The single connected Home Ent window on multiple screens? Economic problems with the indie solution to the broken business model.

Numerous new digital tools promise to deliver films (along with attendant marketing and audience insights) across all Internet connected platforms, wherever and whenever they are demanded. Ted Hope offers a fantastic summary list of these and related services.

One technological and regulatory approach to enable development of business models based on digital entertainment is to make paid for (or legally free) access to content as unrestricted as possible on multiple devices. For details see the Digital Entertainment Content Ecosystem, now called UVUU (good news for YouView).

The wider adoption of cloud based entertainment services with this multiscreen offer may further condition consumers to entertainment that is undifferentiated by format or mode of
delivery (although linear TV will remain as a distinct media). This effectively reinforces the behaviours developed through consumption of pirated material. This is understandable – the strategy to combat piracy most likely to succeed is one that offers the consumer an easy, legal equivalent to the product already available via nefarious means.

However, by these processes traditional conceptions of rental or ownership in the physical and current digital senses are broken down.

The problem that may develop as corollary is an increasingly negative reaction to the employment of sequential price discrimination. To oversimplify the model, how will the decline in price with time from cinema release be managed if those are the only two variables?

Possibly because such a lot of first level analysis of film industry economics highlights the inability of films as individual products to compete on price in the theatrical marketplace,
the significance of the industrial reliance on price segmentation can be pushed into the background.

In order to extract maximum revenues from every potential consumer, varying levels of willingness to pay are exploited across sequential windows.

A replacement to this is absolutely the core of what the film industry is looking for in new distribution models. Often in industry literature this is simply reduced to: a means to replace the revenues lost from decline in DVD and lost to piracy. It is important to explore the implications of this shorthand.

When windows are indistinguishable by delivery mechanism or viewing device, and internet connected home entertainment represents the second window (after cinematic release) across multiple screens, businesses need to develop strategies to ensure audiences are paying the highest possible price.

As windows converge, media owners are less able to differentiate their offerings and consumer decision making changes. Things are not so simple as “Nah I will wait for the DVD”.

An independent rights holder can make a film available for online download and rental, as well as, and at the same time as, theatrical and VOD (should the bookers and distributors come on
board and many have). They can set prices and the relative availability of such products as they wish.

How likely is it that ownership of a film in the cloud will replace DVD ownership revenue, if the only benefit of spending more is having the content possibly (marginally) quicker?For consumers who were not motivated enough to attend the theatrical release, it’s hard to
see the reasoning not to wait for a lower priced rental.

The alternative to the single picture perspective of control is one that puts independent producers at a disadvantage.

This is the bundling of content, or provision of a service rather than single content items. As per Amazon prime in the USA this is much easier to achieve for majors, tech incumbents and content aggregators.

For independent producers the question then is – can they to licence content to such shop windows and keep non-exclusive rights to distribute the film directly as some element of  transmedia property?

Following the choices and successes of independent distribution choices in conjunction with the continuing experimentation with windows by major distributors is rewarding.

A question for researchers which is linked issue to the actual strategies employed is how to understand them in terms of economics? Along with illustrating the key points of traditional distribution models, recent work by W. A. Konzal of QUT concerning Entertainment Architecture notes that the traditional economic approach to the industry is limited by its focus on equilibrium states. This is arguably undermines such an approach being applied in an industry which is now deemed to be in a constant state of flux.

At the  MEDIA Business School in July Michel Reilhac, Executive Director of Arte France Cinema and Director of Acquisitions Arte France, put forward the view that there will not be an industrial reset to a new replacement model that becomes the norm for film distribution, but that change is now the de facto state. Such sentiment points the way toward considering application of new theories for these topics. As Konzal points out it may be worth exploring the viability of theories of evolutionary economics here, e.g. Potts, Jason D. 2011. Creative Industries and Economic Evolution. New Horizons in Institutional and Evolutionary Economics, edited by Geoffrey Martin Hodgson. Cheltenham; Northampton: Edward Elgar.

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