Interesting persepctive on movie industry & downloads

[Woochifer]

The addition of Netflix streaming on the PS3 is basically the same feature that went into the Xbox 360 last year. It helped Netflix bump up the percentage of their customers that use the streaming service, but the DVD rentals still make the majority of their transactions.

The difference here is that the PS3 will have HD content (though I wonder how much bandwidth is needed just to maintain a heavily pixelated 720p image), if I'm reading this correctly. Still need to use a key disc (on Blu-ray) in order to enable the Netflix streaming, which Netflix would send out.

Bottomline on this -- it doesn't matter all that much because new releases are not available on this streaming service, and new releases generate most of the home video revenue. The content primarily consists of TV shows, and movies that have already been available on home video for a while and thus have limited revenue potential anyway.

For new releases, that leaves most of the remaining online/download market for PPV and purchase options. PPV is conceptually the same as other existing rental options, except that it's done from the convenience of home. The purchase options are problematic because most of them do not currently include HD, and the DRM lockdowns prevent them from interoperating on multiple devices. Basically, if you "buy" a movie via download, you can only use that device to view the movie. And if the hard drive goes down, there goes your collection (not that a typical 1 TB drive can store that many movies anyway, especially at HD resolution).

[Mr Peabody]

I heard they are thinking about releasing new movies on disc and then making the rental companies wait a few weeks before allowing rental. I guess the movie companies are getting desperate for cash. I personally would wait until I saw the movie first before buying. It would just confuse things more as to when I could go rent it. It's difficult enough now to know what's released and available and trying to remember titles whose trailers caught my interest.

On the other hand I bought Transformers 2 at Wal-Mart for $19.97. If more new releases were priced like that I could see me buying more.

[Sir Terrence the Terrible]

To address Mr. P comment:

I heard they are thinking about releasing new movies on disc and then making the rental companies wait a few weeks before allowing rental. I guess the movie companies are getting desperate for cash

Since ripping of rentals is pretty rampant these days, this allows the studio a window of profit since sell through is its biggest money maker. I know quite a few people have built their libraries through ripping, and it just means they will have to wait to do it. This model has been in existence with VOD for years, and consumers have adjusted quite well to this. Remember the days when you had rental windows before you could purchased with VHS? Studios used to have a very large rental market income when mom and pop rental stores were everywhere. Well, the big box rental companies have killed those, and now the studio make next to nothing from rentals. It is not unusual for any company to revise their business plans to maximize their profits even when times are good, so you don't have to be hurting for cash to make this adjustment. Even if times were going well, you would have probably seen this kind of move, as it is just an adjustment to reflect a change in the market place. Considering that credit is hard to get, this is a wise move as studios have to invest more of their own resources in productions than in the past. It is not a move of desperation, but maximization.

[Sir Terrence the Terrible]

I thought that rather than trying to address several complex issues at once, I would break down my arguments into separate issues to better address NL misinformation and off base assumptions. One fact that is indisputable, all American businesses that sell some sort of product are not doing very well in this economic climate. Even the computer industry is in even more trouble than the film industry in this respect. Among all industries, the computer industry is third in overall layoffs, far more loss of jobs than the film industry and its associated business put together. NL claims the computer industry is leading the economic recovery, which when you look at the facts, is total BS. Just recently two computer manufacturers, and three computer software companies not far from me have announced another round of layoffs because the demand for computers has still not risen. So much for leading the economic recovery. When your entire manufacturing base is banking its sales on the success of one product (Windows 7), then you know things are perilous for you. Now Microsoft has Google to contend with, so not everything is going to be smooth sailing this time around, even if Windows 7 is a much better product than Vista. Since the second largest manufacturer of computers (Acer passed Dell this year) has committed to Google’s OS for their netbooks, the hottest selling PC at this moment, it is not a slam dunk that the new Windows OS is going to save the struggling American computer manufacturers. If Acers move proves successful, you are going to find others doing what the same thing they have done. It seems to me the computer software makers are in a similar war that the film industry found themselves in two years ago, but their war has three parties duking it out, Apple, Microsoft and Goggles OS’s.

First let's address the claims that the studios are in trouble. They are in no more trouble than any other American business. He continually lumps the studios together as if they are one big entity, and that is the problem with his argument. Some studios are doing better than others. Some studios are owned by larger concerns that are not doing well even though at the studio level things are fine. Sony and Warner fall into that category. Sony's studio is not doing terribly bad, as they have had very few layoffs, but a lot of shifting of resources, and removing of redundancies. Warner has integrated New Line back into the greater Warner studio, and eliminated redundancies along the way. This is a way of controlling costs for Warner. Paramount is doing fairly well considering the two Transformer titles are selling very well, and did great at the box office as well. Disney is also doing okay, with their film business actually doing quite well even if Disney as a whole has seen a slight loss. A lot of these studios when you look at their film operations are doing fairly well in this economy. It is their non film business that is hurting them. Paramount closed its Shrek traveling show, and Disney is shortening the tours of their shows. His second claim; the studio are don't understand the internet, are killing downloads, and are stuck in old business models. Now these claims come from an individual with absolutely no experience in ANY film studio. It is all his opinion and gut, and I will show he does not know what he is talking about. If the studios were so afraid, then why are they actually trying to find a business model that actually works, when nobody else has made it work so far? This is another example of each studio progressing into downloads at their own pace. At my studio (Disney) we have managed to apply "cloud" computing to our downloads, which enables our films to be played back on a variety of video devices without having to store the file on a hard disc. Whether you are talking ipod, computers, Zune, smart phones or any other device, you will have access to the movies that you want, whenever you want. All films are streamed directly to the device, and it does not have to have a large storage capacity because the file is not stored in the devices. All of the other Hollywood studios are developing their own "cloud" technology called Digital Entertainment Content Ecosystem of which Disney will eventually migrate to. It also involves Sony Computer, Microsoft, Intel, Comcast and Best Buy. Microsoft will host the system, Sony computer is developing devices, Intel the chips, Comcast the pipeline and Best buy the retail outlet. This should satisfy everyone’s desires, with the consumer having access to content on their various video devices, and the studios able to protect their content as well This was conceived and arranged BY THE STUDIOS, so if they are afraid of the internet, and don't understand it, they sure are pushing the internet as another distribution network along with traditional methods. This added with the fact the several studios own Hulu, and all of the Hollywood studios own interests in Movielink which is a downloading service (that is losing money as well). This is evidence and prime examples that the studios have embraced the internet as another delivery system for their content. Personally I think that the DECE model is going to be the only way to generate a decent profit from streaming digital content, because it allows the studios themselves to spread the costs of storage (which is very expensive) to all of the major studios (and any other smaller studio) instead of individually having to shoulder the costs alone.

Each studio is advancing based on their leadership’s willingness to embrace new technology and distribution outlets. Some studios are still run by the old school executive and others by those with more progressive attitudes on technology. Disney/ABC and NBC/Universal are prime examples of studios run by more progressive leaderships. Both have invested heavily in all digital studios designed just to handle web content. The other majors are behind these studios in current implementation, but are definitely headed in that way.

He also looks at figures like the DVD losing sales, but does not address that it is an overall sales figures, and not a by studio based one. Some studio DVD sales losses are smaller than others. He also does not factor in that almost all of the studios have released all of their movies on DVD, and that current DVD sales are based on new releases ONLY. It is easy to have big DVD sales numbers when you have plenty of content to release. Figures will always drop when there is less content to release, and that is where the studios are with DVD. Even VHS would have faltered to huge sales losses if the DVD had not come when it did. The reality is that the studios could have offset these losses if the HD hardware manufactures didn’t get into a big fight over formats. Had we transitioned to HD on disc with one format from the onset, much of the disc sales losses would have not been so bad or happened at all. But that two year fight allowed a quicker erosion of disc sales as consumer had to choose which format to support, and stopped buying DVD’s in the process. Combine that with formats maturity and less content, and you have your current situation on DVD. Most analysts point to these reasons for the losses than they do the overall economy’s financial health. With Blu-ray sales up 88% from last year, just imagine where it would have been minus the two year battle with HD-DVD. We probably would not have experienced a 16% overall decline in disc sales, that is for sure. If I blame the studios for anything, I would blame them for allowing the format war to persist as long as it did. Had Universal and Paramount not looked at that short term gain of accepting payments for exclusive support, and looked at the long term consequences a format war would have on the business, they probably would not have gone in that direction. I personally blame these two studios for the current media on disc issues we are having today. I would go as far as saying all of the other studios that supported Blu-ray from the onset are were very angry at Universal, Paramount and DreamWorks for what has happened with disc sales. What the studios envisioned is as smooth a transition to HD on disc as we saw with the transition from VHS to DVD. Nobody expected Blu-ray to just kick the DVD to the curb, as it took more than 5 years for the DVD to kick VHS to the curb.

Some things I do agree on, talent salaries have to be checked. Their salary as a percentage of production costs has approached nearly 50%. The cost of CGI is still expensive (it requires a server farm to render images), but that cost is holding in comparison to talent wages which are rising yearly. After you have paid the director, and the top named actors, you have already spent a great deal of your budget, and that must change. The studios also need to focus on releasing better movies, instead of more to feed the DVD pipeline. A good movie will do well in both its theatrical run, and its DVD release. Some of the studios have essentially been releasing large amounts of trash to feed the DVD pipeline to pay for the cost of huge blockbuster films they produce. Disney does not do that, but Warner and Universal have been very guilty of this. This is why they are suffering from DVD sales erosion than the other studios. Disney has a different marketing model than all off the other studios. Rather than just making a killing on each title they release, they only release a certain amount of copies of their vault. When those copies are sold, they discontinue releasing the title for a few years then open the vault again. This extends the value of each title by years, which brings profits spread over years rather than a short window during original releases. Combine that with a more targeted audience which naturally replenishes itself year after year. Year after year both reminiscent adults, and a new generation can enjoy their titles which increases your catalogs value over time. The other studios do not do this, which is why they cannot all be lumped together like NL seems to enjoy doing.

Computer geeks love to point to DVD sales losses, and this supposed lack of interest in the internet for the film industry’s woes. But their reasons just don’t add up when the issue is carefully scrutinized and the fact are revealed. The idea that the film studios are at their last breath because they didn’t keep up with trends is just not founded, but only the ranting of a person that just does not keep up with what studios are doing. He listens to one person who one could perceive as a disappointed independent filmmaker who products did not sell well at film festivals, and figures because it agrees with his opinion that he has some special insight into studio operations. People who look from the outside in are never as informed as those who are on the inside. All American businesses are restructuring their operations to cope with less sales, the auto industry being one of them and computer manufacturers another. The film industry is no different. Everyone is suffering from bloat brought on by easy credit to consumers which spurred a consumerism bubble, and now the reality is that bubble has broken forever. To avoid future losses, companies have to streamline their operations, and keep costs down. The film industry is no different, and neither is the computer industry. I will tackle the costs of downloads and streaming next...

[pixelthis]

I heard they are thinking about releasing new movies on disc and then making the rental companies wait a few weeks before allowing rental. I guess the movie companies are getting desperate for cash. I personally would wait until I saw the movie first before buying. It would just confuse things more as to when I could go rent it. It's difficult enough now to know what's released and available and trying to remember titles whose trailers caught my interest.

On the other hand I bought Transformers 2 at Wal-Mart for $19.97. If more new releases were priced like that I could see me buying more.

and that was a Blu wasnt it?
Halloween and several other Blu discs were ten bucks
Meanwhile my cable company (key the Darth VADER music) has shown several titles
"day and date" with disc releases.
And isnt that new transformers the reference disc to beat all reference discs?

[pixelthis]

I thought that rather than trying to address several complex issues at once, I would break down my arguments into separate issues to better address NL misinformation and off base assumptions. One fact that is indisputable, all American businesses that sell some sort of product are not doing very well in this economic climate. Even the computer industry is in even more trouble than the film industry in this respect. Among all industries, the computer industry is third in overall layoffs, far more loss of jobs than the film industry and its associated business put together. NL claims the computer industry is leading the economic recovery, which when you look at the facts, is total BS. Just recently two computer manufacturers, and three computer software companies not far from me have announced another round of layoffs because the demand for computers has still not risen. So much for leading the economic recovery. When your entire manufacturing base is banking its sales on the success of one product (Windows 7), then you know things are perilous for you. Now Microsoft has Google to contend with, so not everything is going to be smooth sailing this time around, even if Windows 7 is a much better product than Vista. Since the second largest manufacturer of computers (Acer passed Dell this year) has committed to Google’s OS for their netbooks, the hottest selling PC at this moment, it is not a slam dunk that the new Windows OS is going to save the struggling American computer manufacturers. If Acers move proves successful, you are going to find others doing what the same thing they have done. It seems to me the computer software makers are in a similar war that the film industry found themselves in two years ago, but their war has three parties duking it out, Apple, Microsoft and Goggles OS’s.

