Hollywood is Desperately Afraid of Unrealized Revenue

I was linked over to a Forbes article today from reddit. The focus of the article was the ease with which pirates can access movies online versus the difficulty of acquiring the movies legitimately. It's a good read, and makes a lot of good points.

It strikes me, that the issue with Hollywood is that those in power have a desperate fear of unrealized revenue. So great, in fact, that it outweighs even the desire for profit. The MPAA will happily spend millions of dollars on lawyers and lobbyists to realize a few $100,000 in increased sales because piracy becomes slightly less convenient. Instead would it not make much more sense to save the legal fees and campaign contributions and instead invest that into an online service with a great user interface and robust selection of films?

Steam has become the go-to platform for video game purchases because they made it easy and painless to get any game in the library. They gave you all of the rights and abilities you have with physical copies such as the ability gift games and install to multiple machines, but they added in more value. You can re-download Steam games at will, games purchased from Steam often get bonus content for free, and now you don't have to deal with storing stacks of discs.

Amazon has done the same for books. The Kindle store has taken more than a few pointers from Steam, including frequent specials and sales, vast selections of titles, and most importantly the ability to easily re-download any purchased content to any Kindle device. There is no gifting as of yet, but the publishing industry's hatred of second-hand books is an issue for another day.

And then with films we have Netflix. This could be Hollywood's Amazon or Steam, or the studios could try and come up with their own service. But, as it is they fight Netflix tooth-and-nail and treat the service as an enemy rather than as a vendor or customer. Netflix purchases an estimated $240 million worth of DVDs annually. It is, perhaps, the largest individual consumer of films in the U.S. and yet the studios treat it as a villain.

Combine the attitude towards Netflix with Warner's recent strong-arming of Redbox (the studio wants a 56 day delay for newly released films to be rented from Redbox kiosks) and you begin to envision an content creation industry that actively discourages consumership. How does this make sense?

In the late 1970s the industry demonized the VCR the same way they do the Internet now. Eventually, it became a huge source of profit for Hollywood. The Internet will eventually do the same, but studios sure aren't doing a damned thing to make that day come any sooner.