Pay by the Size of the Screen? Not Likely

This was recently reported by Variety.

“DreamWorks Animation chief Jeffrey Katzenberg thinks the windowing model of feature films will become a “pay by the inch you watch.” During the Entrepreneurial Leadership in the Corporate World panel at the Milken Global Conference in Beverly Hills, Katzenberg explained what he thinks is the future of scheduling and distributing feature films.

“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.”

Katzenberg is right that the current windowing release model will collapse and movies will be available everywhere ubiquitously either concurrently with a movie’s theatrical release or very soon thereafter. That has already started to happen with independent releases.

He is wrong that people will pay more based on the size of the digital screen.

Mr. Katzenberg needs to understand his own customers.

If you are a subscriber to Netflix you can watch on any screen of any size for the same monthly price.  There is no additional charge to see Netflix on your TV. 

It is more expensive to see a movie in a theater because of the real estate costs associated with owning and maintaining a large physical property.  We also get to experience the movie on a very large screen.  As filmgoers we understand this.

The world of digital is completely different. Here, the costs are much lower and will continue to decline.  A movie studio can deliver me a movie over the Internet more cheaply today than 5 years ago, and will be able to do so more cheaply 5 years from now.  

I decide to watch a movie on my TV, my laptop, my tablet or my smart phone based on a number of different factors just as many other consumers do. Time of day, convenience, whether I am viewing it with others or by myself, the list goes on. 

And I know that the cost of delivering the movie to me on each one of these digital screens is the same for the company that delivers it.

Why should I pay more?

Consumers will not take kindly to any movie studio that decides to charge them more to watch on their TV than on their phone because it will try to break (and therefore ignore) the habits that we have already developed.  Habits we fully embrace. 

Netflix created simplicity for its customers by making sure they could watch on any screen at any time at one price.  They have set the bar for all others—including the movie studios.

If movie studios want to innovate their business model, they must be ahead of the digital curve–not behind it.

As they say, the horse is already out of the barn.

They might as well face it.

 

About Chris Dorr

I consult with companies on digital media strategy and business development. Clients include Samsung, MTV Networks, Tribeca Film Festival, Shaw Media and Canadian Film Center. I created the Future of Film blog for Tribeca. I have worked in the movie business for Disney Studios, Universal Pictures, Scott Free and in the digital media business for Intertainer, Sony and Nokia. Contact me at chris@digitaldorr.com or follow me at @chrisdorr
This entry was posted in Distribution, Hollywood, Internet and tagged , , , , , , , , . Bookmark the permalink.
  • John Tomko

    He’s a bit of a dinosaur re technology as well. Why wouldn’t I buy the movie for my phone and send it to my big-screen tv via Chromecast or Airplay?

    • chrisdorr

      John, thanks for your comment. You are right, you would. It is likely that Mr. Katzenberg is unaware of this technology.

  • Christian Ekiza

    You are facing the problem on the premise of “Why should I pay more to … ”

    I think that the interesting view would be “Could I pay less if … ?”

    Maybe the question here is not the size of the screen, but the resolution of the content it requires. For the company providing to you, it is not the same to provide a 4K resolution movie than it is to provide the same one at 720 or even less. It means processing time and upload bandwidth, and if multiplied by millions of consumers, it can make a real difference.

    If I watch Game of Thrones on my 37” TV, I like it to be at 720p. (If I had a larger screen, maybe I would go even further and require it to be at 1080p.)
    But if I am watching The Big Bang Theory, I don’t mind if it is at a lower resolution (SD) on my TV. Could I pay less if I was getting less resolution?
    Even more, most of the times I will watch it on my netbook, or even on my smartphone, which is equally enjoyable with that level of quality. Should I be paying more even if I don’t require that much quality?

    Some services already offer the possibility to buy/rent a digital movie at FullHD or SD with a variation on the price. You can still play them wherever you want, but you can choose which option is more convenient for you.