First let's address the claims that the studios are in trouble. They are in no more trouble than any other American business. He continually lumps the studios together as if they are one big entity, and that is the problem with his argument. Some studios are doing better than others. Some studios are owned by larger concerns that are not doing well even though at the studio level things are fine. Sony and Warner fall into that category. Sony's studio is not doing terribly bad, as they have had very few layoffs, but a lot of shifting of resources, and removing of redundancies. Warner has integrated New Line back into the greater Warner studio, and eliminated redundancies along the way. This is a way of controlling costs for Warner. Paramount is doing fairly well considering the two Transformer titles are selling very well, and did great at the box office as well. Disney is also doing okay, with their film business actually doing quite well even if Disney as a whole has seen a slight loss. A lot of these studios when you look at their film operations are doing fairly well in this economy. It is their non film business that is hurting them. Paramount closed its Shrek traveling show, and Disney is shortening the tours of their shows. His second claim; the studio are don't understand the internet, are killing downloads, and are stuck in old business models. Now these claims come from an individual with absolutely no experience in ANY film studio. It is all his opinion and gut, and I will show he does not know what he is talking about. If the studios were so afraid, then why are they actually trying to find a business model that actually works, when nobody else has made it work so far? This is another example of each studio progressing into downloads at their own pace. At my studio (Disney) we have managed to apply "cloud" computing to our downloads, which enables our films to be played back on a variety of video devices without having to store the file on a hard disc. Whether you are talking ipod, computers, Zune, smart phones or any other device, you will have access to the movies that you want, whenever you want. All films are streamed directly to the device, and it does not have to have a large storage capacity because the file is not stored in the devices. All of the other Hollywood studios are developing their own "cloud" technology called Digital Entertainment Content Ecosystem of which Disney will eventually migrate to. It also involves Sony Computer, Microsoft, Intel, Comcast and Best Buy. Microsoft will host the system, Sony computer is developing devices, Intel the chips, Comcast the pipeline and Best buy the retail outlet. This should satisfy everyone’s desires, with the consumer having access to content on their various video devices, and the studios able to protect their content as well This was conceived and arranged BY THE STUDIOS, so if they are afraid of the internet, and don't understand it, they sure are pushing the internet as another distribution network along with traditional methods. This added with the fact the several studios own Hulu, and all of the Hollywood studios own interests in Movielink which is a downloading service (that is losing money as well). This is evidence and prime examples that the studios have embraced the internet as another delivery system for their content. Personally I think that the DECE model is going to be the only way to generate a decent profit from streaming digital content, because it allows the studios themselves to spread the costs of storage (which is very expensive) to all of the major studios (and any other smaller studio) instead of individually having to shoulder the costs alone.

Each studio is advancing based on their leadership’s willingness to embrace new technology and distribution outlets. Some studios are still run by the old school executive and others by those with more progressive attitudes on technology. Disney/ABC and NBC/Universal are prime examples of studios run by more progressive leaderships. Both have invested heavily in all digital studios designed just to handle web content. The other majors are behind these studios in current implementation, but are definitely headed in that way.

He also looks at figures like the DVD losing sales, but does not address that it is an overall sales figures, and not a by studio based one. Some studio DVD sales losses are smaller than others. He also does not factor in that almost all of the studios have released all of their movies on DVD, and that current DVD sales are based on new releases ONLY. It is easy to have big DVD sales numbers when you have plenty of content to release. Figures will always drop when there is less content to release, and that is where the studios are with DVD. Even VHS would have faltered to huge sales losses if the DVD had not come when it did. The reality is that the studios could have offset these losses if the HD hardware manufactures didn’t get into a big fight over formats. Had we transitioned to HD on disc with one format from the onset, much of the disc sales losses would have not been so bad or happened at all. But that two year fight allowed a quicker erosion of disc sales as consumer had to choose which format to support, and stopped buying DVD’s in the process. Combine that with formats maturity and less content, and you have your current situation on DVD. Most analysts point to these reasons for the losses than they do the overall economy’s financial health. With Blu-ray sales up 88% from last year, just imagine where it would have been minus the two year battle with HD-DVD. We probably would not have experienced a 16% overall decline in disc sales, that is for sure. If I blame the studios for anything, I would blame them for allowing the format war to persist as long as it did. Had Universal and Paramount not looked at that short term gain of accepting payments for exclusive support, and looked at the long term consequences a format war would have on the business, they probably would not have gone in that direction. I personally blame these two studios for the current media on disc issues we are having today. I would go as far as saying all of the other studios that supported Blu-ray from the onset are were very angry at Universal, Paramount and DreamWorks for what has happened with disc sales. What the studios envisioned is as smooth a transition to HD on disc as we saw with the transition from VHS to DVD. Nobody expected Blu-ray to just kick the DVD to the curb, as it took more than 5 years for the DVD to kick VHS to the curb.

Some things I do agree on, talent salaries have to be checked. Their salary as a percentage of production costs has approached nearly 50%. The cost of CGI is still expensive (it requires a server farm to render images), but that cost is holding in comparison to talent wages which are rising yearly. After you have paid the director, and the top named actors, you have already spent a great deal of your budget, and that must change. The studios also need to focus on releasing better movies, instead of more to feed the DVD pipeline. A good movie will do well in both its theatrical run, and its DVD release. Some of the studios have essentially been releasing large amounts of trash to feed the DVD pipeline to pay for the cost of huge blockbuster films they produce. Disney does not do that, but Warner and Universal have been very guilty of this. This is why they are suffering from DVD sales erosion than the other studios. Disney has a different marketing model than all off the other studios. Rather than just making a killing on each title they release, they only release a certain amount of copies of their vault. When those copies are sold, they discontinue releasing the title for a few years then open the vault again. This extends the value of each title by years, which brings profits spread over years rather than a short window during original releases. Combine that with a more targeted audience which naturally replenishes itself year after year. Year after year both reminiscent adults, and a new generation can enjoy their titles which increases your catalogs value over time. The other studios do not do this, which is why they cannot all be lumped together like NL seems to enjoy doing.

Computer geeks love to point to DVD sales losses, and this supposed lack of interest in the internet for the film industry’s woes. But their reasons just don’t add up when the issue is carefully scrutinized and the fact are revealed. The idea that the film studios are at their last breath because they didn’t keep up with trends is just not founded, but only the ranting of a person that just does not keep up with what studios are doing. He listens to one person who one could perceive as a disappointed independent filmmaker who products did not sell well at film festivals, and figures because it agrees with his opinion that he has some special insight into studio operations. People who look from the outside in are never as informed as those who are on the inside. All American businesses are restructuring their operations to cope with less sales, the auto industry being one of them and computer manufacturers another. The film industry is no different. Everyone is suffering from bloat brought on by easy credit to consumers which spurred a consumerism bubble, and now the reality is that bubble has broken forever. To avoid future losses, companies have to streamline their operations, and keep costs down. The film industry is no different, and neither is the computer industry. I will tackle the costs of downloads and streaming next...

LOOKS like the stuff that came with my credit card.

[Woochifer]

I thought that rather than trying to address several complex issues at once, I would break down my arguments into separate issues to better address NL misinformation and off base assumptions. One fact that is indisputable, all American businesses that sell some sort of product are not doing very well in this economic climate. Even the computer industry is in even more trouble than the film industry in this respect. Among all industries, the computer industry is third in overall layoffs, far more loss of jobs than the film industry and its associated business put together. NL claims the computer industry is leading the economic recovery, which when you look at the facts, is total BS. Just recently two computer manufacturers, and three computer software companies not far from me have announced another round of layoffs because the demand for computers has still not risen. So much for leading the economic recovery. When your entire manufacturing base is banking its sales on the success of one product (Windows 7), then you know things are perilous for you. Now Microsoft has Google to contend with, so not everything is going to be smooth sailing this time around, even if Windows 7 is a much better product than Vista. Since the second largest manufacturer of computers (Acer passed Dell this year) has committed to Google’s OS for their netbooks, the hottest selling PC at this moment, it is not a slam dunk that the new Windows OS is going to save the struggling American computer manufacturers. If Acers move proves successful, you are going to find others doing what the same thing they have done. It seems to me the computer software makers are in a similar war that the film industry found themselves in two years ago, but their war has three parties duking it out, Apple, Microsoft and Goggles OS’s.

I think that the move to netbooks is behind much of the computer industry's woes, because it shifted a lot of demand downmarket. For all the big players on the PC side, they got caught in a race to the bottom. Everybody from MS to Dell to HP and others have been decimated on the revenue side. MS lost out because they make basically nothing on the XP licenses that they were forced to give away on netbook sales (netbooks could not run MS' bloated Vista OS and netbooks were moving heavily towards Linux before MS decided to give away XP on the netbook side). Most of the PC makers got caught up in a price war where any value added in computers got reduced to commodity status in a hurry.

Apple is coming out of this in great shape because they decided to solidify the demand on the high end of the market, which most of the other PC manufacturers ignored. While their market share is under 10%, they right now command close to half of the profits in the PC market and a majority share in the higher end market.

The lesson to be learned for the studios is that they could be in a world of hurt if they go chasing the market down to the bottom. They already saw what happened to the publishing industry when their content got published online for free with no viable model in place for replacing the advertising revenue that came with printed circulation. That's why the studios are now looking at different revenue models for Hulu and other online video sources.

It makes absolutely no sense for the studios to pursue the downloading angle if the market cannot create a revenue stream close to what their current streams generate.

Several of the major studios resisted the DVD format until the evidence was clear that revenues from DVD sales would more than make up for the lost revenues from VHS rental windows. Until downloads and streaming media can demonstrate that they are a viable revenue source that makes up for the sales losses in optical media, then it makes no sense for the studios to dive in head first.

He also looks at figures like the DVD losing sales, but does not address that it is an overall sales figures, and not a by studio based one. Some studio DVD sales losses are smaller than others. He also does not factor in that almost all of the studios have released all of their movies on DVD, and that current DVD sales are based on new releases ONLY. It is easy to have big DVD sales numbers when you have plenty of content to release. Figures will always drop when there is less content to release, and that is where the studios are with DVD. Even VHS would have faltered to huge sales losses if the DVD had not come when it did. The reality is that the studios could have offset these losses if the HD hardware manufactures didn’t get into a big fight over formats. Had we transitioned to HD on disc with one format from the onset, much of the disc sales losses would have not been so bad or happened at all. But that two year fight allowed a quicker erosion of disc sales as consumer had to choose which format to support, and stopped buying DVD’s in the process. Combine that with formats maturity and less content, and you have your current situation on DVD. Most analysts point to these reasons for the losses than they do the overall economy’s financial health. With Blu-ray sales up 88% from last year, just imagine where it would have been minus the two year battle with HD-DVD. We probably would not have experienced a 16% overall decline in disc sales, that is for sure. If I blame the studios for anything, I would blame them for allowing the format war to persist as long as it did. Had Universal and Paramount not looked at that short term gain of accepting payments for exclusive support, and looked at the long term consequences a format war would have on the business, they probably would not have gone in that direction. I personally blame these two studios for the current media on disc issues we are having today. I would go as far as saying all of the other studios that supported Blu-ray from the onset are were very angry at Universal, Paramount and DreamWorks for what has happened with disc sales. What the studios envisioned is as smooth a transition to HD on disc as we saw with the transition from VHS to DVD. Nobody expected Blu-ray to just kick the DVD to the curb, as it took more than 5 years for the DVD to kick VHS to the curb.

Almost the entire tech press has been on Blu-ray's case from the beginning. It brings a litany of line items that computer writers hate -- DRM, physical media, proprietary technology, etc. They've been writing the story about how online/streaming media has taken over entertainment for many many years, and they're desperate to actually be right just once. Any bit of market data gets spun into a Blu-ray obituary and more nonsense about how download/streaming has already arrived in earnest, no matter what the objective facts otherwise say. With the holidays coming up, I can already see the latest flurry of "Do or Die Time for Blu-ray" stories hitting the various tech sites ... pretty much the exact same ones they've been publishing for the last two years.

