Whoa. Now here’s a shocker that I hadn’t seen coming.
According to the California-based research group the Los Angeles Economic Development Corporation, low cost DVD rental kiosks could cost the home video industry a whopping one billion dollars in lost jobs, lost economic development, and more. Check out the logic straight from the LAEDC:
Redbox’s low-cost kiosks are challenging the traditional distribution and release model of the industry, which is built upon timed, sequential release into differentiated market segments through a variety of channels (box office, sell-through, rental, pay television and cable). … Although box office numbers are headlined in industry and popular press, revenues from this income stream account for less than 25 percent of the total revenues earned by distributors. Most movies are not immediate money makers, and companies rely on sequential sales, such as in the home entertainment market, to recoup their production and marketing investment.
Well, they’re right on that score, that video is a huge part of release profit. But what the LAEDC seems willfully ignorant of (and note I say “seems”) is that part of the problem is the industry itself.
Jim Carrey is not worth twenty five million dollars a picture.
When you consider the criminally monstrous salaries the studios are paying out, the problems posed by Netflix and Redbox take on a whole new light. Considering that there are movies made literally every day by folks with their credit cards and a few friends that go straight to video, Redbox’s distribution strategy suddenly doesn’t seem like the giant bugaboo the LAEDC would like you to believe it is.
Maybe what Redbox is doing is forcing the studio system to think twice about its own operations. And that can’t be a bad thing…can it?