I am BARRY HESS > Blog

Video Content Delivery

This article about Blockbuster, linked by Greet Machine, got my wheels a-spinnin’. It’s amazing to read about capitalism in action. Blockbuster’s story is being written rather quickly, indeed.

Yet it’s a bit depressing to think that almost none of this (Netflix, cheap DVD’s, quick releases of purchasable DVD’s) would have happened if Blockbuster would have signed the revenue-sharing deal the studios offered them. In that scenario, the scenario that existed with VHS, the marketplace would have essentially been boxed out of the decision making process.

Netflix’s business model requires DVD’s to be a cheap commodity. Under the previous rental pricing model, Netflix simply could not have distributed new releases and I don’t know if they legally would have been allowed to distribute off-the-shelf DVD’s. I do know that a rental version of VHS tapes typically would cost over $70. Sending $70 DVD’s in the mail? DVD’s that have not been released to consumers? I don’t think so.

Ultimately, Joe Public is happier. I don’t know the numbers, but I imagine the studios are making more money without the exclusivity contract than they were with it. I’m sure the studios are happy. So good riddance to Blockbuster, and more importantly the model they represent. It’s just too bad the studios aren’t learning their lesson from this whole experience.

The writing is clearly on the wall for Netflix (Netflix clearly sees this). Mail-order DVD rental is something that will exist for a relatively short amount of time. As broadband proliferates and improves (sadly, this isn’t happening as quickly as it should), delivery will be taken out of the hands of the USPS. Ultimately users will demand a single appliance for their media. At minimum, an interface that allows them to rent movies for overnight delivery, watch DVR content, and watch live HD content. Additions of purchasing video and audio content for fair use would also be excellent options in a single box.

Further down the road I can envision a system where one simply buys the rights to content. A centralized rights-management point would be necessary for allowing user access. But imagine a system where, with, say, a physical key, you could access your entire library of approved content online and immediately stream it to your media appliance (or your friend’s or your parent’s).

Unfortunately the only way for a consumer to make his/her demand known is with the ability to buy a product. My fear is that counter-productive digital rights management processes and the lack of desire of media providers to get together to innovate and standardize will slow this down and confuse the consumer. One road leads to mass consumer acceptance due to the convenience, usability and trust given to them. The other road leads to finger-pointing, multiple unaccepted platforms and interfaces, and a complete mistrust by the consumer in the studios’ and labels’ ability to provide for the market. And once again we, the consumers, will be in a position where our market demands are ignored because there is no outlet to make our choice known.