The constant with the tech press is that they constantly chase the latest technology fad (the uncritical bloviating that persisted during the dotcom era is just an example of the myopic feeding frenzy and groupthink that typifies tech "journalism") and their current obsession is cloud computing, since Web 2.0 is now sooooo 2007 (not to mention a huge money hole for investors trying to make money from all those eyeballs). Since cloud computing is the future, entertainment in the cloud must therefore also be the future -- reality be damned.

Optical media is too old school for their attention spans. Yet, it's still where the vast majority of sales come from. They're just too jaded and/or dishonest to acknowledge that market trends and consumer behavior don't change just because of fanboy wishful thinking. The tech press doesn't even bother mentioning the CD market anymore because they presume that it's already dead, that downloading has already made optical audio media obsolete. Yet, the "dead" CD format still accounts for 65% of music sales. SIX years after the iTunes Music Store first went online, and 10 years after Napster's debut, CDs are still the primary revenue generator on the audio side.

And here are these purported tech experts making bold predictions about Blu-ray's demise and how downloading will take over video viewing in virtually no time. Yet, the audio side points to an example of how long it actually takes before consumer behavior fundamentally shifts towards a new paradigm.

[Sir Terrence the Terrible]

I think that the move to netbooks is behind much of the computer industry's woes, because it shifted a lot of demand downmarket. For all the big players on the PC side, they got caught in a race to the bottom. Everybody from MS to Dell to HP and others have been decimated on the revenue side. MS lost out because they make basically nothing on the XP licenses that they were forced to give away on netbook sales (netbooks could not run MS' bloated Vista OS and netbooks were moving heavily towards Linux before MS decided to give away XP on the netbook side). Most of the PC makers got caught up in a price war where any value added in computers got reduced to commodity status in a hurry.

Apple is coming out of this in great shape because they decided to solidify the demand on the high end of the market, which most of the other PC manufacturers ignored. While their market share is under 10%, they right now command close to half of the profits in the PC market and a majority share in the higher end market.

The lesson to be learned for the studios is that they could be in a world of hurt if they go chasing the market down to the bottom. They already saw what happened to the publishing industry when their content got published online for free with no viable model in place for replacing the advertising revenue that came with printed circulation. That's why the studios are now looking at different revenue models for Hulu and other online video sources.

It makes absolutely no sense for the studios to pursue the downloading angle if the market cannot create a revenue stream close to what their current streams generate.

Several of the major studios resisted the DVD format until the evidence was clear that revenues from DVD sales would more than make up for the lost revenues from VHS rental windows. Until downloads and streaming media can demonstrate that they are a viable revenue source that makes up for the sales losses in optical media, then it makes no sense for the studios to dive in head first.

From where I look, no studio really wants to push their entire business plan towards downloads until both the market, and the infrastructure is there to support it. Neither is there yet, and we have not really made much money on studio ventures with downloading so far. I found out as successful as Apple has been with digital music sell throughs, and Microsoft with movie rentals, neither is making more than a few pennies on the venture. From what I understand from the corps director of the SF Renegades (a big time Apple executive and a close friend), overhead costs are eating into whatever profits they could make. He also told me that leveraging the least profitable side (the content) sell more Apple products, and that is what they are more interested in. That goes for Microsoft with Zune and XBOX. Amazon and BB are doing the same thing with with their downloading services, they are leveraging the least profitable (the rental and sell through of digital downloads), to sell their more profitable items, such as Blu ray players and streaming devices. They are not responding to market trends, but adding value to more profitable items.

The latest experiment the studio's are trying is the day and date release of VOD with Blu-ray and DVD. I am really anxious to see how that will work out. But one thing is for certain - the industry is definitely looking for a much broader distribution network than just disc related items. Nobody is ready to stake their business plans on downloads, but they are sure looking to bring it into the revenue stream, that is for sure.

Almost the entire tech press has been on Blu-ray's case from the beginning. It brings a litany of line items that computer writers hate -- DRM, physical media, proprietary technology, etc. They've been writing the story about how online/streaming media has taken over entertainment for many many years, and they're desperate to actually be right just once. Any bit of market data gets spun into a Blu-ray obituary and more nonsense about how download/streaming has already arrived in earnest, no matter what the objective facts otherwise say. With the holidays coming up, I can already see the latest flurry of "Do or Die Time for Blu-ray" stories hitting the various tech sites ... pretty much the exact same ones they've been publishing for the last two years.

You and I have seen it, but NF seems to think this a "minor" voice, when it is actually the entire tech press on overdrive.

The constant with the tech press is that they constantly chase the latest technology fad (the uncritical bloviating that persisted during the dotcom era is just an example of the myopic feeding frenzy and groupthink that typifies tech "journalism") and their current obsession is cloud computing, since Web 2.0 is now sooooo 2007 (not to mention a huge money hole for investors trying to make money from all those eyeballs). Since cloud computing is the future, entertainment in the cloud must therefore also be the future -- reality be damned.

Disney's Keystone was once an internal archive system that allows for employees to watch Disney movies while onsite. It is now being offered to the public, but not all movies will be available for streaming. The implementation of Keystone just happens to fall in my management area, and the cost of offering it to the public is not cheap to us. Cloud computing is expensive as hell, even with the latest advances in server and cooling technology. The problem with the more power efficient servers is that they throw off more heat. So what you save in running the computers is eaten up by cooling them. The most efficient cooling system (my IT guy states water chilling systems) cannot be used in all environments (it works better in cooler climates), which leaves the lesser efficient systems in play. We compared outsourcing our cloud operations to Amazon, and found it was more expensive to outsource than to keep it in house. It costs a crap load of cash to set up the infrastructure, and to maintain it. So Keystone is going to start off limited, and grow when the market grows. We are going to scale to the demand, and right now, there is not much demand.

Optical media is too old school for their attention spans. Yet, it's still where the vast majority of sales come from. They're just too jaded and/or dishonest to acknowledge that market trends and consumer behavior don't change just because of fanboy wishful thinking. The tech press doesn't even bother mentioning the CD market anymore because they presume that it's already dead, that downloading has already made optical audio media obsolete. Yet, the "dead" CD format still accounts for 65% of music sales. SIX years after the iTunes Music Store first went online, and 10 years after Napster's debut, CDs are still the primary revenue generator on the audio side.

They believe if they just keep repeating it over and over, it will sway the public, much like NF is trying to do here. Just keep saying the studio are behind the times, and maybe it will stick. The problem with this approach is they are on the outside looking in, and do not really know what the studios are actually planning, or doing. The studio want to kill downloads is all you hear, yet the studios are supply $hit loads of content for downloading, including setting up their own service (MovieLink anyone). Downloads are for expanding the distribution system, not to supplant the disc. The studios do not want to kill one thing (their bread and butter) just to support another (that is not making anyone any money).

Many point to the growing revenue generated by digital downloading, but few point to the profits. When you look at the ratio of revenue versus profits, downloading's ratio is absolutely terrible. Operating overhead just chews up profits like a garbage disposal chews leftovers. This is why the studios as a whole are not moving quickly in that direction, and why they are not basing their business plans on downloads.

And here are these purported tech experts making bold predictions about Blu-ray's demise and how downloading will take over video viewing in virtually no time. Yet, the audio side points to an example of how long it actually takes before consumer behavior fundamentally shifts towards a new paradigm.

Agreed. And even with the fact that it is quite a bit easier for the music industry to move towards downloading, most of the majors are still pressing disc, and they are still selling in far larger numbers than downloads. Even though Apple sold more than a billion single downloads in Itunes stores first year, when you think about how many disc were also sold in that year, on an individual song basis, the disc FAR outsold downloads by a considerable margin. There is a reality here - both DVD and CD are mature technology. DVD can look to Blu-ray as a successor, what can the music industry look to? The record companies that have now seen digital distribution surpass their CD sales are now becoming empty shells, as they see their profit's erode to a point that their operation have been cut into the bone. I see downloads complimenting the disc, not replacing it. If a record company is smart, they will begin release audio only albums on the Blu-ray format, because let's face it, the CD is done. Player sales are sliding big time, and at some point those high end CD manufacturers are going to have to find another format to develop, or they are going to find themselves out of business. Sticking high end D/A chips, clean audio paths and analog stages is only going to take you so far, when the disc that goes in them have huge year over year sales declines. A few small European record labels have seen the writing on the wall for CD, and have now began releasing to Blu-ray disc. According to what you read, the response has been quite good. The American music industry better hurry up and migrate, or they will find themselves in a world of financial trouble just relying on downloads to support them. Licenses and royalties get quite expensive if they cannot be leveraged over many different sources. They are profit killers if you are going to only support downloads, and give up disc technology.

What cracks me up is that NF thinks he has come up with some great ideas to save the disc, when his ideas will kill it dead. All of his talking points have been argued to death since Blu-ray came on the scene, so he is really behind the curve on this argument. None of his ideas are original, they have been stated and refuted numerous times in the last three to four years.

NF better watch his back. If Cloud computing does take off, it will mean a lot more outsourcing of IT jobs to India if India can build its electrical grid out to handle the load. Iceland is also getting ready to take American workers IT jobs as well.

[nightflier]

What cracks me up is that NF thinks he has come up with some great ideas to save the disc, when his ideas will kill it dead. All of his talking points have been argued to death since Blu-ray came on the scene, so he is really behind the curve on this argument. None of his ideas are original, they have been stated and refuted numerous times in the last three to four years.

NF better watch his back. If Cloud computing does take off, it will mean a lot more outsourcing of IT jobs to India if India can build its electrical grid out to handle the load. Iceland is also getting ready to take American workers IT jobs as well.

...how mature. I'm not really worried about my job. I actually am doing just fine working "in the cloud" (is that a new word for you?). As far as predictions, well, your superiors are not very happy with your perspective, while I was just called into our president's office to be congratulated on my vision for the future and offered oversight over a new division ('didn't come with a bonus, but in this economy...). Anyhow, this is not to brag, but as I've said before, maybe your point of view isn't so popular after all.

Needless to say, I completely disagree with the belittling of downloads. As before, all the attention is focused on paid content, and my point has been all a long that the real movement in this industry is in unpaid content. The public wants more of it, and the more the studios resist this, the more piracy will increase. I'm suggesting something that could very well curb piracy, and because it comes from me, you arrogantly shrug it off as insignificant and continue with the barrage of insults. As before, this doesn't really endear you to the other readers here, and does little to further your argument.

I also take the stereotypical comments about your perception of the computer industry with some trepidation. Actually it's way off. If you think this about the computer industry, then you really do not know what you are talking about. In my position at work, I straddle both (as I've described) and I have a fair bit of knowledge about each, but you both insist on pigeon-holing me into the computer camp. I don't take this as an insult, but it's simply not the case.

In the end, I fail to see how such a critically-negative point of view can even begin to understand the Internet and the millions of potential customers there. More sadly, it is the reason why you don't see what is really happening to your industry and the reason why it is still very much in decline, especially when much of the rest of the economy, particularly those sectors related to high tech, are recovering.

So for the sake of everyone here, let's stop talking about me, and focus the attention on the very real problem of the growth of piracy, which neither of you have offered a working solution for. I've offered one - why not give it a try? At this point for your industry, it's time for desperate measures.

Wooch, I didn't want to come out so strongly, because I've always valued your point of view, and you bring it without insult. But your negative characterization of the computer industry is not only false, but myopic. If you really think this is what the computer industry is, then I have to tell you, you are barking up the wrong tree.

As for the other naysayer (still trying real hard not to insult with names), well it's no wonder your associates and superiors don't respect your point of view (banning DVDs from computers, really?), but it's probably also the reason why you are looking to retire. What I find troubling about your new plans (to start your own recording studio, right), is that you expect the lofty price-structure to still be there when the economy recovers. I don't like telling anyone their retirement investments are disastrous, but if you take nothing else from my posts, please listen to me here: your very pricey investment may not pay out the way you imagined. I'm really sorry I'm the only one willing to tell you this, and I'm sure you'll find a million reasons to disagree, but I'm going to stand by that opinion. Frankly, I hope I'm wrong and that you will do quite well with it, but if you don't, don't say I didn't warn you.

[Sir Terrence the Terrible]

...how mature. I'm not really worried about my job. I actually am doing just fine working "in the cloud" (is that a new word for you?). As far as predictions, well, your superiors are not very happy with your perspective, while I was just called into our president's office to be congratulated on my vision for the future and offered oversight over a new division ('didn't come with a bonus, but in this economy...). Anyhow, this is not to brag, but as I've said before, maybe your point of view isn't so popular after all.

