Monday, May 15, 2006

What's the Sound of One Hand Burning?

by Ken Houghton

In the Monetization of the Internet, some firms realise sooner than others that keeping a quarter is better than losing a dollar.
Starting Monday, Vivid Entertainment says it will sell its adult films through the online movie service CinemaNow, allowing buyers to burn DVDs that will play on any screen, not just a computer.

It's another first for adult film companies that pioneered the home video market and rushed to the Internet when Hollywood studios still saw it as a threat.

The home video market revolutionised the porn industry, but required a complete revamping of the business model (e.g., the shift from shooting on film to tape for cost purposes and revamping the distribution system). See Boogie Nights for a reasonable fictional representation of the changes.

Some of that affected the Hollywood mainstream as well, but the savings weren't so great, and the studios attempted to maintain the business model that was centered on Theatrical Release. That, and other poor decisions--such as shooting films in television ratio (4:3 instead of 16:9)--belie the optimism of at least one analyst:
"The rest of Hollywood stands back and watches and lets the pornography industry work out all the bugs," [Michael Greeson] said.

Lest we think this is self-promotion, Greeson doesn't work in or with the pornography industry directly--but he benefits from their marketing.
"Leave it to the porn industry once again to take the lead on this stuff," said Michael Greeson, founder of The Diffusion Group, a consumer electronics think tank in Plano, Texas. [emphasis mine]

The article cautions that "[t]here are business and technology factors that make it easier for adult film companies to embrace new technology faster than traditional media." Trust me--or read the whole thing--that they don't raise any technology factors. And what is the main "business" factor?
[The major] studios are hesitant to anger large retailers such as Wal-Mart Stores Inc. and Blockbuster by selling DVD-ready downloads directly to consumers....

"We don't have to divvy up the pie," said Bill Asher, co-chairman and co-owner of Vivid Entertainment, the largest distributor of adult entertainment. "We sell in smaller stores, mainstream chains, but no one dominant component where we're going to get that phone call."

Translating those two paragraphs: the porn industry revised their business model in the late 1970s and early 1980s to concentrate on expanding their relationship with consumers. The major studios retained (indeed, expanded) their dependency on distributors--not consumers--of their product.

Is it any wonder that Mark Cuban argues that the studios aren't Quite Getting It?
Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?