Hollywood hasn't given up on Web rentals or Netflix
That was the message we got this week from some of the big studios at CES. Netflix left the UltraViolet consortium but there's little the two offered each other anyway.
The headlines from CES about Hollywood's digital efforts are likely to make readers believe that the major film studios are fixated on selling movies instead of renting.
Readers might also have the impression that the studios' strategy on UltraViolet (UV), the plan to promote the use of digital lockers, was hurt by Netflix's decision to drop participation in UV.
Both are true to a point but much more nuanced.
I wrote this week that Netflix decided not to renew its membership in the consortium behind UV and some pundits are taking it as a sign that UV is in trouble. Certainly, a startup service like UV, which was rolled out three months ago, could benefit from having the No.1 Web video-rental service as a partner and it doesn't help that Apple isn't on board either (that's two of the biggest movie outlets online). But it's just as true that Netflix and UV didn't offer each other much.
UV is a means to enable owners to store their films in online lockers. They can access their movies via streaming or download from wherever they can connect to the Web.
Netflix, on the other hand, streams movies on demand. The company hosts thousands of films, which come and go from the site according to whatever licensing terms are involved. There's no need for users to store anything. You only store a movie when you've purchased it and want it on hand at any time.
According to leaders from some of the major studios, Netflix has indicated to them that it has no intentions of selling movies.
On Tuesday at CES, I moderated a panel that included high-ranking executives from the home video divisions of four out of the six Hollywood studios: David Bishop (Sony Pictures), Mike Dunn (Fox), Craig Kornblau (Universal), and Ron Sanders (Warner Bros).
Since I was moderating I couldn't take notes, so I'll paraphrase what the studios execs said:
Netflix was asked to offer consumers a way to buy films but company leaders declined. The panelists from the studios said that they still view Netflix as a good partner and rentals and sales are each important to the studios. They said large numbers of consumers are interested in buying as well as renting. They said it has always has been this way.
Most of them acknowledged, however, that for the time being, UV is designed to help ignite interest in collecting movies. This is not unexpected. Overall DVD sales have fallen seven consecutive years and Hollywood needs to find a fix.
If and when the studios want to integrate rentals into UV, the technology is ready to do that, said Lisa Hook, chief executive at Neustar, one of the technology providers behind UV who was also on the panel.
When it comes to sales, the studios received a lift from Amazon. UV's backers announced that Amazon has agreed to distribute UV films for one studio but didn't say which one. Sources told me that the studio in question is Warner Bros.
Amazon, unlike Netflix, sells as well rents movies, which probably lifts them a notch above Netflix in the eyes of the film sector--although one source told me that it's still hard to sell movies when Amazon posts a $14.99 sale price next to the $3.99 rental fee. Which one do you think gets clicked on more?
Amazon's strategy is different than Netflix. According to Bill Carr, an Amazon exec on the panel, Amazon wants to give consumers as many choices to view and manage their content as possible. When he said that, the panelists from the studios just smiled.