Oh brother........

Needless to say, I completely disagree with the belittling of downloads. As before, all the attention is focused on paid content, and my point has been all a long that the real movement in this industry is in unpaid content. The public wants more of it, and the more the studios resist this, the more piracy will increase. I'm suggesting something that could very well curb piracy, and because it comes from me, you arrogantly shrug it off as insignificant and continue with the barrage of insults. As before, this doesn't really endear you to the other readers here, and does little to further your argument.

Unpaid content is available. It is called broadcast television, and Google. And if the public wants more, just sit in front of the box longer. Free movies, not going to happen. This is not an arrogant shrug off, just a plain shrug off. Your ideas for curbing piracy have been argued to death on other boards, it is not practical, it won't curb piracy, and it is not original by no means. Free movie downloads, even low quality equals no sale. Nobody is going to buy what they can get for free. I do not know why just because an idea comes from you it gets a negative reaction. This is not about you, the idea is just plain bad no matter where it comes from. I do not know why you think I am looking for endearment from anyone. I am not, I am here to refute your bad or misinformation. I do not care about you personally, just your words. Are we clear?

I also take the stereotypical comments about your perception of the computer industry with some trepidation. Actually it's way off. If you think this about the computer industry, then you really do not know what you are talking about. In my position at work, I straddle both (as I've described) and I have a fair bit of knowledge about each, but you both insist on pigeon-holing me into the computer camp. I don't take this as an insult, but it's simply not the case.

NF, who cares about you except you? I don't care about your position because it is not in the film industry. You are a computer guy trying to analyze the film industry. That is like a doctor trying to analyze an accountant. A fair bit of knowledge describes nothing. The bottom line is you have no knowledge of how the film industry works, and that is a fact, not an insult. Now you can call a dog a cat, a horse a fly if you want to. But a fact is a fact, and if you choose to be insulted by a fact, that is your business.

In the end, I fail to see how such a critically-negative point of view can even begin to understand the Internet and the millions of potential customers there. More sadly, it is the reason why you don't see what is really happening to your industry and the reason why it is still very much in decline, especially when much of the rest of the economy, particularly those sectors related to high tech, are recovering.

Your constant babbling about my industry and the internet is not getting a single inch of traction in this argument. I have offered too many instances of the film industry push towards the internet. So you have gone from uniformed, to just plain lying about the facts. You continually like a parrot keep repeating the same assumption over and over again, even when facts have been presented that refutes them. The film industry is not in decline, the studio executives are not scared, and the tech industry is not in recovery with Sun Microsystems announcing layoffs of over a 1000 folks, and Microsoft announcing 800 layoffs in the last week. You can fool yourself by believing in your lies, but you cannot fool me.

So for the sake of everyone here, let's stop talking about me, and focus the attention on the very real problem of the growth of piracy, which neither of you have offered a working solution for. I've offered one - why not give it a try? At this point for your industry, it's time for desperate measures.

Nobody talking about you except you Mr. Patyourselfontheback. The film industry is not in a desperate situation, so you need to stop telling that lie. The only solution you have offered will lead to fewer disc sales, and that is the bottom line. Since pirates propagate free low quality downloads already, what advantage would the studios have in propagating their own? Both will lead to no sale, and that does not help an industry that depends on revenue.

Wooch, I didn't want to come out so strongly, because I've always valued your point of view, and you bring it without insult. But your negative characterization of the computer industry is not only false, but myopic. If you really think this is what the computer industry is, then I have to tell you, you are barking up the wrong tree.

Well, based on what you think about the film industry, then I have to tell you that you are also barking up the wrong tree. Your assumptions are not only false, but myopic as well. Kettle, meet Black. Black, meet Kettle.

As for the other naysayer (still trying real hard not to insult with names), well it's no wonder your associates and superiors don't respect your point of view (banning DVDs from computers, really?), but it's probably also the reason why you are looking to retire.

I already outlined why I wanted to retire, and that was not one of the reasons. Do you have another lie you would like to try?

What I find troubling about your new plans (to start your own recording studio, right), is that you expect the lofty price-structure to still be there when the economy recovers.

I am not STARTING a recording studio, I am continuing a post production operation that I previously had. And since you do not know my pricing structure, then your comment are just plain stupid. You really need to get the facts, or get whatever facts you have straight.

I don't like telling anyone their retirement investments are disastrous, but if you take nothing else from my posts, please listen to me here: your very pricey investment may not pay out the way you imagined. I'm really sorry I'm the only one willing to tell you this, and I'm sure you'll find a million reasons to disagree, but I'm going to stand by that opinion. Frankly, I hope I'm wrong and that you will do quite well with it, but if you don't, don't say I didn't warn you.

LOLOLOLOLOLOLOL....WAAAAAAHAHAHAHAHAHAHAH. Please tell me you are joking. You get insulted the way you do because of hair brained idiotic comments just like this. Your opinion is like crap on toilet paper. If there was no capacity for post production facilities that service the film, audio,and gaming industries, then nobody would open a facility in the future ever. Since Disney knows there will, they are spending $600 million to build more post production stages and facilities in Los Angeles alone. My studio will be an extension of there's, and there is enough work booked right now to last for years. So much for your assumptions and stupid opinion.

You are not a financial or film analyst. So if you think that anyone should respect a thing that you have to say, then you are nuts. Stick to the computer industry, I am sure with the growth of cloud computing you'll have enough to worry about. The CEO of Unisys thinks that cloud computing will lead to more outsourcing of American jobs because foreign labor is cheaper, and just as competent.

http://www.networkworld.com/news/200...computing.html

I would like to see you stretch your arms around and pat yourself on the back after this happens.

[nightflier]

Free movie downloads, even low quality equals no sale. Nobody is going to buy what they can get for free.

Why don't you just admit that having free low-quality downloads would also reduce the number of formula-plot badly-done movies? Because people will be able to see the whole story, they'll know not to spend real money on movies not worthy of it. And that's what you're so afraid of, because all those bad movies that clog the theaters and retail channels will go away and that's where you make your money.

See, instead of 20 movies to choose from on a Thursday night, 15 of them not worth $16 a ticket, there will be 5 worth seeing, in multiple theaters. The fat cats don't like that model because they make so much money on the bad movies - essentially they make their money on quantity rather than quality. IMO, it's about time that the Bose-marketing of bad movies goes away and we get back to quality movies worth the price of admission.

the idea is just plain bad no matter where it comes from.

Why is it so bad? I mean really, give us some good reasons.

The bottom line is you have no knowledge of how the film industry works, and that is a fact, not an insult.

Well I disagree, but one thing is for sure: you certainly don't know enough about the Internet to be making such sweeping generalizations. You're marketing ideas for movies are a square peg for a round hole, because the Internet doesn't work like that. Because you don't understand and don't care to want to understand, the underlying culture that makes up the Internet, your marketing model is failing, big time. You won't consider new ideas and you criticize them up & down. In the meantime, you haven't offered anything that is working aside from staying with old technology and doing everything in your power to hold back progress and technology.

...And I'm just standing here laughing at seeing you flip flop all over yourself.

Your babbling about my industry and the internet is not getting a single inch of traction in this argument.

I would beg to differ. I would counter that you're the one that's not getting any traction, and I'm not even going to include your constant insults in that consideration, because they are also not furthering your cause.

I have offered too many instances of the film industry push towards the internet.

Funny, because you've also offered plenty of examples how they are all just paltry efforts compared to physical disks. Yes the industry is dipping it's toe in the pool, but that doesn't make them swimmers, now does it?

On the one hand you say the industry is forging ahead with their Internet push, and then you turn around and say it's a commercial failure. You're killing your own argument. Again, I'm just standing here laughing while you flip flop all over yourself.

The film industry is not in decline, the studio executives are not scared,

Hey, buddy, you're the one who said that it wasn't recovering, a few posts back, and that it's still in the dog-house with the rest of this economy, right? I mean, are you now going back on that statement?

Flip-flopping along...

and the tech industry is not in recovery with Sun Microsystems announcing layoffs of over a 1000 folks, and Microsoft announcing 800 layoffs in the last week.

See you're just not looking at the bigger picture and just focusing on a few examples that suit your argument. This is a chronic problem of yours and one that explains why you're still struggling to understand anything. The rest of the high-tech industry (not just computers) is showing some impressive gains. Maybe if you actually invested in something other than your own industry, you wouldn't be such a Grinch.

Now, I'm not saying the whole economy is riding the bull, but you gota pick winners if you're going to succeed, my friend. I'm understanding more and more why you're just not making it in that CEO club, you so proudly claim to be a member of. You have no vision, you're negative, and you focus on particulars rather than the big picture.

...still laughing.

...you cannot fool me.

You're doing a perfectly good job of that all by yourself. No need to put any effort into that one.

The only solution you have offered will lead to fewer disc sales, and that is the bottom line.

Considering all the bad movies out there, maybe it's high time for some changes.

Since pirates propagate free low quality downloads already, what advantage would the studios have in propagating their own? Both will lead to no sale, and that does not help an industry that depends on revenue.

Are you just that dense? I mean, I explained it several times already, and it's just not sinking in, is it? If there is perfectly legal low-quality content out there, then why would anyone brave the risks of the illegal stuff? The illegal stuff will go away, and isn't that what we all want?

Or do you need the illegal stuff to justify your existence? Now don't fry your noodle over this one, 'cause it's a biggie. But think about this for a minute: what would you have to cry wolf about if there was no illegal content?

I already outlined why I wanted to retire, and that was not one of the reasons. Do you have another lie you would like to try?

Yeah, go ahead, put a positive spin on it. Fact is, you're no longer a good fit at the country club, and you have to go.

I am not STARTING a recording studio, I am continuing a post production operation that I previously had. And since you do not know my pricing structure, then your comment are just plain stupid. You really need to get the facts, or get whatever facts you have straight.

Recording Studio / Post Production Studio - who cares what you call it. It's going to cost beaucoup bucks to build and that's my only point about it. I also don't need to know your pricing structure, because I know you are stuck in the past. You will expect to collect those lofty fees that now make up your lofty salary. You'll need to charge those to recover your investment, and I'm telling you that's a pie-in-the-sky investment.

Several commentators, including the one who wrote the original article I quoted above, have said that real-prices are going to fall. This is not only because the dollar is worth less and less, but also because the studios aren't going to produce as many movies, and definitely less of those expensive ones. You'll be buying your studio with today's dollars, but trying to pay for it with tomorrow's - and that's just bad investing.

Yes, I know you disagree with my assessment. So what? We're not going to resolve that argument today. So let's come back to this in a couple of years and see who was right. I'll still be here - see you one the other side.

If there was no capacity for post production facilities that service the film, audio,and gaming industries, then nobody would open a facility in the future ever. Since Disney knows there will, they are spending $600 million to build more post production stages and facilities in Los Angeles alone. My studio will be an extension of there's, and there is enough work booked right now to last for years. So much for your assumptions and stupid opinion.

Why don't you forgo the peacock strutting, and answer me this: if they are building their own, why should they use yours?

You are not a financial or film analyst. So if you think that anyone should respect a thing that you have to say, then you are nuts.

As I've already said, I'm doing just fine with my analyses. You, on the other hand....

Stick to the computer industry, I am sure with the growth of cloud computing you'll have enough to worry about.

I'm in the thick of it, and doing just fine. But thank you for being concerned about me, it's quite out of character for you, but I'll take the well-wishes nonetheless.

The CEO of Unisys thinks that cloud computing will lead to more outsourcing of American jobs because foreign labor is cheaper, and just as competent.

Yes, and I'm not really worried. Doesn't that just eat away at you?

I would like to see you stretch your arms around and pat yourself on the back after this happens.

Whatever. I really do hope I'm wrong about your sound studio, er, post production studio, or whatever you call it. Unlike you, I really don't want to wish you any harm (like coming to my house and teaching me a lesson, like you posted before). I really do hope you do well and that I'm wrong. But the fact is, when it comes to investments, I'm not wrong very often. Take from it what you will.

[Woochifer]

The latest experiment the studio's are trying is the day and date release of VOD with Blu-ray and DVD. I am really anxious to see how that will work out. But one thing is for certain - the industry is definitely looking for a much broader distribution network than just disc related items. Nobody is ready to stake their business plans on downloads, but they are sure looking to bring it into the revenue stream, that is for sure.

