie recently in theaters, about 30 days earlier than has been possible in the past, is valuable enough to entice consumers to pay extra.

The new premium release window will be tested at some Blockbuster DVD rental kiosks, and will test a higher price point, possibly about $3 for a one-day rental, compared to the $1 price point for movies available for rental using the standard DVD rental release window.

As part of the arrangement, Universal will directly supply NCR with new release DVD and Blu-ray titles effective immediately, beginning with "Robin Hood" and "Get Him to the Greek."

"By implementing a 28-day window agreement with NCR, we are able to provide consumers with what they want –additional access and options in movie rentals for some of Universal’s newest and most popular titles," said Craig Kornblau, president, Universal Studios Home Entertainment. "Our agreement to test premium day-and-date offers and new DVD sales will help us identify new outlets for our movies while giving our customers the flexibility and choice they want in their entertainment purchases."

Many content owners have, as you might guess, been unhappy with the $1 price point of Redbox rentals, arguing it devalues the product. The earlier release window offers a chance to move price points higher.

Blockbuster Declares Bankruptcy

Call it a commentary on the retail rental model, changes in end user preferences or simply the rise of online and other forms of distribution, but Blockbuster, to almost nobody's surprise, has declared bankruptcy.

Blockbuster Express Plans 10,000 U.S. Locations by End of 2010

Blockbuster Express, the self-service movie rental service, is supposed to be available at 10,000 U.S. locations in 2010. The service competes with Redbox.

Blockbuster Tries to Take Advantage of its 28-Day Release Window Advantage

We should soon see whether Blockbuster's 28-day earlier release window for new release DVDs confers any business advantage over other competitors in the space, especially Netflix and Redbox, as Blockbuster and its studio partners seem to think will be the case.

Blockbuster announced availability of the hit movie, "It's Complicated" from Blockbuster in stores, by mail, or digitally, a full four weeks before it will be available through some competitors.

Blockbuster's early advantage reflects its ongoing agreement with Universal Studios to provide customers with the opportunity to rent hit movies the day they are released. Blockbuster also has early availability of other box office hits like Sherlock Holmes and the highest grossing film of all-time, Avatar, as well as other upcoming new releases such as Tooth Fairy, Valentine's Day, and Invictus.

Blockbuster also has struck deals with mobile handset providers to put the "Blockbuster On Demand" app prominently on the main screens of about 60 models of Samsung Blu-ray Players, HDTVs, and Blu-ray Home Theater Systems, as well as on T-Mobile's HTC HD2.

Blockbuster is the only multichannel provider that has every hot new movie on the day of its release, it's just that simple. What we now shall see is whether that makes a material difference for Blockbuster. Release windows typically have been important in the movie distribution business, so some shift should be seen.

Studios Throw Blockbuster Video a Lifeline

It is not unheard of for one or more content providers to favor one channel, or even one contestant within a channel. As a rule, theatrical exhibition gets priority for new movie releases, with a standard set of release windows for other channels. In recent decades, the home video and DVD windows have changed the most, since home video and DVD channels now represent the single-biggest source of revenue, by channel.

But there are stresses in the channel as the revenue from home video and DVD, especially DVD purchases, is declining. In the once-hugely-important, and now simply important video rental channel, Blockbuster, historically the single most important video rental channel, and now the largest remaining place-based retailer, is struggling to survive, and seems to be getting a lifeline thrown to it by some of the leading stuidos.

Blockbuster recently got an exclusive deal with Time Warner, and apparently now has distribution deals with the Twentieth Century Fox Home Entertainment and Sony Pictures Home Entertainment that give Blockbuster an advantage: new release rentals will be available at Blockbuster, and not through Netflix or Redbox, about a month earlier.

Basically, that means Blockbuster will be able to rent new hit movies and releases on the same day they become available for purchase. Since each form of distribution satisfies part of the fixed demand for any new title (most people view a movie only once), it makes a difference in terms of sales volume that one channel partner has a month advantage.

