Planning to skip theatrical releases for this year's hot Warner Bros. movies such as The Dark Knight Rises and The Hobbit to watch them at home on your HDTV a few months later? Better add another four weeks to your wait if you rent DVDs from Blockbuster, Redbox, or Netflix. Warner Bros. has reportedly reached a deal with the three DVD rental outlets to double the waiting period from 28 to 56 days between when a DVD goes on sale and when it can be rented, according to AllThingsD.
The new deal is expected to be announced during the Consumer Electronics Show, which starts next Tuesday in Las Vegas. The reported deal is yet another attempt by Hollywood to shore up faltering DVD sales. The final sales numbers for 2011 aren't in yet, but market research firm IHS iSuppli said in December it expects U.S. video purchases (physical and online) to drop by $9.9 billion for 2011 compared to 2010.
This will be the second time that Warner Bros. has tried to boost DVD sales by stalling prospective rentals. In 2010, Warner Bros. struck a deal with Netflix in which the online DVD rental outlet agreed to wait 28 days before offering a new DVD release to Netflix customers. Other movie studios including Universal Studios and 20th Century Fox soon followed suit and cut similar deals with Netflix. So it's a good bet Warner Bros. won't be the only movie studio lining up a 56-day delay window for new DVD rentals in 2012.
Two years ago, Netflix said that in return for waiting 28 days, it could offer more online streaming content to its customers. This time around Warner Bros. isn't giving the rental outlets any extra incentives to sign on the dotted line, AllThingsD reports.
Hollywood Just Doesn't Get it
Warner Bros. apparently believes it can stoke lagging DVD sales by creating what amounts to a false scarcity in the marketplace. In other words, if you can't rent the latest super popular movie on DVD, I guess you'll just have to break down and buy it, right? Sure, if this was 1986 and DVDs were VHS tapes. But in 2012, if you release a movie on DVD on Friday, it is guaranteed to show up online as a file-sharing torrent by Saturday, if not earlier.
The recent Warner Bros. DVD release Contagion, for example, was released on DVD on Tuesday. A quick glance at The Pirate Bay shows a number of DVD rips went online as torrents the same day and some even earlier. There are also a few good quality versions of the movie on pirate streaming sites such as videobb, novamov, and putlocker.
Hasn't Hollywood figured out by now that if you frustrate your customers by refusing to make your content easily accessible, you only encourage more piracy? Take a look at the music industry, which fought for years to combat piracy while at the same time restricting digital access to its content.
But a March 2011 report by market research firm NPD Group found that music piracy dropped from 16 percent of all U.S. Internet users in 2007 to 9 percent in 2010. The analysts attributed the change in part to the shutdown of Limewire in late 2010. But it's no coincidence that music piracy is dropping while cheaply-priced digital music services are multiplying, including download stores such as iTunes and Amazon, and subscription services such as Rhapsody, Spotify, and Mog.
Instead of trying to restrict DVD rentals, Warner Bros. should be figuring out how to get its movies in more people's hands at a good price. Whether it's through streaming rentals on Facebook, Netflix subscriptions, or cheap digital downloads, the only way to reduce piracy and increase revenue is to make your content more available, not less. If the major movie studios don't learn to embrace digital distribution, then Hollywood risks getting left behind by its own customers.