Interesting, because I've been reading speculation about whether the industry will go in the direction of reserving a new release window for Blu-ray and then releasing the DVD version weeks later. Some bloggers point to Warner's 1999 decision to release The Matrix exclusively on DVD, and delay the VHS release by six weeks, as a watershed event for the DVD format because it went onto become the first DVD title to sell 1 million copies.

The recent Diamond Series release of Snow White seems to also hint in that direction since the BD/DVD combo pack got released a few weeks ago, while the two-disc DVD set won't come out until later on this month.

I thought that VOD through the iTunes store was already day and date with the DVD release.

They believe if they just keep repeating it over and over, it will sway the public, much like NF is trying to do here. Just keep saying the studio are behind the times, and maybe it will stick. The problem with this approach is they are on the outside looking in, and do not really know what the studios are actually planning, or doing. The studio want to kill downloads is all you hear, yet the studios are supply $hit loads of content for downloading, including setting up their own service (MovieLink anyone). Downloads are for expanding the distribution system, not to supplant the disc. The studios do not want to kill one thing (their bread and butter) just to support another (that is not making anyone any money).

The common theme with much of the tech press is that they view technology as so cutting edge that it trumps tried-and-true analysis of markets and consumer behavior. Patterns are not that difficult to identify, but the tech press often seems so convinced of the sectors' omnipotence that they freely ignore the market data and evidence of actual consumer behavior in order to push their anointed "next big thing." Yet, despite their best efforts, they very often get it all wrong. Plenty of comic relief to be had looking back at the bold predictions written by the tech press back in the late-90s at the height of the dotcom boom.

As I've stated before, consumer behavior does not fundamentally shift on a dime. It evolves over time, and the current state of the market is nowhere near where it needs to be for downloading and streaming media to make a meaningful push to majority status.

Agreed. And even with the fact that it is quite a bit easier for the music industry to move towards downloading, most of the majors are still pressing disc, and they are still selling in far larger numbers than downloads. Even though Apple sold more than a billion single downloads in Itunes stores first year, when you think about how many disc were also sold in that year, on an individual song basis, the disc FAR outsold downloads by a considerable margin. There is a reality here - both DVD and CD are mature technology. DVD can look to Blu-ray as a successor, what can the music industry look to? The record companies that have now seen digital distribution surpass their CD sales are now becoming empty shells, as they see their profit's erode to a point that their operation have been cut into the bone. I see downloads complimenting the disc, not replacing it. If a record company is smart, they will begin release audio only albums on the Blu-ray format, because let's face it, the CD is done. Player sales are sliding big time, and at some point those high end CD manufacturers are going to have to find another format to develop, or they are going to find themselves out of business. Sticking high end D/A chips, clean audio paths and analog stages is only going to take you so far, when the disc that goes in them have huge year over year sales declines. A few small European record labels have seen the writing on the wall for CD, and have now began releasing to Blu-ray disc. According to what you read, the response has been quite good. The American music industry better hurry up and migrate, or they will find themselves in a world of financial trouble just relying on downloads to support them. Licenses and royalties get quite expensive if they cannot be leveraged over many different sources. They are profit killers if you are going to only support downloads, and give up disc technology.

Disagree with you here. I'm not sure that music on Blu-ray will amount to anything but a niche market -- certainly not one big enough to supplant both the CD and downloads. The audio and video segments of the market fundamentally differ in that music listening is (and has been) moving towards increasing mobility, while home video viewing has moved towards larger and larger screens that further anchor the viewing room as the spot for viewing video content.

Both CDs and downloads complement the move towards portability in the audio market because the CD format uses an uncompressed open format amenable to creating digital files while downloads are already in a portable digital file format (unless they're locked down by DRM). Blu-ray, with its DRM and encryption, does not serve the needs of portable audio devices. It's fine for sitdown listening, but that endeavor does not represent the majority of the market. Like it or not, it's all about the iPod right now on the audio side. Apple's iPod sales alone more than double what the rest of the home audio industry combined takes in.

On the video side, Blu-ray is a perfect fit for the current transition to HDTV and the ever growing average screen sizes. As average screen sizes increase to 42" or more, it just reinforces the living room as the nerve center for viewing entertainment. While the DVD, downloads, and streaming media made computers viable devices for video viewing, consumers simply prefer to watch their movies and TV programming using TVs. The delivery method does nothing to change this. While the majority of households now have broadband connections at home, relatively few of those connections are used for the TV or home entertainment center. Gaming consoles and set top boxes might be the trojan horse that brings downloaded or streaming content into the living room (computers won't be the avenue), but adoption rates remain relatively low.

[Sir Terrence the Terrible]

Why don't you just admit that having free low-quality downloads would also reduce the number of formula-plot badly-done movies? Because people will be able to see the whole story, they'll know not to spend real money on movies not worthy of it. And that's what you're so afraid of, because all those bad movies that clog the theaters and retail channels will go away and that's where you make your money.

We already have free low quality downloads AND a lot of bad movies. I see no reduction of one in the presence of another.

See, instead of 20 movies to choose from on a Thursday night, 15 of them not worth $16 a ticket, there will be 5 worth seeing, in multiple theaters. The fat cats don't like that model because they make so much money on the bad movies - essentially they make their money on quantity rather than quality. IMO, it's about time that the Bose-marketing of bad movies goes away and we get back to quality movies worth the price of admission.

What is bad or good is a matter of perspective. What you think is bad, is good to somebody. If that wasn't the case, then why would movies like Jack Ass which cost $5 million wasted bucks turn into a $80 million ROI? Somebody likes what is called a "bad" movie, even if other pan it. Your taste is different from other folks, and there seems to be a market out there bigger than your ever so narrow perspective.

Why is it so bad? I mean really, give us some good reasons.

I cannot believe that you cannot figure this out(well maybe I can), but there is a reason Google is losing money hand over fist with YouTube. Any time you store non moniterized content on a server, it you lose money. Overhead costs are generated with no offsetting revenue on the movie. Offering a free non revenue generating movie that costs $100 million dollars to make is an open invitation to losing a great deal of money on that movie. Unlike Google, the studios does have anything to leverage losing money on one thing to support another. Google's search engine offsets the losses Google generates with YouTube. If I give that movie away for free, then I have sacrificed any revenue that I could generate from DVD, Blu-ray, VOD, downloading, and streaming that movie. This is why your idea is stupid from the jump. It would be pretty stupid of me (and perhaps normal for you) to give away my $10,25,50,100 million dollar investment for free. If you cannot understand this, then there is no need to go any further.

Well I disagree, but one thing is for sure: you certainly don't know enough about the Internet to be making such sweeping generalizations. You're marketing ideas for movies are a square peg for a round hole, because the Internet doesn't work like that. Because you don't understand and don't care to want to understand, the underlying culture that makes up the Internet, your marketing model is failing, big time. You won't consider new ideas and you criticize them up & down. In the meantime, you haven't offered anything that is working aside from staying with old technology and doing everything in your power to hold back progress and technology.

So, this new idea that you are offering - give away your multi-million dollar investment away for free is a logical and feasible idea? For who a monkey? Your idea is trash, is stupid, and it will lead to bankrupting a studio faster than you can say nightfool. How you can disagree with the fact that you are un-knowledgeable about the film industry is just crackers. You haven't got basic economics down yet.

...And I'm just standing here laughing at seeing you flip flop all over yourself.

Or perhaps you are laughing at the sheer stupidity of your own arguments. I am certainly laughing at that!

I would beg to differ. I would counter that you're the one that's not getting any traction, and I'm not even going to include your constant insults in that consideration, because they are also not furthering your cause.

Either you need to develop thicker skin, or change the meaning of what is considered an insult. You are insulted by everything, except your own naive, ignorant beliefs.

Funny, because you've also offered plenty of examples how they are all just paltry efforts compared to physical disks. Yes the industry is dipping it's toe in the pool, but that doesn't make them swimmers, now does it?

It seems to me that you have to wade into the pool before you can swim in it. Only a fool would jump into something without knowing what (or how deep) they are jumping into. I hate to bring this to you, but VOD has been around a lot longer than DVD and Blu-ray. Yet, all forms of digital delivery just made a billion dollars in revenue after being around far longer. The DVD format alone is a $15 billion dollar yearly business, and by the end of this year, Bluray would have made its first billion in revenues after less than 4 years in the marketplace. Now, use your little pea brain here - what pool would you jump in? If we compared ALL physical disc (DVD, CD, Blu-ray) against ALL forms of digital delivery, then digital delivery becomes spit in a teaspoon in comparison. Everything has a beginning, and not all beginnings are a canon ball into a pool.

On the one hand you say the industry is forging ahead with their Internet push, and then you turn around and say it's a commercial failure. You're killing your own argument. Again, I'm just standing here laughing while you flip flop all over yourself.

It has been a commercial failure based on the current business models used for it. I never said the studios were going to follow the current business model, did I? The studios are forging ahead with their own internet plans, and they won't be like the money losing plans already tried.

Hey, buddy, you're the one who said that it wasn't recovering, a few posts back, and that it's still in the dog-house with the rest of this economy, right? I mean, are you now going back on that statement?

Flip-flopping along...

No I did not say it wasn't recovering, I said they are taking cost cutting measures just like every company is in this economy. When I mentioned "dog house", it was in reference to Paramount, Universal, and Dreamworks accepting kick backs for their support of HD DVD. Funny how you can fabricate an assumption with no information, but you cannot attribute a comment within its own context.

See you're just not looking at the bigger picture and just focusing on a few examples that suit your argument. This is a chronic problem of yours and one that explains why you're still struggling to understand anything. The rest of the high-tech industry (not just computers) is showing some impressive gains. Maybe if you actually invested in something other than your own industry, you wouldn't be such a Grinch.

Since you don't know what I have invested in, you are just spouting senseless trout. You are just as guilty of not looking at the bigger picture, and you also struggle to understand anything about the film industry. Pot meet Kettle. Making impressive gains is another way of trying to BS your way to a point. The tech industry is in no better shape than any other industry. All one has to do is look at the stock price of any tech related company, and you can see it is anything but impressive. You are dirtying my boots with your BS. You talk about chronic problems, yours is that you are more in tune with your own uneducated BS, than reality or facts.

Now, I'm not saying the whole economy is riding the bull, but you gota pick winners if you're going to succeed, my friend. I'm understanding more and more why you're just not making it in that CEO club, you so proudly claim to be a member of. You have no vision, you're negative, and you focus on particulars rather than the big picture.

When did I say I was a CEO idiot? I have never said any such thing. As far as my vision, you have no clue what my vision is. You just love to pull crap out of your a$$ and pretend that it is word, when really it is just crap out of your a$$. If I had no vision, I would not have moved from a studio grunt to managing the studio's post production sound department. Try doing that with no vision.

...still laughing.

You must do that every morning while looking in the mirror. Clowns usually can laugh at themselves.

You're doing a perfectly good job of that all by yourself. No need to put any effort into that one.

You must be talking to the mirror......

Considering all the bad movies out there, maybe it's high time for some changes.

Considering all of the bad computer software that is written, poorly made computers, and a carbon footprint the size of China, the computer industry needs to make some changes as well.

Are you just that dense? I mean, I explained it several times already, and it's just not sinking in, is it? If there is perfectly legal low-quality content out there, then why would anyone brave the risks of the illegal stuff? The illegal stuff will go away, and isn't that what we all want?

Look stupid, a free legal copy of a movie makes no money. A free illegal copy of a movie makes no money. Either way, no money is made. So only your stupid insipid mind can think that one free legal giveaway will cancel out free illegal giveaway. What WE want is the illegal stuff to go away, so the legal stuff can generate revenue. You don't make movies (good or bad) with air and water, It takes money. If you give away all of your revenue generating product for free, you are out of business because you will have no money to make more products. Simple economics simpleton

Or do you need the illegal stuff to justify your existence? Now don't fry your noodle over this one, 'cause it's a biggie. But think about this for a minute: what would you have to cry wolf about if there was no illegal content?

You know, I apologize for calling you an idiot. You are worse than that...really.

Yeah, go ahead, put a positive spin on it. Fact is, you're no longer a good fit at the country club, and you have to go.

Since you are not me, how can you say this pile of $hit for a comment is a fact. You do not know fact from a hole in the ground.

Recording Studio / Post Production Studio - who cares what you call it.

Because you are too stupid to know the difference, I will explain it to you. A recording studio is where you record music. A post production facility is designed to finish a soundtrack, or film content. One process happens at the front of the process, the other at the end of the process. How can one claim some knowledge of an industry when they don't even know the difference between where one starts a project, and where one finishes it.

