Wednesday, November 3, 2010, 10:40 AM ET
Yesterday brought more evidence of how digital distribution release windows and promotions are rising as DVD sales wane. First there was news that Disney had teamed up with Wal-mart to allow buyers of the Toy Story 3 DVD to get a bonus digital version of the film playable through the company's recently acquired Vudu digital outlet. That offer was quickly one-upped by Amazon which announced an increase from 300 to 10,000 movies in its "Disc+" program, which provides a digital copy to the user's Amazon VOD account when they purchase a qualifying DVD.
Meanwhile at the Blu-con conference in Beverly Hills, studio executives debated how to best calibrate digital, VOD and DVD distribution. Even emerging practices come with exceptions and debates about results. For example, while VOD has largely gained day-and-date release with DVD, exceptions are still made on a case-by-case basis, such as with Universal's "Despicable Me" which will have its DVD go on sale on Dec 14, but its VOD release not until after Christmas.
However, there isn't a consensus about the impact of delayed release windows vs. DVD. On the one hand, Fox, Universal and Warner Bros., which all signed 28-day delay window deals with Netflix, believe DVD sales have increased by 10-15% vs. prior releases without the delay window. However, Sony, which offers concurrent $1 rentals by Redbox with DVD release, claims there's been no drop-off in sales.
Netflix has loomed larger this year for studios, not just because of the 28-day delay window deals, but also because of its high-profile license with EPIX, which carved out its own 30-day release delay to accommodate existing pay-TV distributors. EPIX followed Starz, another premium cable network, in finding a way to work with Netflix. Surely as Netflix's subscriber count approaches 20 million by the end of the year and it continues to flex its financial muscle, more studios and rights-holders will be compelled to further use windows. But distribution on Netflix's Watch Instantly itself can be quirky. For example, I watched half of The Godfather: Part II this past Sunday (which was Oct. 31st); when I went back to stream the remainder the following day, it was mysteriously now only available for DVD rental, with no warning! Clearly some element of its streaming rights had expired.
Finally, if you thought the confusion around digital distribution was going to settle down, think again, because at least 3 major players have yet to be fully heard from. First is Apple, which is putting the finishing touches on a massive new $1 billion data center in North Carolina that one cloud-computing expert compares to a new-age "broadcasting system." With brisk sales of the new Apple TV, the phenomenal success of the iPad and continued rumors about streaming iTunes, Apple is yet to truly assert itself in movies' digital delivery models. Then there's mega-retailer Best Buy which is teasing something called "media channels" it plans to explain on Dec. 2. And lastly, there's Google which recently added Netflix's former #2 content executive and is promoting Google TV as a living room digital media hub.
All the action means consumers will have more choices than ever, though the degree of market noise will require them to work ever-harder to decide what's best for them.
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Amazon, Apple, Best Buy, Disney, EPIX, FOX, Netflix, Sony, Starz, Universal, VUDU, Wal-Mart, Warner Bros.