TakeAway: Sony is taking the bull by the horns. The movie industry has been wrestling with its distribution challenges for a few years but no effective solutions have surfaced.
Now, Sony, with an eye on the future, is leveraging its suite of movie assets to create new channels of distribution for its movies. Interesting story of product, place, and price optimization.
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Excerpted from NYTimes, “Sony to Offer Film on Internet TV, Then DVD,” By Tim Arango, November 10, 2009
The latest experiment in Hollywood’s effort to find a way to compensate for the steep decline in profits from home entertainment … Sony will make its animated hit “Cloudy With a Chance of Meatballs” available to consumers directly through Internet-enabled televisions and Blu-ray players BEFORE the movie is released on DVD.
The move is significant because it represents the latest tinkering with the movie industry’s release windows, something Hollywood has long been reluctant to do out of fear of upsetting the profitability of DVD sales and angering its most important retailer, Wal-Mart. But with the decline in DVD sales, off as much as 25 percent at some studios, finding new ways to distribute movies has become a necessity.
The price of the film, $24.95, is high enough not to alienate retailers, Sony said … “It will make televisions more valuable, and that’s a good thing.”
Sony, the only Hollywood studio tethered to a major hardware manufacturer, is in a unique position to experiment with selling movies directly to consumers through television sets … The experiment is part of a search in Hollywood for ways to capitalize on the Internet’s potential for film distribution.
“The time when a majority of consumers have Internet-enabled TVs is a long way off,” said an analyst at Pali Capital. “But it’s moving the ball in the right direction” …
In addition to the industry ramifications, the experiment is important to Sony’s vision of its two pillars — hardware and content — to work together profitably …
Sony hopes later to entice other studios to make their films available to owners of Sony televisions, bypassing cable and satellite companies that offer their own video-on-demand services …
Mindful of the music industry’s contraction after the collapse of compact disc sales, Hollywood is frantically trying to develop new sources of home entertainment revenue …
Edit by TJS
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Full Article
http://www.nytimes.com/2009/11/10/business/media/10sony.html?ref=media
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