It's going to cost beaucoup bucks to build and that's my only point about it. I also don't need to know your pricing structure, because I know you are stuck in the past. You will expect to collect those lofty fees that now make up your lofty salary. You'll need to charge those to recover your investment, and I'm telling you that's a pie-in-the-sky investment.

It is not going to cost me BEAUCOO bucks to build anything, it is already done. If you do not know my pricing structure, or what "lofty" fees are actually charged, then how can you make this stupid statement? This is a continuation of an already existing business. If I didn't have enough business to re-coup my investment, I would not have built the facility in the first place fool. The clients I serve cut across many different industries. Since you would rather digest your stupidity than face the facts, let me school you. I have been mixing game soundtracks for ten years as a freelancer. I do alot of business in that field, and had to rent facilities to do my work. Now I don't. I have mixed television programming for other studios and producers my entire career as a freelancer, and I had to rent a studio to do that. Now I don't. I have had to get out of bed, get dressed, and drive to my studio to do my work. Now I don't have to. The reason gaming companies, other studios, and producers come to me is because I know how to stay within or under budget, and that makes me a bonus. I have one big built in client (my studio) and 50 or so other clients who have booked my facility solid for years to come. I am not worried one bit about the comments of a online idiot who does not know the top of his head from his feet.

Several commentators, including the one who wrote the original article I quoted above, have said that real-prices are going to fall.

Several commentators? Who are they, and where are the quotes. So one independent filmmaker writes an opinion piece (because that is all it is, an opinion) based on his outside perspective of studio operations, and that makes it a fact? I don't think so. A sound argument does not need filler or air to support it. Nobody knows where prices are going. One thing that is for sure, big box office movies make big profits for the studios, so they are not going anywhere. The group that will suffer tremendously is the independent filmmaker, hence why this independent filmmaker is pissing in the wind. Since you are too stupid to see the author of the original article slant, you are perpetuated a falsehood based on his livelihood. If the studios suffer, he will suffer even worse, because they will buy fewer and fewer independent films which will put him out of a job. Independent movies are a huge risk to the studios, since they have to buy them, pay to market and distribute them, and they are usually too targeted to reach a wider audience which generates larger returns.

http://bartlettsscreenwritingtips.bl...ig-profit.html

http://www.shadowandact.com/?p=11727

Learn something for a change.

This is not only because the dollar is worth less and less, but also because the studios aren't going to produce as many movies, and definitely less of those expensive ones.

Where in the hell did you get this information? At the Blu-con gathering held a few days ago, no studio said they are going to release fewer movies in the future, not one. Knowing the economics of making a big blockbuster movie, no studio in their right mind would cut the budgets of those (see my above link). Since you obviously do not understand where the majority of production costs come from, you are making stupid assumptions that are not based in reality. If there are any cuts, they will come out of talent salaries which fluctuate based on an actors performance at the box office. Production, and post production expenses are a fraction of the total expenses of a movie release in comparison depending on the movie (animation is expensive at the production level). Talent salaries, marketing, and distribution budgets can equal and exceed the production and post production budgets easily. If a studio wants to cut back, it usually comes from talent salaries, streamlining marketing costs, and creating more distribution channels that increases revenues. They also look for savings on film processing and distribution, hence the push to digital cinema. Actors like Kidman, Cruise, Garner, and several others have seen their salaries drop big time as the movies they last did tanked. The studios do not usually have to check their salaries directly, the market seems to do that quite efficiently without their help.

You'll be buying your studio with today's dollars, but trying to pay for it with tomorrow's - and that's just bad investing.

Yo dummy, I bought my studio already. It is paid for in full, using yesterday money. I was smart enough to invest heavily when the stock market went from 8k up to 14k, and I got out before it crashed. The profits from my investments paid for the studio in full. So much for you lame brained claims and assumptions

Yes, I know you disagree with my assessment. So what? We're not going to resolve that argument today. So let's come back to this in a couple of years and see who was right. I'll still be here - see you one the other side.

I remember the last time you said this, you stupid a$$ ended up with pie in your face during the format war. You must be a glutton for embarrassment.

Why don't you forgo the peacock strutting, and answer me this: if they are building their own, why should they use yours?

Simple answer simpleton. The larger stages will be used to handle larger projects that generate more revenue. Larger studios have more overhead, and must generate more income. The projects I will handle are smaller in scale (mixing television programming, and DVD and Blu-ray soundtracks) which require lower overhead costs. Since the studio does not pay for the overhead of my studio, I cost less to them than a freelancer who rents a studio, as they would have to pay the hourly studio rental, and the salary of the freelancer. With me, it is just one expense, my salary and a bonus. Because they have my availability, I am a increase in work flow capacity without the extra overhead. I win, they win, and everyone is happy. The question you have to ask is, why tie up the larger studios with higher overhead costs with projects with lower profit margins? That is where I come in.

There is your answer, but I doubt you have the capacity to understand it.

As I've already said, I'm doing just fine with my analyses. You, on the other hand....

I guess your definition of doing just fine is being dead wrong, profoundly ignorant, more mouth than brains, and a parrot that continually repeats misinformation. So far, that is all you have been doing. Perhaps you ought to change you idea of what doing fine really means.

I'm in the thick of it, and doing just fine. But thank you for being concerned about me, it's quite out of character for you, but I'll take the well-wishes nonetheless.

I am sure you will take anything you can get at this point.

Yes, and I'm not really worried. Doesn't that just eat away at you?

Well no. I already said that I didn't give a damn about you, and I mean that. It is probably easy to hide the sweat online isn't it?

Whatever. I really do hope I'm wrong about your sound studio, er, post production studio, or whatever you call it. Unlike you, I really don't want to wish you any harm (like coming to my house and teaching me a lesson, like you posted before). I really do hope you do well and that I'm wrong. But the fact is, when it comes to investments, I'm not wrong very often. Take from it what you will.

Well, if you are so right about investments, then why are you having to save just to buy an Oppo Bluray player? It seems to me that if you are so successful with your investment advice, you would be able to buy 30 of them without blinking an eye. I mean, Oprah gives away cars to her employee's, and you save your money to buy a $499 bluray player. Your idea of success is not my idea of success, that is for sure.

Not only are you wrong about my studio, but you are wrong about a great many things. Opening up a new studio even in this economic climate is nothing new. Mix magazine is full of announcements of new audio and post production studios that just opening up, or opening up in the future. You obviously don't read Mix do you? The workflow of a growing number of soundtracks have reversed the role of a smaller mixing or editing studio (or the combination of both like mine) as opposed to a larger re-recording stage which costs big bucks to rent (like Skywalker Studios). They are pre-mixed in a smaller studio which ensures better panning and low level accuracy, and can be used for DVD or Blu-ray audio masters, and then re-eq and tweaked on a larger dubbing stage for the theatrical mix. Doing it this way saves shaves about 40% off the cost of sound designing because the costs can be amortized over several platforms. It shifts the cheapest studio rental time forwards (where the lion share of work is done), and the most expensive studio time backwards (which is the most expensive but requires far less rental time). That is why studios like mine will become far more important than the larger dubbing stages in the future.

Since you have no expertise in the film industry, I am going to take your comments for exactly what they are worth.....nothing. There is a pent up demand for smaller post facilities that handle visual effects, audio, and motion capturing for animation and games. There is also a pent up demand for audio for games, and web based content. My studio will handle mixing for television, audio for games and web based content. There is going to be huge growth in these areas for smaller studios, and I have the contacts, the experience, and now the facilities to take advantage of that growth. So I am not worried about the musings of a computer geek with a pinhead's worth of information and no experiences at all in these areas. Stick with what you know NF, since that is not much, it should not be hard being successful.

[Sir Terrence the Terrible]

Interesting, because I've been reading speculation about whether the industry will go in the direction of reserving a new release window for Blu-ray and then releasing the DVD version weeks later. Some bloggers point to Warner's 1999 decision to release The Matrix exclusively on DVD, and delay the VHS release by six weeks, as a watershed event for the DVD format because it went onto become the first DVD title to sell 1 million copies.

The recent Diamond Series release of Snow White seems to also hint in that direction since the BD/DVD combo pack got released a few weeks ago, while the two-disc DVD set won't come out until later on this month.

Well, this year 110 movies were released on DVD, BR and VOD simultaneously, and they did so well that the studios are doing it more, especially on smaller lower budget titles. I know we are doing it with UP and G-Force. Sony is doing it with the Ugly Truth, Aliens in the Attic, Angels and Demons, and two more releases that I cannot think of. Warner is doing it with Four Christmases and My Sisters Keeper. Universal is doing it with Bruno. The studios definitely want a disc window, but now that the market has opened up a bit, it seems everyone is trying different distribution models to see what works.

I thought that VOD through the iTunes store was already day and date with the DVD release.

Not for all titles. It looks like Itunes is not the little darling that the studios had hoped for. For rentals, XBOX is beating them out right now. VOD via cable and the telecoms are going to be the lucky ones to benefit from day and date VOD with the disc formats.

The common theme with much of the tech press is that they view technology as so cutting edge that it trumps tried-and-true analysis of markets and consumer behavior. Patterns are not that difficult to identify, but the tech press often seems so convinced of the sectors' omnipotence that they freely ignore the market data and evidence of actual consumer behavior in order to push their anointed "next big thing." Yet, despite their best efforts, they very often get it all wrong. Plenty of comic relief to be had looking back at the bold predictions written by the tech press back in the late-90s at the height of the dotcom boom.

I agree with you here. It seems the NF has selected memory, or a memory of selected omission when it comes to this. This is probably why the American tech industry is in the condition that they are in. They are always trying to revolutionize when evolution is probably a better move.

As I've stated before, consumer behavior does not fundamentally shift on a dime. It evolves over time, and the current state of the market is nowhere near where it needs to be for downloading and streaming media to make a meaningful push to majority status.

You are correct, but NF insists that the film industry jumps into this full bore, or the studios are out of touch with consumers. Definitely a computer guys perspective, but hardly a wise move.

Disagree with you here. I'm not sure that music on Blu-ray will amount to anything but a niche market -- certainly not one big enough to supplant both the CD and downloads. The audio and video segments of the market fundamentally differ in that music listening is (and has been) moving towards increasing mobility, while home video viewing has moved towards larger and larger screens that further anchor the viewing room as the spot for viewing video content.

I am not looking at a supplant as much as an addition. Here is a reality, there are thousands of 5.1 master tapes that are sitting idly by generating nothing but dust thanks to the death of DVD-A and soon to be death of SACD. There is still an active market of classical and Jazz loving consumers who still sit in front of their rigs and passively listen and enjoy music. Why not utilize those high resolution titles to generate income, because let's face it, they are not right now. This way you have a three tier marketplace that has something for everyone. CD's are in the same place as the DVD. Most record companies entire catalogs have already been released, and the erosion in sales shows the format is pretty long in the tooth right now. If you now include all of those 5.1 master tapes into the equation, you get another chance to re-release your catalog titles (in high resolution) to another format.

Both CDs and downloads complement the move towards portability in the audio market because the CD format uses an uncompressed open format amenable to creating digital files while downloads are already in a portable digital file format (unless they're locked down by DRM). Blu-ray, with its DRM and encryption, does not serve the needs of portable audio devices. It's fine for sitdown listening, but that endeavor does not represent the majority of the market. Like it or not, it's all about the iPod right now on the audio side. Apple's iPod sales alone more than double what the rest of the home audio industry combined takes in.

Once again, not looking for a majority stake, but a chance to offer a high resolution alternative to the market. 2L, Surround Records, and several other small European labels, have had so much success with audio only on Blu-ray, they are getting quite aggressive with recording new projects, and remastering and repurposing old projects as well. Surround Records just signed a deal that gives them licensing rights to Naxos entire catalog. Alex also told me they are actively doing that for many labels that released to both DVD-A and SACD. Relying on downloads and falling CD sales is not sustainable for the record companies. They need to put idle 5.1 masters back in the market place, because collecting dust does not bring in a dime.

On the video side, Blu-ray is a perfect fit for the current transition to HDTV and the ever growing average screen sizes. As average screen sizes increase to 42" or more, it just reinforces the living room as the nerve center for viewing entertainment. While the DVD, downloads, and streaming media made computers viable devices for video viewing, consumers simply prefer to watch their movies and TV programming using TVs. The delivery method does nothing to change this. While the majority of households now have broadband connections at home, relatively few of those connections are used for the TV or home entertainment center. Gaming consoles and set top boxes might be the trojan horse that brings downloaded or streaming content into the living room (computers won't be the avenue), but adoption rates remain relatively low.

