| Peter Sealey's Ten Trends
(trend 3)
 Back | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | Next 
In August, Bob Iger, the new CEO of the great Disney organization, simply said, "the day is coming where there is going to be a day and date release of the theatrical movie and the home video." Iger is absolutely right. There is no way we can prevent that, and he had the courage to stand up and say, "It is going to come." And then, just two weeks ago, Apple released the new video iPod and announced that two of ABC's hit shows -- "Desperate Housewives" and "Lost"-- will be available for $1.99 purchase -- ad free -- at iTunes the day after each is first broadcast. The entertainment industry is collectively aghast at and in denial of this prospect. In April, Robert Capps wrote a fascinating article in Wired Magazine that persuasively argued that very soon we won't be bringing out entertainment into our home on shiny disks anymore. We can forget the differences between Sony's Blu-ray and Toshiba's HDTV formats -- as the pipes get fatter all media will be zeroes and ones, and we'll get all our media through that fat pipe. Old school movie distribution. Here was my life at Columbia Pictures for ten years: first came the theatrical window. Then came the home video window, and -- six months later -- rental and sell through. Then, video demand and pay per view. Then, a little later, premium television: HBO, Starz, Encore. Then, basic cable got its turn. Then there was a window for a second premium TV. If you added on HBO, then you might go to Showtime the next time. Then came network television -- old-fashioned broadcast network television. And, then came syndication and barter, where you put the movie in a package and licensed it out to local television stations. It took two years to get through this process, squeezing money out of every window. I even took the prints from the United States and, five months later, shipped them over to Europe, dubbed them, and ran those same prints in theaters there. You cannot do that today. Your new movie is going to be pirated in Hong Kong within twenty-four hours. So, what you are going to have to do is have a day and date release for everything together -- any format you want. And consumers will still want all the formats. I have a nineteen-year-old daughter, my youngest daughter. I could have a seventy-inch Plasma TV set at home with surround sound, but Jane Sealey is still going to go the movies, with her friends. There is no way she is going to stay at home. The movie guys are worried about cannibalization, but it's not going to happen. A "What If?" Exercise: the December 14, 2005 release of "King Kong" I'm going to speculate about the new Peter Jackson "King Kong" out December 14, 2005, and what would happen if, a la Bob Iger, NBC Universal were to release the home video the same day as the theatrical release.
This year, in my class at U.C. Berkeley, I taught entertainment marketing and gave the class the assignment of writing a theatrical marketing campaign for "King Kong." Adam Fogelson, who runs marketing at NBC Universal, came down to give guest lecture, and we talked about "King Kong." Adam is not going to do this -- he is not going to release the movie and the DVD at the same time -- and I have no information about his budget, so what follows is composed purely of my guesses. SEALEY GUESSES What if theatrical and DVD both happend on December 14th?
How many units?
I think Universal will give Adam a hundred million dollar marketing budget. It is called Prints and Ads -- ads to let the public know about the movie, and then you have to ship out these big canisters of thirty-five millimeter film at two thousand dollars apiece to a lot of theaters. What if Adam had both the theatrical and home video day and date set at December 14, 2005? I think the movie is going to gross at least fifty million dollars opening weekend. Six million people will come to see it. And the theatrical opening establishes its value in these subsequent windows. So, the theatrical window is extremely important. If Adam made the DVD available on the afternoon of December 14 via NetFlix, Blockbuster, Wal-Mart, and the other outlets, how many units would sell? My conservative guess is twenty million. That means he would gross three hundred million dollars from the DVD. With a twenty percent margin going to the retailers, Adam has put two hundred and forty million dollars into Universal's pocket on that first DVD window. By the way, on the theatrical window -- the fifty million dollars he is going to get opening weekend -- he has to give twenty-five million dollars of that to the theater owners. So, he only gets twenty-five million dollars out of that theatrical window. If you stop and think about it, Adam needs to get six million people to get into a theatre on that opening weekend. He could take his hundred million P&A dollars and just buy them all tickets, and say, "go to it." If that is all he wants to do is get those people to come to the theater to establish the value of the subsequent windows, then why not? Movie studios don't make any money off theatrical windows. So why not give moviegoers the money, and send them in there. This is going to happen. You will be able to sit at home, as these films come out. If you want to stream the movie to your TV set, if you want to buy it on a high definition DVD, or, if you want to go to the theatre -- you will be able to choose any of the three, and more. It is going to happen. Now, this is going to cause enormous chaos. I predict angst and agony from the Hollywood establishment. This will bankrupt some of the DVD companies, but the Blockbusters are going down anyway. The business models of Blockbuster and its competitors are simply going down the drain. My friends at NetFlix are down the street from me in Silicon Valley -- boy, are they doing well -- and theirs is the business model, which is going to take the DVD as long as it is going to be taken, but soon enough you are not going to be driving down to a Blockbuster or Hollywood Video store. Throwing satellite radio into the media mix Four million people are paying $10 to $13 per month to listen to the radio, and MyFi is the first pocket sized satellite radio from Delphi for XM radio, and it has a built-in recorder: TiVo for radio. At home, I have a neat little unit called a Roady 2 from XM. It's about the size of an audiocassette: I can put it in the car, then, when I get to my little beach house, I can take the thing out and play it inside. It is really marvelous. Satellite radio's impact? Sirius paid five hundred million dollars for Howard Stern. XM is adding about a half million subscribers per quarter, and predicting eight million total subscribers by the year-end. In San Francisco, XM gives me local traffic and local weather. Think about it: take the iPod, add Satellite radio, and what is this stick in the ground going to be worth in five years? The big radio holding companies are already programming remotely anyway. There is nobody at the local station, so I simply do not know where broadcast radio will end up in five years.
Back | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | Next
|
A revolution in the motion picture, television, and recorded music industries
