And from YouTube’s perspective, that’s all that matters. Because the Google (GOOG) unit certainly didn’t make any money from the exercise: 2,684 people paid $3.99 a pop to rent indie movies from Sundance, netting all of $10,709.16, the New York Times notes.
But since YouTube hadn’t ever rented a single piece of video to anyone who wasn’t a Google employee before, the company can plausibly claim this was a success. It has been testing movie rentals internally for some time, and Google execs have suggested both publicly and privately that they’ll be renting films–and perhaps TV shows–in the near future.
But among other things, they need to show Hollywood that they can actually do this, so the Sundance experiment could be useful no matter how many dollars it generates.
I’d assumed that the standard pricing/windowing/biz-dev issues were holding up YouTube’s entry into paid video, but some industry executives have told me that there are technical issues to deal with as well, like making sure video files are handled securely. So Sundance has to help, right?
Meanwhile, here’s the trailer from “Be Kind Rewind,” a movie about movies I haven’t seen but would like to. Maybe once this season of “Lost” ends.
It’s important to remember this whenever you see stories about Hollywood’s resurgence, measured by box office receipts. Because box office receipts don’t do that much for Hollywood’s bottom line–that’s the role of DVDs.
It’s also important to remember this when you see stories about Hollywood’s conniption fit over “windowing” and the lawsuit/hardball deal combo the studios have used with Redbox and Netflix (NFLX). Because the studios’ desire to wring every last penny from DVDs is what’s driving those moves.
Ditto for Hollywood’s desire for a 3-D boom: The studios are in desperate need of a new revenue stream to replace the disappearing discs.
So here’s the one-sentence story I promised, which illustrates the collapse. It comes via Edward Jay Epstein’s dissection of MGM’s blowup, published on Defamer (nice get!):
In the US alone, MGM’s net receipts from DVDs fell from $140 million in its 2007 fiscal year (which ended March 31, 2008) to just $30.4 million by 2010.
That clarifies things, no?
Yes, you can add plenty of caveats if you’d like. For instance, MGM has been more or less dormant except for its Bond films the last couple years, and studios rely on new releases to juice DVD sales. And the DVD slump hasn’t hit all studios equally–Disney (DIS) and DreamWorks Animation (DWA) have done less poorly, because parents still need to buy stuff to occupy their kids.
But that’s still a staggering 78 percent drop in a couple years. So even if you’re running a studio whose DVD sales don’t look that bad, you’re looking at plummeting sales. Scary stuff.
As predicted, Steve Jobs showed off a new multimedia device today. One thing he didn’t show off, though: Much in the way of new media.
Jobs and company clearly plan on incorporating new products from newspapers, magazine publishers, TV networks and Hollywood movie studios as the iPad rolls out. But there wasn’t much talk about any of those media products during the launch event.
The only mention of TV, music and movies, for instance, came as Jobs showed off the device’s multimedia features. But the implication, at least for now, is that consumers will get that stuff into their machines the same way they get it now, from iTunes, and at the same price–or via Google’s (GOOG) YouTube, which Jobs did take time to demo. That is, no talk of subscription products or of other changes in the media consumption/distribution model.
The same goes for magazine and newspaper products. As predicted, Apple (AAPL) highlighted an iPad app designed by the New York Times (NYT), but there was no mention of how much the thing will cost or whether the paper will charge anything at all.
“This was a demonstration product. It’s too soon to discuss any details such as pricing,” Times spokeswoman Diane McNulty tells me via email.
Apple also highlighted games, bringing out demos from Electronic Arts (ERTS) and Gameloft. But both companies showed off versions of games you can already get for the iPhone and iPod touch.
Jobs did unveil one major media change: Apple is getting into the e-book world and competing with Amazon’s (AMZN) Kindle head on. Jobs made a point of highlighting agreements with five big publishers: Pearson’s Penguin Group, News Corp.’s (NWS) HarperCollins, Hachette Book Group, CBS’s (CBS) Simon & Schuster and McGraw-Hill (MHP). And, as reported, he showed off a higher price point for books than Amazon’s $9.99.
But even that seems fairly preliminary. While Jobs’s demo showed off splashes of color and a more “paper-like” presentation of the books’ pages, it didn’t feature much of the stuff you’d expect in an “enhanced e-book,” like video, audio, etc. So it will be interesting to see how the books, and their prices, evolve.
And that’s the key to all of this: It’s going to take some time. Keep in mind that Apple kept just about all the big media companies at arm’s length before the announcement and didn’t even acknowledge that there was a device until very recently.
Apple expects that like the iPod and iPhone, the iPad will be a big enough hit that media companies will adapt to the new hardware. Some of the media executives I spoke to in advance of today’s announcements were fine with that, but noted that many of them didn’t roll out new products for the earlier devices for a long time following their launch. We may be looking at a repeat here.