I have to agree with you. I just got my Netflix disc for my PS3 two days ago. The streaming of the titles offered looks really bad on my flat panels, but no so bad on my computer. I am noticing alot of artifacts that I see on the big screen, that I don't see on a computer screen.

One thing I do know, there is a sizable community of people just like you and I who still enjoy sitting and listening to music. Right now there is nothing for us to latch on to, as SACD releases have slowed to a crawl, and DVD-A is all but buried. I sat down yesterday to listen to Divertimenti on bluray disc, and I cannot remember a single SACD or DVD-A disc that sounded this good. Considering the response Alex has gotten on Surround Records releases, I see a pent up demand for high quality high resolution music on disc. It may not be the masses, but its a community that has cash to spend to hear the best quality on their rigs.

[nightflier]

So many points to disagree with that I don't know where to jump in. Let's start here:

Look stupid, a free legal copy of a movie makes no money. A free illegal copy of a movie makes no money. Either way, no money is made. So only your stupid insipid mind can think that one free legal giveaway will cancel out free illegal giveaway. What WE want is the illegal stuff to go away, so the legal stuff can generate revenue. You don't make movies (good or bad) with air and water, It takes money. If you give away all of your revenue generating product for free, you are out of business because you will have no money to make more products. Simple economics simpleton

Yes, we both want illegal stuff to go away, but you haven't offered anything that even comes close to dealing with it. As a matter of fact, piracy is growing. So what's your big solution? And is it better than what I'm suggesting?

Let's remember that I'm not saying we should give away high quality movies, just low-quality ones. This will allow people to sample what's there, and then buy the full version if they agree it's worth their money. And while this suggestion certainly comes from the computer industry, we should keep in mind that it's worked quite well for them. Now that movies are available digitally (i.e. in the computer realm), maybe it's time to consider doing what has worked there for years already. Here's two more examples of this model (that I'm sure you'll have plenty to argue against, too):

The Motorola Droid phone:
While the number of apps is 1/10th as large as it is for Apple's, the critics are lauding it as one of the best features of the new phone. Why? because many more apps there are free. Moreover the ones that aren't, are less expensive, and many offer free trials.

The Barnes & Noble challenge to the Kindle, the Nook:
This is a digital reader. Realizing that they were late to the game, and would have to compete with Amazon's vast library of titles, they are drawing on the one thing Amazon doesn't have: their brick & mortar stores. They are offering their whole digital catalog for free to Nook readers at their stores. What is key here, is that it's not just a sample or preview of the digital file, but the whole thing - and it's completely free. Another feature that they are offering, is the ability to share digital files with friends completely free. That's right, just as you can lend a paperback to a friend, now you can lend your digital books too.

Of course, you'll just write these examples off as completely unrelated to the movie industry. You'll probably also belittle the fact is that the more these kinds of technologies become pervasive, the more they become what consumers expect. Do I even need to mention that the Droid will play movies, too? Or that B&N has a huge catalog of movies as well?

All this points to two factors that you don't want to accept: free content is becoming more pervasive and costs for paid content is going to go down drastically. This will hurt your studio plans, your friends in the industry, and those big-budget action flicks. It's actually ironic that the industry's insistence on charging the same for all movies, is now coming back to bite them in the rear: as small budget films drop in price very fast, they will drag down the prices of the big action flicks too. After all they were the same price before, right?

At the Blu-con gathering held a few days ago, no studio said they are going to release fewer movies in the future, not one. Knowing the economics of making a big blockbuster movie, no studio in their right mind would cut the budgets of those

Of course no studio is going to say anything of the sort. That's kind of like letting the fox tell us the hen-house is safe, no? The fact is, prices and real values will come down, not because of economies of scale, but because of the pressure from free content. At some point the studios will have to settle for a sale at a lower price than no sale at all. You disagree, I know, but we can't resolve this now, so why continue that discussion? Let's wait and see what happens in 2 years. I'll still be here - let's see if you have the cojones to admit you were wrong.

Production, and post production expenses are a fraction of the total expenses of a movie release in comparison depending on the movie (animation is expensive at the production level).

Actually special effects as well as animation are expensive. Seeing as movies are relying increasingly on animation and special effects, doesn't that suggest that these costs will drive prices up and make those movies harder to make in a shrinking economy? Yes, there will still be those movies, but less of them and that's been my point about them.

Talent salaries, marketing, and distribution budgets can equal and exceed the production and post production budgets easily. If a studio wants to cut back, it usually comes from talent salaries, streamlining marketing costs, and creating more distribution channels that increases revenues.

They will cut costs anywhere they can - and post production will be one of those. And while you think you have clients lined up for years to come, I would suggest that you wade carefully there (a suggestion that also comes from an understanding of hi-tech). This generation of consumers doesn't think in years - technology changes way too fast for that. What you think may be secure two years from now, could very well be obsolete by then. Independent video has encroached on this industry because of how fast technology has become more available. Even sound editing and sound editors, which used to be very expensive, have now become much more mainstream. Yes, I know you will probably come back and say how little I know about this and how I should just leave it all to you. Whatever. I don't really care. Just don't come back in two years with sorrowful tales about how the economy is killing your retirement plans.

And I also don't buy your argument that clients will come to your studio over using their own or going elsewhere. First of all, if the studios have their own, they will use that because it will cost less than what you charge, even if you've already paid off all your equipment and facility costs. As far as your competition from smaller shops, didn't you also say:

Mix magazine is full of announcements of new audio and post production studios that just opening up, or opening up in the future?

Sounds like a pretty saturated market to me. What makes your studio so much better? I think your expectations are a bit lofty. Yes, anyone starting a new business is full of optimism. They have to be. But let's superimpose something on top of that: the number of new businesses that fail every year, and especially this past year. You're competing against quite a few other guys who think the same about you. Maybe you have better connections, I can't know that, but let's not get ahead of ourselves. You say it will be a booming success, I am only warning that it may not be. And yes, I base that on my understanding of the hi-tech industry's influence on yours. You obviously don't agree. Well, let's see where we stand in two years, shall we?

By the way, I wasn't just saving for a BR player, I was also saving for a regular disk player (possibly a DAC), and 5-channel amp. Yes, I do have to save for that kind of cash outlay, and frankly I'm not ashamed of that. The fact that you don't is perhaps something you should be more ashamed of. Look, if your recording studio is a success, then I'm glad for you. No I don't know that business as well as you. Maybe you'll eek out a handsome retirement out of it. Good for you.

...But let me repeat my warning: your dogged lack of understanding of the computer industry and the Internet could very well become your own undoing.

[Woochifer]

Let's remember that I'm not saying we should give away high quality movies, just low-quality ones. This will allow people to sample what's there, and then buy the full version if they agree it's worth their money. And while this suggestion certainly comes from the computer industry, we should keep in mind that it's worked quite well for them. Now that movies are available digitally (i.e. in the computer realm), maybe it's time to consider doing what has worked there for years already. Here's two more examples of this model (that I'm sure you'll have plenty to argue against, too):

The Motorola Droid phone:
While the number of apps is 1/10th as large as it is for Apple's, the critics are lauding it as one of the best features of the new phone. Why? because many more apps there are free. Moreover the ones that aren't, are less expensive, and many offer free trials.

Android is yet another one of these darlings of the tech press that has garnered more hype and hyperbole than actual sales. (I guess with desktop computer revenues cratering, these tech "journalists" have to move onto something else to salivate over) The Droid arrived this past weekend, and sales were only a fraction of what the iPhone's initial sales were. Not a good sign.

And six months ago, everyone was going ape**** over the Palm Pre, and when sales for that handset fizzled out, it was onto the next shiny object of their affection. Six months from now, I'm sure you'll see yet another Android-based smartphone hit the market, and that too will be anointed as the greatest thing ever. Oh so predictable.

Also, many of these so-called "free" apps are linked to other commercial initiatives that are either ad supported or subscription-based. It's nothing more than an extension of something that already has a paid business model behind it.

The Barnes & Noble challenge to the Kindle, the Nook:
This is a digital reader. Realizing that they were late to the game, and would have to compete with Amazon's vast library of titles, they are drawing on the one thing Amazon doesn't have: their brick & mortar stores. They are offering their whole digital catalog for free to Nook readers at their stores. What is key here, is that it's not just a sample or preview of the digital file, but the whole thing - and it's completely free. Another feature that they are offering, is the ability to share digital files with friends completely free. That's right, just as you can lend a paperback to a friend, now you can lend your digital books too.

And is the Nook itself free? Obviously not. So-called "free" content is subsidized somewhere along that chain, and I doubt that it includes best sellers or titles that still have significant revenue potential for the publishers. You can give away the reader and charge for the content, or you can charge for the reader and give away the content, or you charge for both the hardware and the content. And even if both the content and the reader were given away, it's still nothing more than a loss leader designed to pull shoppers into B&N stores and get them to buy stuff once they are in the store. Either way, it's not free.

Of course, you'll just write these examples off as completely unrelated to the movie industry. You'll probably also belittle the fact is that the more these kinds of technologies become pervasive, the more they become what consumers expect. Do I even need to mention that the Droid will play movies, too? Or that B&N has a huge catalog of movies as well?

Technology itself is not the end-all be-all that you seem to think it is. Consumer behavior evolves over time, and the appearance of technology does not mean automatic adoption. If anything, consumers have proven resistant to rapid technological changes time after time. Techies tend to base their conclusions on what they want to happen, rather than taking a hard look at what actually happens.

Just because consumers CAN watch TV programs on a computer, does not mean that they WILL (43% of consumers watch online video, yet it accounts for less than 1% of actual viewing time). Just because consumers CAN watch movies on a tiny smartphone screen does not mean that they WILL (the movement towards mobility on the audio side has not taken hold on the video side, where the trend is towards bigger screens and higher resolution).

Consumers CAN watch TV programs on TVs, and that's what they DO. Consumers CAN watch movies on larger and larger screens, and that's what they DO.

All this points to two factors that you don't want to accept: free content is becoming more pervasive and costs for paid content is going to go down drastically. This will hurt your studio plans, your friends in the industry, and those big-budget action flicks.

Is this based on actual data, or is this just wishful thinking? Looking at the box office numbers and movie sales (i.e., what consumers actually pay to watch), the top performing movies remain those big budget action flicks that you seem so quick to deride.

In case you didn't know, this has been a record-setting year at the box office, and overall revenues for home video have been flat despite the recession. I don't know what evidence you're hanging on to conclude that free and cheap are taking over the market.

It's actually ironic that the industry's insistence on charging the same for all movies, is now coming back to bite them in the rear: as small budget films drop in price very fast, they will drag down the prices of the big action flicks too. After all they were the same price before, right?

This makes no sense whatsoever. Small budget films also generally attract smaller audiences. Lower investment, lower return. How would smaller budgets on one genre of movie have ANY impact on big budget action pics? The price for a movie ticket or rental or DVD/BD purchase goes towards two or three hours of entertainment. If you're suggesting that movie ticket or DVD/BD prices have any linkage to the production budget, that's absolutely absurd. .

I don't think that price drops for obscure movies with a limited audience will have any bearing whatsoever on the ticket prices or DVD/BD prices for a megahit like Star Trek.

[pixelthis]

Night flier made a comment about 5.1 channel stuff collecting dust.
Hate to bust your bubble but I have been trying to drag audiophiles (kicking and screaming) into the 21st century.
These guys wont give up tubes, and most are convinced 5.1 is a "gimmick".
TO EVERYBODY ELSE music is someting you listen to on a portable device.
Which is the main reason DVD-A and SACD tanked, and SACD did slightly better,
because it relied on 5.1 less.
And I must admit, being a "listener" my own self, that imaging is something that I strive for.
You don't always get it, but when everything snaps into place, and everything is laid out in front of you, it beats a bunch of stuff dancing around all to heck.
A classic marketing snafu, the ipod crowd coundnt care less, neither could the golden ears types if they couldnt play it on a turntable.
Which leaves no market.
Heres something NO one has ever tried, a totally analog laser based disc system.
This is what audiophiles (including my self) actually want.
EVER GONNA SEE IT?
nah.

