Digital dump on Hollwood: nothing new
The digital Godzilla that splatted the music industry is headed full speed for the movie and TV business.
So says a top Lehman Brothers analyst, whose downgrade of the entertainment sector from “neutral” to “negtive” roiled major Hollywood stocks early this week — even though all of this gloom has long been factored in to media stock prices.
“Owning a collection of movies in this new digital world is really just not that cool for young adults in the target demographic that we look to for the future of the business,” Anthony DiClemente proclaimed during a conference call.
Then he let loose the dreaded words: “Content may no longer be king in the entertainment business.”
DiClemente trotted out the usual suspects: digital distribution via outlets like the iTunes Store and Amazon’s Unbox, illegal movie downloads, ad-killing DVRs, the overall downtrend in the aging DVD format.
He downgraded 20th Century Fox, News Corp., Time Warner, CBS and the Walt Disney Corp., media giants he said were particularly vulnerable to digital disruptions. Paramount took less of a hit.
News Corp., for example, saw the target price for its stock fall from $25 to $15 a share in Lehman’s eyes. Time Warner’s slid from $20 to $14.
“The structural shift created by ubiquitous technological change — a shift that has materially impacted the music industry — could also disrupt the core economic models of the film and television studios,” DiClemente said.
Most of the stocks DiClemente cited failed to participate in Tuesday’s broad stock rally, but their losses from Monday’s bashing seem over.The Lehman report saw a lot of press because of its doom-and-gloom headlines, but anyone with an active interest in this topic knows there’s nothing new there. Almost all of the analysts rounded up for comment blew off DiClemente’s report.
DiClemente, of course, had to justify his sector downgrade, so don’t blame him for stating the obvious.
He did make a point we don’t hear often enough. The era of owning an artifact — an album, CD or DVD — in order to enjoy entertainment is coming to a close. The forward-looking musician Todd Rundgren was making this point 15 years ago, but no one was listening.
Most of us have heard of kids who buy CDs, download the music, and then throw away the disc before someone cool sees them with the dumb thing.
The Hollywood stock slide in my opinion doesn’t present a buying opportunity (outside of overall market cheapness). I don’t own media stocks (aside from some GE stock I’m looking to dump) — and that’s from someone who’s worked in media most of his life.
iTunes Store gets fresh movie downloads
iTunes made a much-needed upgrade to its movie download business with today’s news that major Hollywood films will be available on Apple’s retail site day-and-date with their DVD releases.
The movie downloads on the iTunes Store are flowing from Disney, 20th Century Fox, Warner Bros., Paramount Pictures, Universal Studios Home Entertainment, Sony Pictures Entertainment, as well as the major indies Lionsgate, Image Entertainment and First Look Studios.
The move already is paying off: Six of the top 10 iTunes movie sellers as of today were released to DVD within the past couple of weeks, led by “Cloverfield” (April 22). None of these titles were available for iTunes rental.
Only a couple of this week’s DVD releases are up there, but chick-flickers can score “27 Dresses” and “The Diving Bell and the Butterfly.” All of these films are available for download on Amazon’s Unbox.
The lag time for movie downloads has made this business look kind of goofy, with digital product running a couple of months behind the home video window. So count this as a major victory for Steve Jobs’ bid to make the iTunes Store a dominant player in movie downloads.
This delay time is critical to film studio economics. The studios, movie exhibitors and the home video distributors and retailers have been fussing over the release window since the first Betamax hit the shelves. The window (delay) continues to close, to cinema owners’ dismay.
Apple’s press corp is struggling with the day-and-date concept.
The iTunes press release states: “New releases available for purchase on the iTunes Store this week, concurrent with their DVD release, include “American Gangster” and “The Diving Bell and the Butterfly.” Sounds good, except “American Gangster” came out on DVD months ago. And, ironically, “Gangster” was a victim of big-time BitTorrent downloading shortly after the theatrical film came out.
iTunes also is selling “Juno,” “Alvin and the Chipmunks” and “Walk Hard: The Dewey Cox Story.”
The big news came out on the fifth anniversary of the iTunes Store, a massive world-changing success in the music business.Netflix stock, trying to recover from a quarterly earnings warning that sent it down 24%, took another hit with today’s news of the iTunes movie download deal. On a terrific day for the market, NFLX took a 3% hit. AAPL was up almost 3.5%. (Disclaimer: I own Apple and bought Netflix on the big dip.)
‘Juno’ DVD gives birth to digital copies
Plop in the disc, hit a prompt or two and you’ve got a copy of “Juno” ready for iPod or iTunes viewing. That was almost as easy as getting pregnant when you’re young, in lust and not even close to married.
The Hollywood studios are slow but not dumb. They finally figured out that tech-savvy users are going to get copies of hit movies onto their PCs and portables whether the copyright cops like it or not. Until the new year, that often meant grabbing an illicit version via BitTorrents or hacking the copyright protection on the DVD.
Starting with Fox’s release of “Blue Harvest” — the “Family Guy” spoof of “Star Wars” — the studios started trickling out digital copies of movies packaged with the standard DVD. The pace appears to be quickening.