The unusual new arrangement with Blockbuster shows just how important a distribution channel it is deemed to be. So appparently concerned are studios about the company's survival that some are giving Blockbuster a significant sales advantage over the rival video rental distributors.

source

What Future for Downloading, Streaming Video?

The conventional wisdom now is that movie downloading will replace DVD sales and rentals, and that this replacement is only a matter of time. The conventional wisdom may well be correct, up to a point. On-demand viewing, in one form or another, has been increasingly for decades.

To some extent, the rise of the cable industry was an early and crude form of on-demand viewing, to the extent that viewers began to break away from the "three networks" experience, starting a process of audience fragmentation that continues today in much more diverse forms.

But movie downloading isn't the only future. In fact, the way new visual media are being used suggests that consumers are taking an "all of the above" approach to media.

People might continue to rent DVDs as well. But maybe not in the same way. "Unless video stores are reinvented, it may be that in five years, there are tens of thousands of kiosks, millions of online DVD renters and very few video stores," says Reed Hastings, Netflix CEO.

If you look at any sort of DVD media as an example of "sideloading," as people sideload music onto their iPods and MP3 players, you get the idea. People download songs. But they also may stream or sideload. And though one often thinks online delivery is the only viable business format, one can imagine other ways to do things.

Price, for example, might be one way to differentiate the market. Online or to-the-TV downloads or streaming will have a higher price point, with a more "immediate" delivery format. But mailed DVDs will have a much-lower price point, with less immediate delivery. But the point is that the delivery time might not matter.

On the Netflix unlimited three DVD plan, can have as many as three movies "checked out" at any one time. And if a person is busy enough, viewing of those movies only happens on weekends. So "immediate" availability isn't required. The three selections have to be available on the weekend.

Release windows still are a factor as well. If you want to see a movie, and missed it in the theaters, you can view it about a month to 45 days sooner than any "on demand" outlet has the content, if you watch on a DVD. On an unlimited rental plan, the cost of any viewing is arbitrary.

Cable and Internet VOD costs something on the order of $4.00 per movie, and the content has to be viewed within a certain period of time, sometimes within 24 hours.

Selection probably will be an issue as well. It is hard to imagine an equivalent lineup of online titles as the Netflix catalog represents, especially in the "long tail" area of niche content.

"Despite the growth of VOD over the last five years, DVD rental has been stable, with online rental and kiosk rental making up for store losses," says Hastings. "In the United States, DVD spending, including purchase, is still approximately 20 times larger than cable and Internet VoD combined, according to Adams Media Research."

Just about everybody thinks this will change, at some point. The issue is whether online delivery is the only choice, or whether other delivery methods still will remain a significant part of the mix. Price, release windows, immediacy, and depth of catalog suggest there is room for multiple consumption modes.

Apple, Netflix ramp up Online Video Efforts

There are many reasons lots of people ought to be paying attention to streaming and downloaded video. Lots of people work for companies making a living delivering video products and everybody watches video in its various forms. Lots of companies are making expensive bets about what people want to watch, how and where they want to watch, what features are required and how much they will watch. The two mid-January developments in the area of particular note are the Netflix "unlimited online viewing" offer and Apple's launch of a video download service.

Up to this point Netflix has allowed its subscribers to watch online movies on a limited basis, corresponding to their monthly plans. Basically, hours of online viewing roughly correlated to the monthly subscription price. The big change is that Netflix now allows users on unlimited rental plans starting at $8.99 a month to stream as many movies and TV episodes as they want on their PCs, choosing from a library of over 6,000 familiar movies and TV episodes.


Now, subscribers on unlimited plans can stream as many movies and TV episodes as they want from the smaller instant watching library, unconstrained by any hourly limits. The move widely is viewed as a preemptive response to Apple's launching of its own video download service, using a rental model rather than "download to own" approach. Up to this point Apple has seen modest success with an approach based on Apple TV hardware and content from two studios, Disney and Paramount.

All major Hollywood studios have agreed to make their content available as part of the new Apple service. They include Paramount, Universal, Walt Disney, Warner Bros, Sony Pictures, Metro-Goldwyn-Mayer, Lionsgate, New Line and News Corp's Fox.

Using Apple's iTunes online store, US consumers will be able to hire new-release movies at $3.99 for 30 days. Older titles are priced at $2.99 for the same duration.

These movies can be viewed on iPhones, iPods and television. One can debate the impact of Apple's more-aggressive move into online downloads and streaming. In fact, one can argue that the streaming business is a different segment from the "download to own" market or the "rent by downloading" segment.

One also can debate who wins and loses in the video rental business: Netflix, Blockbuster, Amazon.com, Joost, iTunes or others. Even the impact on Netflix is debatable. If consumer use of the streaming feature increases, Netflix will pay more money in licensing fees to the studios who own the content. It also will incur more bandwidth charges. On the other hand, Netflix might spend less money on postal charges, shipping and handling of physical DVDs.

Probably more important is the strategic impact: Netflix's ability to retain existing market share as new competitors enter the market.

The other issue is which market is affected. To some extent the "view on PC" segment is where Apple, Netflix and others compete head to head. There are other segments, such as the "watch on my iPod" market, where Netflix and others delivering to the PC do not play.


Also, one might debate whether a subscription service is different from a pay-per-view model. Heavier users arguably will prefer a subscription model. Lighter users might well prefer the "pay as you go" model. Also, there is little question but that mobile, iPod, PC and TV viewing segments will emerge as full-fledged markets at some point, irrespective of the payment model.

Business motivations also are different. Apple sells content at prices as low as possible so it can create a market for its devices. Its market is rNetazors (devices) not razor blades (recurring revenue). Netflix has the opposite business model: it only cares about devices as platforms to sell content on a recurring basis.

To some extent, then, Netflix and iTunes ultimately compete with telco, wireless and cable on-demand programming offerings, in addition to competing with each other to some extent. Netflix and iTunes now are in the video on demand business, not the "DVD rental" business.

Telcos and cable companies investing heavily in broadband access networks play in the linear TV space as well as the on-demand video space. They compete directly with each other and satellite providers. But over time each of the three main linear programming providers also competes in the on-demand entertainment market, especially as such viewing can be supported on TV screens at some point.

Netflix Download -to-TV Service Coming

Netflix is working with LG Electronics to market a set-top-box=based movie download service for TVs, Business Week reports. The move is not unexpected, but is significant in terms of its timing. Netflix has over the last few years modified its statements about the DVD rental business, moving from a "consumers don't want to mess with downloading" to "we'll do it when it's the right time" stance.

The move now means it is "time." The transition from physical distribution of movie content to electronic download to TVs is underway, Netflix is signaling. The service, which extends the Netflix download service beyond "movies to your PC," is expected to begin service in the fall of 2008.

And though Apple TV has not gotten much traction, Business Week expects Apple to unveil its own download-to-TV service as well.

Netflix has been offerings downloads to PCs for about a year. But just about everybody who thinks about the matter agrees that downloads directly to TV screens is what is needed to really jumpstart the business.

Amazon.com, TiVo and Blockbuster also have decided they no longer can wait to enter the nascent business.

Again, what is important about the Netflix move is the timing, not the move itself. Netflix has concluded that even if revenues from online-to-TV downloading will not eclipse DVD rentals for some time, one tipping point has been reached. Netflix has to get into position now if it wants to maintain leadership in the movie rental business of the future.

By some reckoning, that business already is entering its 3.0 phase, having started with retail store rentals, followed by mail delivery and now starting the download phase.

And it is worth noting that if cable TV "pay per view" or "on demand" efforts had been quite a bit more than a niche, the video rental business and Netflix would not have developed. Cablers will note that studio licensing rules and release windows account for the rise of the independent video and DVD rental business.

That is true. What also is true is that studio profit margins and gross revenues control the availability of product. Once studios decide they can make as much, or more money, by switching to online distribution, they will do it.