[Sir Terrence the Terrible]

So many points to disagree with that I don't know where to jump in. Let's start here:



Yes, we both want illegal stuff to go away, but you haven't offered anything that even comes close to dealing with it. As a matter of fact, piracy is growing. So what's your big solution? And is it better than what I'm suggesting?

I already offered it, you quickly dismissed it as not understanding the online consumer. The only answer you seem to offer is to give it away for free. That is not going to happen, and you know it won't.

Let's remember that I'm not saying we should give away high quality movies, just low-quality ones. This will allow people to sample what's there, and then buy the full version if they agree it's worth their money. And while this suggestion certainly comes from the computer industry, we should keep in mind that it's worked quite well for them. Now that movies are available digitally (i.e. in the computer realm), maybe it's time to consider doing what has worked there for years already. Here's two more examples of this model (that I'm sure you'll have plenty to argue against, too):

Low quality free downloads are available all over the internet in the form of illegal copies. You keep skating the issue. If a copy is free legal or not, how is it going to translate into dollars? If that consumer was interested in a quality copy, then they would be using downloads in the first place.

Once you start down the slippery slope of offering content for free, nobody is going to want to pay for anything. This is not a sustainable model.

The Motorola Droid phone:
While the number of apps is 1/10th as large as it is for Apple's, the critics are lauding it as one of the best features of the new phone. Why? because many more apps there are free. Moreover the ones that aren't, are less expensive, and many offer free trials.

The Barnes & Noble challenge to the Kindle, the Nook:
This is a digital reader. Realizing that they were late to the game, and would have to compete with Amazon's vast library of titles, they are drawing on the one thing Amazon doesn't have: their brick & mortar stores. They are offering their whole digital catalog for free to Nook readers at their stores. What is key here, is that it's not just a sample or preview of the digital file, but the whole thing - and it's completely free. Another feature that they are offering, is the ability to share digital files with friends completely free. That's right, just as you can lend a paperback to a friend, now you can lend your digital books too.

Of course, you'll just write these examples off as completely unrelated to the movie industry. You'll probably also belittle the fact is that the more these kinds of technologies become pervasive, the more they become what consumers expect. Do I even need to mention that the Droid will play movies, too? Or that B&N has a huge catalog of movies as well?

Once again, you cannot seem to get this through your thick skull. These are examples of companies leveraging less profitable content or free content to sell a more profitable products. Apple does that with the Itunes store, and Microsoft does it with the Xbox. Unfortunately studios sell movies, not video products. If a studio does not sell a video display product, then it has nothing to leverage a free giveaway of its movies. You are trying to mesh two things together that are not the same. The movie studios only sell movies, not players, not phones, not readers or mini display devices. So they cannot just give away the only thing they have to sell.

All this points to two factors that you don't want to accept: free content is becoming more pervasive and costs for paid content is going to go down drastically. This will hurt your studio plans, your friends in the industry, and those big-budget action flicks. It's actually ironic that the industry's insistence on charging the same for all movies, is now coming back to bite them in the rear: as small budget films drop in price very fast, they will drag down the prices of the big action flicks too. After all they were the same price before, right?

Before you talk about the proliferation of free content, you need to give it some context. The overwhelming amount of free content comes from YouTube, and online providers of already free content such as television shows (that were already free to the public). Blockbusters movies were never given away, as they have monetary value that can be exported to many platforms. Once again you are parroting a lie, it is not the film industry charging the same for movies, it is NATO, or the National Association of Theater Owners. Another point that seems to escape you, is that you are not paying a single admission charge to see a single movie. You are paying an entrance fee to see any movie that you want within the complex. You can see two movies on a single admission if you so desire. I have done that myself. In an environment where many movies are shown, everything from a big blockbuster to a chick flick, that cost is leveraged. The reality is the big blockbusters are subsidizing independent and targeted market films in any multiplex. Theater owners know that more people will come to see 2012 than who saw Amelia. They can afford to show Amelia because they are making their killing on 2012. Where they make their money is on concessions, and the reality is, they are going to sell far more popcorn showing 2012 than the will ever sell showing Amelia. You compartmentalized thinking thinking is killing you. Theaters have never charged an admission fee on a per movie type of movie basis, how would they survive the periods between blockbuster releases if they did? They wouldn't.

Of course no studio is going to say anything of the sort. That's kind of like letting the fox tell us the hen-house is safe, no? The fact is, prices and real values will come down, not because of economies of scale, but because of the pressure from free content. At some point the studios will have to settle for a sale at a lower price than no sale at all. You disagree, I know, but we can't resolve this now, so why continue that discussion? Let's wait and see what happens in 2 years. I'll still be here - let's see if you have the cojones to admit you were wrong.

This is such punk BS. When you are in a seminar discussing business with your own folks, there is no need to lie about your business plan. It will all come out in the wash anyway. You have this stupid idea in your fat head that the studios are in meltdown, when it is not even close to the truth. It is a lie in your head, and when you write it out here. First a youtube video, or a free broadcast television program is not competing with a movie like A Christmas Carol or 2012. They don't show Youtube videos or broadcast television programs in movie theaters, so your connection and example is quite frankly stupid. I have seen no indication that ticket prices are falling, and no example that attendance is falling either. Considering the fact that a film on the based on the rehersals of a pop star just crossed the $200 million dollar mark, and 21 films that crossed the $100 million mark so far, I think the business is doing just fine thanks.

Actually special effects as well as animation are expensive. Seeing as movies are relying increasingly on animation and special effects, doesn't that suggest that these costs will drive prices up and make those movies harder to make in a shrinking economy? Yes, there will still be those movies, but less of them and that's been my point about them.

Once again box head thinking. Special effects and animation have gotten alot cheaper to produce than it used to be. The computing is cheaper, and with so much software out there, the competition has driven the cost of the tools downward. Haven't you noticed there is many more animation pictures out there now than we have seen in quite a while? In the last 5-8 years, we have seen more animation released to theaters than we have seen in the previous 20 years, and that shows just how much the costs have fallen to produce them. Special effects have gotten so much cheaper to produce, you are seeing it in alot more movies than ever. So no, your assumptions are completely wrong.

They will cut costs anywhere they can - and post production will be one of those. And while you think you have clients lined up for years to come, I would suggest that you wade carefully there (a suggestion that also comes from an understanding of hi-tech). This generation of consumers doesn't think in years - technology changes way too fast for that. What you think may be secure two years from now, could very well be obsolete by then. Independent video has encroached on this industry because of how fast technology has become more available. Even sound editing and sound editors, which used to be very expensive, have now become much more mainstream. Yes, I know you will probably come back and say how little I know about this and how I should just leave it all to you. Whatever. I don't really care. Just don't come back in two years with sorrowful tales about how the economy is killing your retirement plans.

High tech is not film making. The computer industry is not the film industry. What works for tech does not necessarily work for the film industry, so when a tech guy hands out film making advice, please don't be insulted if it is mistaken for toilet paper.

In the film industry you cannot just roll out new tech at the drop of a hat. Look at how long it has taken for Digital Cinema to roll out. The basic configuration of a movie theater has not changed in 75 years. You still require a screen and speakers, just as you did back in 1930. It took the industry years to get stereo into theaters. It took more years to get Dolby six track in all of its configurations rolled out into theaters. It has taken years to get 10,000 theaters THX certified. This industry does not roll out technology at the drop of a hat, and consumers don't really need half of the stuff the computer industry rolls out on a yearly basis.

There is a difference between a good sound editor and a sound editor. Your average basement operating sound editor is not always qualified or skilled enough to do a feature length big budget movie. While sound editing tools have changed, they are not changing yearly. In the film industry, technology advances much slower than in the computer industry because the computer industry does not have to support a large permanent infrastructure. If the film industry advanced technology as quickly as the computer industry, there would be no time for certifications of any kind anywhere, and the entire industry would go bankrupt trying to keep up. Sound editing is not mainstream, and neither are the tools. If you are talking about a very basic sound editor being offered as a package in mainstream computer stores, that is a far cry from what we use in film. Those packages are crude and inaccurate when compared to what we use professionally. Trying to equate cheap software with professional software and hardware, and professional sound editors with amateur ones is just plain idiotic.

And I also don't buy your argument that clients will come to your studio over using their own or going elsewhere. First of all, if the studios have their own, they will use that because it will cost less than what you charge, even if you've already paid off all your equipment and facility costs. As far as your competition from smaller shops, didn't you also say:

Who gives a damn what you buy? I certainly don't. Studios have been outsourcing their post production for years. Haven't you ever heard of Todd AO post production, or Lucasfilm post production? Studios have been sending movies for sound post production to Lucasfilm for years even though they own their own post facilities. Universal has some of the best re-recording guys, and finest sound stages in the industry, yet The Haunted (a Universal production) sound was done at Lucasfilm. Sound post production is not always tied to the producing studio, that is why there are hundreds of post production facililites in Los Angeles alone. Some directors like working with specific re-recording guys who work in faclilites outside the producing studios. Randy Thom did all of Pixars previous work out of Lucasfilm post production. In my previous studio, I did many DVD remixes for many different studios, so what you believe, and what is reality are polar opposites.

Since you do not know what I charge for my services or what it costs a studio, then how do you know what is cheaper? Pulling more stupid assumptions out of your nose again?

Sounds like a pretty saturated market to me. What makes your studio so much better? I think your expectations are a bit lofty.

You are an airhead, so what you think means nothing. In this industry how do you know a saturated market, you don't seem to have the industry knowledge to make such a claim. Studios are not clustered, and neither is the talent. New studios open all over the country, and all are not doing exactly the same things. There a just a few studios that can handle gaming sound where I live. I live just a few miles from Silicon Valley where a lot of the gaming industry has its headquarters. Some new studios handle audio only, some handle television sound, but few handle both and gaming and can remix DVD's and Bluray as well. Quite a bit of my business has come from independent producers and well as studio projects. I am not at all worried about my business.

Yes, anyone starting a new business is full of optimism. They have to be. But let's superimpose something on top of that: the number of new businesses that fail every year, and especially this past year.

It is not a new business airhead it is 15 years old. I have been freelancing for 15 years outside of my regular job. I had to rent a studio to do my freelance work, and now I don't. I was paying rates that others had established, and now I don't have to, I set my own. I had my own studio 7 years ago that was very succesful, but the building needed alot of earthquake retrofitting. It made sense to tear it down and re-build it, which require me to rent studios to do my work. Get you facts straight before making faulty assumptions.

You're competing against quite a few other guys who think the same about you. Maybe you have better connections, I can't know that, but let's not get ahead of ourselves. You say it will be a booming success, I am only warning that it may not be. And yes, I base that on my understanding of the hi-tech industry's influence on yours. You obviously don't agree. Well, let's see where we stand in two years, shall we?

Since the high tech industry is magnitudes different than the film industry, you understanding is nil. I don't need your warnings because you don't know didly about anything even remotely related to what I am doing here. Stick to what you know, it ain't much, but I am sure it can be used somewhere. I have had my own business for 15 years, so two years is nothing.

By the way, I wasn't just saving for a BR player, I was also saving for a regular disk player (possibly a DAC), and 5-channel amp. Yes, I do have to save for that kind of cash outlay, and frankly I'm not ashamed of that. The fact that you don't is perhaps something you should be more ashamed of. Look, if your recording studio is a success, then I'm glad for you. No I don't know that business as well as you. Maybe you'll eek out a handsome retirement out of it. Good for you.

My studio is not funding my retirement, my pension, a healthy savings, and a 401k is just fine for that. The studio is paid for, and the two are not tied together in any way. Why should I be ashamed that I worked hard enough, saved, and made smart business decisions so I don't worry about the price of a component? Doesn't hard work and playing it smart deserve its rewards? It is awfully small of you to be a hater of another person's success. That shows how small a person you truly are.

Once again, you make some of the dumbest choices. Why in the hell would a person buy a CD player and a BR player when the BR player plays both? If you are so concerned about the CD sound from your BR player, just get the SE upgrade, or buy a DAC to use with your coaxial outputs, or stick with HDMI. You are the only person I know who wraps their arms around their head twice just to blow their nose.

...But let me repeat my warning: your dogged lack of understanding of the computer industry and the Internet could very well become your own undoing.

Since I don't work in the computer industry or support the net, then I cannot see how I will suffer. The film industry has done just fine without the input of computer geeks. You are a real drama queen with all of this "I am warning you" crap. The film industry does not need any advice from the computer industry. The computer industry cannot keep their house in order all that well, and should keep their noses out of the film industry. That is really directed at you more so than anything.