In the case of this week’s DVD release of “Juno,”
Getting “Juno” onto my Pro Mac (Intel) with iTunes v. 7.6.2 took all of three minutes. The disc started up with a mighty whirling. A popup asked if I wanted to add the movie to iTunes. Sure. Another screen assured me a download was under way.
The movie appeared to download in about a minute, but there was no clear indication that had happened, other than a thumbnail image of the DVD cover that appeared under the Movies tab in the main Library. Double-clicked and the system asked if I wanted to authorize this computer to store the movie. Yep. Then it indicated two of five computer slots for the film had been used (presumably one for the desktop and another for the plugged in iPod).
“Juno” started up with with that familiar Fox studio drum intro … and pretty much looked like crap. That was at the full-screen setting for the monitor. Moved back about 5 feet and everything looked good enough for a full-length viewing, with allowances for softness and grain. The audio was clear and crisp, but nothing special, of course.
The smaller the screen space, the better it looked — as is the case with all computer video. So iPods have it easy in coming up with a sharp image.
The experience for Mac users should prove almost identical to renting or buying a movie off the iTunes Store — meaning hassle-free.
No doubt studios will use digital copies as marketing incentives. Sony’s upcoming DVD of Dolph Lundgren’s “Diamond Dogs,” for instances, has a digital copy as a “bonus copy,” but it wouldn’t work on the Mac. The sleeve says “Diamond Dogs” will work either as a PC or PSP transfer. At least it’s free. Get what you pay for dept.
Writers get their online video share
Hollywood’s writers have won a piece of action in the coming boom for movies and TV shows online. Assuming there is a boom.
Their union early Saturday secured a percentage deal for revenues from online distribution of TV shows and films, starting in the third and final year of a new contract. For years 1 and 2, writers will get $1,200-plus as a flat fee for Internet runs of a one-hour TV show.
The 2% share of revenue is seen as a guarantee writers will share in any spike in online revenues for the networks and studios. That share may not mean be all that rich in three years, but it will set a starting point for future contract negotiations. (Writers felt they’d been screwed when they failed to see DVDs as the video medium of choice.)
Writers also fear that network use of reruns will fade as current and catalog shows are being routinely uploaded for free viewing, cutting off residuals.
The flat residual rate for online video had been agreed upon earlier in the year, but the writers prolonged the strike seeking the percentage. (Directors accepted the flat residuals.) Early Saturday, the deal was made.
The networks and producers argued, with some justification, that the economic model for making money online hasn’t been found, and the costs of getting online distribution to work fall to them alone.
Writers have to ratify the deal — a no-brainer given the misery index here in L.A. — and could be back at work as early as Wednesday, guild officials said.
Also under the deal, movies and TV shows sold online — such as those on the iTunes Store — will provide a doubled residual rate for the writers compared with DVDs.
The Writers Guild of America also won jurisdiction over bigger-budget Internet programming.
The guild told its members, “It is an agreement that protects a future in which the Internet becomes the primary means of both content creation and delivery. We believe that continuing to strike now will not bring sufficient gains to outweigh the potential risks and that the time has come to accept this contract and settle the strike.”
My pal Bill Braunstein recently weighed in on the reality and animation writers‘ situation over on Write for Blogs.
‘Jackass 2.5′ punks cinemas, debuts online
The first two “Jackass” movies grossed something like a combined $140 million in theaters, but the exhibitors aren’t getting their mitts on the next installment.
Paramount is heading straight for the gross-out gang’s core audience by deploying “Jackass 2.5″ online, starting Wednesday with exclusive streaming on Blockbuster’s Movielink.
A week later it’s on to DVD
Blockbuster shareholders will be delighted to hear the rental giant reportedly paid $2 million for this chance to spotlight its movie download service. With a film featuring liberal ass, dick, shit and piss.
The online units of MTV and Paramount say this is first major studio movie to debut online. That’s not counting “Sicko” and “American Gangster,” both victims of major leaks to Bitstream Nation. The scheme also promos the new jacksassworld.com
“Jackass 2.5″ is just what it sounds like: outtakes and deleted scenes from “Jackass 2.” Damaged goods? Nope, this is another balls-to-the-wall effort from Johnny Knoxville and the boys. Making it about as funny as disgusting humor gets — strictly for those with the inability to be offended.
Knoxville says in the that “2.5″ is due to “my and the boys’ inability to stop shooting ‘Jackass 2.’ ” And so we have stunts such as anal-bead kite flying, fun with snapping turtles, a Russian prostate massage, a cobra-infested bed of nails, the smelly powder “poof” and the “rattlesnake salad toss.”
The best bit is fat man Preston Lacy dressed as King Kong, balancing atop an outhouse while fending off radio-controlled airplanes. His love interest is Wee Man, as Fay Wray.
In between bits, the boys talk about each stunt and how much the victim Jackass guy hated doing it. They say things like, “We filmed this atrocity … ”
Here’s Knoxville with a pitch for this major Viacom corporate initiative: