Pricing movies by the inch

“I think the model will change and you won’t pay for the window of availability. A movie will come out and you will have 17 days, that’s exactly three weekends, which is 95% of the revenue for 98% of movies. On the 18th day, these movies will be available everywhere ubiquitously and you will pay for the size. A movie screen will be $15. A 75” TV will be $4.00. A smartphone will be $1.99. That enterprise that will exist throughout the world, when that happens, and it will happen, it will reinvent the enterprise of movies,” he told the crowd.

When I read this today I couldn’t quite let it go past without comment. It’s from Jeffrey Katzenberg of Dreamworks.

It is hard to imagine how this will work unless television manufacturers agree to some new DRM standard that registers screen size. Indeed, they will likely oppose this because it basically taxes larger screens at the point of sale. When you buy a larger screen you will have to factor in a continual level of higher payments for media.

lcd-screen-sizes-comparedInstead, one suspects this will have to do with resolution which is a pricing scheme we have now. The advantage of resolution is that the movie studios can control the product supply and pricing as it is not possible to convert a low resolution video into a higher one.

The more interesting thing about Katzenberg’s statement is a compression in the time from movie release to television release. This is more radical but I suspect it will ultimately only be forced by piracy or something like it. Basically, if a family of four go to the movies they pay, in total, $40-$50. If the movie were released on all media soon after, they would have to have a pretty low discount factor to not wait and see it for $15 if they had a home theatre. What is more plausible is that new movies might be released broadly and the imputed discount for private, in home showings would be only slightly less than a theatre.

In reality, what movie studios want is what all digital media suppliers want: a way of charging by the viewer. This is what movie theatres give them by making movies more of a rival good. The problem is how do they measure how many people in a room are viewing a movie? There are ways but, right now, it does not seem there are ungamable ways.


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