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Strange Bedfellows?

April 12, 2010 | Author: Ibex Marketing

What could possibly bring the cable companies and the Hollywood studios together? Aren’t these the same two warring camps that have been playing chicken over retransmission fees? Well, consider these two words: Netflix and Redbox.

The fact is that DVD sales continue to drop as consumers choose other ways to get their movies at home, and rentals play a large role in that. And the studios aren’t all that happy about it. (Redbox has had to employ an army of buyers to get retail copies of the latest releases because some studios won’t sell to them directly.)

According to an article in Business Week last month, some studios and cable companies are teaming up for a $30 million marketing campaign promoting cable on-demand services as the best way to watch the latest movies at home. The plan is to release more movies for on-demand viewing on the same day that the DVDs become available for sale. Fox Home Entertainment plans to triple the number of titles available on the same day as the DVD release. In addition, some cable operators will give subscribers 48 hours to finish watching an on-demand movie, which is double the customary 24 hour limit.

Presumably, the movie studios get a portion of each on-demand fee, as opposed to only getting revenue one time for a DVD purchased by a rental service. The theme of this new cooperative campaign is “The Video Store Just Moved In“, and will stress the convenience and immediacy of on-demand movies. It will be interesting to see if this can make a dent in the Netflix and Redbox dominance.