In that regard, a recent slowdown in growth rates for DVD sales in retail outlets is another important market indicator. Consumer fascination with DVD purchases might be waning, overall. Legally or illegally, online-delivered content might be a contributing factor.

So legal alternatives such as Netflix will provide should have a shot at success. What remains to be seen is how widespread adoption will be. Consumers are quite fickle about special-purpose electronics devices. If the value is high enough Netflix will not find there is a problem. "No late fees" and "no drive to the store" have proven to have high consumer value.

But Netflix also seems to be pursuing the integration of the decoder circuits into other Internet-connected devices. The decoding software might reside into a TV, a game player or media reader, for example. That would alleviate the "one more box" barrier, as some consumers just don't want another device, with cords and cables, around their entertainment center.

On the other hand, Netflix then encounters the "only available on one model or one brand" problem. Consumers generally don't want to bother with "this flavor of access on this device" issue.

And though on-demand video should in principle provide even more convenience, the problem has been the content release windows, which essentially dictate that by the time an on-demand movie is available, consumers have had lots of other opportunities to view the content.

For the moment, at least, Netflix should continue to have an advantage over cable, satellite or telco on-demand content. The studios aren't going to disrupt the profitable DVD window just because online delivery now is possible.

Providers of broadband access services face a more complex business challenge. Demand for download speeds should get a boost if the download services take off. The issue is how much actual profit might exist. The problem with video is that it offers scant returns on a cents-per-bit basis compared to voice.

Put another way, video necessarily "commoditizes bandwidth." For those of you who are Bellheads, think of it this way. A two-hour movie delivered in widescreen format essentially requires bandqwidth equivalent to a DS-3 with a holding time of two hours(45 Mbps). True, we compress and pre-process now so only 4 Mbps to 6 Mbps is needed.

But the point is that the value of a 4 Mbps to 6 Mbps circuit used continuously for two hours or so is "worth" what a consumer deems a fair price for watching a two-hour video event. Call it $3 to $7, depending on what the content is and when it can be viewed.

All bits are not valued equally. On a cents-per-bit basis, text messages represent the highest return, with voice someplace in the middle and video at the very low end of the revenue continuum.

It might not matter so much whether "streaming" or "downloading" is the delivery technique, though analysts at the Yankee Group so far think streaming will get more volume. Most consumers won't care. But downloading offers more opportunity for managing bandwidth.

Apple Fox Deal: Blockbuster and Netflix Impact

Apple has a deal with News Corp's Fox for a movie rental downloads. So far, the viddeo download business has been called a "hobby" by Apple CEO Steve Jobs.

Disney has had its catalog available on iTunes to allow for purchases, and other studios have partial movie and partial video content catalogs already available. It isn't clear how much impact the new "rental" capability will have. Apple probably doesn't expect much revenue lift for the moment.

Blockbuster and Netflix, of course, will be watching closely, as both of those firms want to dominate the video download business.

If Apple succeeds, it will illustrate one interesting thing about "disruptive" innovation. Normally, one expects more innovation from smaller companies. But sometimes it takes a big, influential company to really shake things up.

Google and Apple are those sorts of companies.

More Personalized Digital Media

U.S. consumers across all demographics and geographies appear to be adopting digital behavior that is far more personalized, distributed and niche oriented that executives at Avenue A/Razorfish previously had thought. In fact, a recent survey of 475 consumers found that the majority are personalizing their digital experiences and sampling a wide range of niche content.

Those behaviors span recommendation engines, blogs, customized start pages, video consumption, mobile behavior and use of social media. About 60 percent of respondents have customized their home pages, for example. And 82 percent use bookmarks “all” or “most” of the time.

But there is less use of more participatory features. About 18 percent subscribe to Really Simple Syndication feeds “all” or “most of the time.” About 39 percent read “most popular” or “most emailed” links “all” or “most” of the time.

Only about 12 percent use tag clouds “all” or “most” of the time.

