Hollywood Has A Great Online Distribution Model — If You Hate Selection

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picture-16In a golf tournament, it can be advantageous to putt after another player because you learn the contours of the path to the hole. In a similar way, you’d think Hollywood would have learned from the rough path the music industry took in transitioning to the world of digital distribution over the web. Unfortunately, it looks to be on the verge of missing the putt as well.

On the surface, it seems like Hollywood is doing a better job of getting consumers to use their approved methods for transferring content over the web — but the reality is that it’s a mess. And the only reason piracy isn’t so rampant in the US is that our broadband speeds, for the most part, suck.

Sure, there are a lot of channels to get films legally over the web. iTunes, Xbox Live, Amazon, Netflix and Hulu are all doing a fairly good job at making the content they’re given, accessible. Unfortunately, it’s the content that’s the problem. If you go to any of those services looking for a specific movie, there’s a very good chance that it won’t be available. And that can be true even if it was available on the service in the past. It’s a nightmare.

Farhad Manjoo had a good article yesterday on Slate outlining some of the major problems. One of the biggest ones is that Hollywood’s archaic syndication rules are in play with digital distribution over the web. For example, Hollywood now gives some movies to services like iTunes for rental immediately or soon after they’re released. But because of the deals studios have in place with premium content channels like HBO, after the pay-per-view window closes (iTunes and the other services’ rentals systems are considered pay-per-view), these movies have to be pulled off of the rental services so that the premium channels can get their exclusive rights to broadcast them.

Those movies then stay exclusive to the premium channels for 15 to 18 months — let me repeat 15 to 18 months! And from there it only gets worse. After the year and a half in premium channel jail, movies then go to the regular cable channels and big networks for airing. As I understand it, some online rentals are again okay during this time, but then, they often go back to the premium channels for a second run. That means they get pulled once again.

This whole process often lasts for seven years or more, as Manjoo notes. It’s only after that time period that movies are really free to be distributed a bunch of different ways. That includes Netflix’s popular Watch Instantly streaming feature — so now you see why the selection of movies on that service is mostly older films. In fact, basically, the only newer ones they offer is because of their deal with Starz, the premium cable channel. That deal may have been one of the smartest ones Netflix has made yet, because at least it gives us access to some movies this side of 2002.

stusThe fact that online distribution has to play in this foolish game of broadcast rights tennis, is of course, bullshit. The brick and mortar rental stores of yesteryear, like Blockbuster, don’t have to play by these ridiculous rules. Movies don’t vanish from their shelves because they’re playing on HBO for the next 18 months. If they did, Blockbuster would have been in trouble a lot sooner than its most recent woes (tied to its failure to get out in front of new forms of distribution).

So how can anyone really expect any of the online movie services to flourish under such restrictions? They shouldn’t, because none of them truly will until Hollywood changes these rules. And with billions of dollars at stake, Hollywood probably isn’t going to do it anytime soon. In fact, I’d venture to guess that the only thing that will force their hands is if services like BitTorrent, which people use to distribute pirated movies, continue to gain popularity as broadband access and speeds improve.

In other words, things may change when Hollywood starts getting screwed just like the music industry got screwed.

Seriously, search for a bunch of new movies you want on iTunes rentals, Netflix Watch Instantly and a torrent tracker. Which has the best selection? It’s certainly going to be the torrent tracker — and that gives you the movies for free.

The success of iTunes music store has proven that people are willing to pay for content (it’s now the largest music retailer, bigger than even Wal-mart), but the key factor is ease of use — of which, selection is a big part. It’s beyond frustrating to search a service for something you really want to pay to watch, only to find it doesn’t offer it. Hollywood is leaving money on the table.

I could go on about other ridiculous things is doing to screw up online distribution. For example, the fact that while a lot movies are available to buy on the day they’re release, most cannot be rented online until a few weeks later. But it’s all part of the same problem.

Hollywood is scared to embrace the move to online distribution. It’s still holding out hope that Blu-ray will catch on and become their next multi-billion dollar cash cow. That’s not happening. For most people, Blu-ray simply doesn’t offer enough of an improvement over DVD. Online distribution, with its instant access, does. Will Hollywood realize that too late?

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