According to the survey, nearly 70 percent of consumers read blogs on a routine
basis, and 41 percent have their own blog, or post frequently to blogs. In fact,
46 percent of consumers who responded to the survey read four or more blogs
on a regular basis. All of that blog activity is significantly cutting into the
reach of traditional media outlets, Avenue A/Razorfish notes.

Some 91 percent of consumers rely on the Web to get current news or information, vastly eclipsing more traditional outlets such as television, Avenue A/Razorfish says.

The growing use of niche content also can be seen in respondent consumption of music and video consumption as well. Some 67 percent of consumers watch videos on YouTube or similar sites on a regular basis and 42 percent purchase music online. Avenue A/Razorfish executives conclude that online video not only is becoming more pervasive but also is affecting offline consumption.

For example, 85 percent of consumers have watched a movie preview online before going to see the film at a theater. Some 58 percent of consumers have used a service to download (iTunes) or order (Netflix/Blockbuster) films online, and 71 percent have watched a TV show online.

Consumers also appear to react positively to recommendation engines and personalized services: 62 percent of respondents have made a purchase based on personalized recommendations (by retailers such as Amazon.com) while 72 percent find such services helpful.

Blockbuster, Netflix, Then What?

"Blockbuster" is almost synonymous with "rent a movie." But it appears "Netflix" is more nearly synonymous with "rent a movie by mail." What isn't clear is whether either of the two movie rental players will dominate the third phase of movie distribution, the download or streaming delivery of such material. Cable companies might have hoped to dominate that niche, but "pay per view" has not yet emerged as a truly significant revenue generator, with the exception of some sporting events and X-rated material.

Well, perhaps we should say that no sizable "legal" download business yet has emerged. There appears to be lots of illegal downloading going on. The fact that no name immediately jumps out as "synonymous" with downloading indicates the field remains open. There is no "category killer" yet in place.

Movie Download Business Won't Be That Easy

Until now, most consumers have been reluctant to purchase movie downloads. There are lots of reasons. It is a new behavior, and learning to do things in a different way takes time. There's little compelling reason to change current behaviors, either. Whatever else one might say, the ability to rent or buy movie material is not a pressing problem.

So Web downloads of the same material consumers easily can get is not a winning proposition for most people: it simply doesn't solve a big enough problem, or save enough time or money. Not when DVD retail, Netflix, Blockbuster rental channels, IPTV and video on demand are so easy to use, both absolutely and comparatively.

And so far, it would be hard to argue that paid movie content delivered over a Web connection for viewing on a standard TV actually saves either money or time.

Download-to-burn services offer a way to get around these limitations and might prove more appealing to consumers, says The Diffusion Group. But not for a while. The number of titles available for D2B services is extremely limited, and that won't be an easy problem to fix.

Not for any technical reason, but because movie content owners are acutely tuned to the distribution methods that net them the most money. And there's no way they'd take a chance on harming existing channels by aggressively deploying a new channel before they have some assurance that cannibalization is minimal and new markets can be created.

CinemaNow and Movielink, both of which offer who offer D2B services, have found uptake to be poor. The problem is pretty simple. Movie rentals and purchases are all about the content, and when the content can be had. Since the studios are cautious, the content D2B offers is widely available elsewhere, through the traditional channels.

While 49 percent of adult Internet users are to some extent familiar with online movie stores that offer downloads, less than five percent report having purchased a movie download.

Not surprisingly, those most interested in D2B services are also the heaviest DVD buyers. On average, D2B potential users purchase 55 percent more movies than users who say they won't, or probably won't use D2B services.

Price sensitivity for B2D services also is significant as well. Still, the biggest problem is simply that the hassle factor is too great, the content selection available elsewhere and the price or time savings minimal to non-existent. This is going to be a tough market to jumpstart.

Joost will provide a new test, of course. But it still is hard to see how the incremental value outweighs the hassle, at least for most consumers. Non-traditional content likely will be the more important factor, ultimately.