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Published on 26 November 2013

The future of movie and TV viewing is much closer than it appears as both the top OTT service provider – Netflix – and the top cable media conglomerate – Comcast – are moving toward alternatives to the outdated see-it-in cinemas-first (or DVD later) approach to distribution.

Earlier this month, Netflix said publicly it wants to debut movies the same day they debut in cinemas http://www.techzone360.com/topics/techzone/articles/2013/10/31/358588-netflix-wants-movies-upon-cinema-debut-trick-treat.htm . Just last week, Comcast, which owns NBC Universal, began selling movies weeks before they are available on DVD through set-top boxes and its website in a landmark move that further closes the window between theatrical release and availability on TV http://cable.tmcnet.com/topics/cable/articles/2013/11/20/360932-comcast-just-started-selling-movies-through-set-top.htm

Broken and Down

The cinema-first movie release process is broken and it's likely other forward-looking content companies understand it. Cablecos are beset by continuing cord cutting and telco TV providers (and others) are front and center in a rapidly intensifying battle over continually climbing content costs that's pushing the limits of customer dissatisfaction.

Concurrently, the spread of broadband combined with a competitive need-for-speed race is opening the door wider to online options both wired and wireless. AT&T recently reported it has passed the 10 million U-verse broadband subscribers to date and is moving forward briskly. Welcome to the burgeoning broadband economy.

As a result, the cinema is anywhere a growing number of consumers want it to be.

Comcast is taking on the weak physical DVD sales in stores and elsewhere approach first. In fact, its TV store even has an on sale section for older titles. So much for the DVD bins in retail locations. Next is the time elapsed between theatrical release and DVD availability.

Buy vs. Rent?

Indications are that the issue isn't consumers buying versus renting movies, etc. but rather redoing the movie release process. How else could buying meet or beat rental price points?

Reality suggests that consumers have limited interest in current "new release" (DVD) purchase options and far prefer current renting models and OTT service options.

Comcast's sale of movies and TV shows is done through the new Xfinity TV Store (http://xfinitytv.comcast.net/mytv/store#store=index.html) , well ahead of current PPV schedule with flicks, though the purchased content would resides in the cable giant's network for access by multiple customer devices.

An app available from Google Play and iTunes enables the content downloads.

In the few weeks since Netflix expressed its interest in offering movies the same day they debut in cinemas, it has become crystal clear that big stakeholders are working to shorten if not eliminate the time elapsed before consumers at home get access to flicks.

The release "window" represents dead sales time. Time is money – big money. And by the time movies reach the second stop, promotional efforts have often faded or are pushed aside by a new crop of movie debuts.

Factors to Consider

What's tough to comprehend is why cable TV subscribers would pay to buy/own most any type of content. Consider the issues.

-Selling and Buying Content. In an industry where even coveted content is under intensifying price pressure, price points and newness of the movies would largely determine whether buying has a chance. Pay VoD movies rent at $4.99 to $6.99, while Redbox rentals are $1.20 a pop. Netflix and other OTT options include movies in their already low (Netflix) under $9 a month.

-Timing. Long standing questions remain concerning how consumers would react to the ability to get movies earlier. Would they be interested in buying given current renting options? Would seeing movies sooner make them pay more than what they do now? Comcast already rents some indie films before theatrical release for a premium. It would be silly to assume the cableco hasn't amassed valuable data and performed analysis of buyer's behavior here. We don't know what we don't (yet) know.

-Ownership. Renting has proliferated while buying (DVD) has shrunk to the point where sales are most popular when offered as a season of an original series in box set form, not movies. Also, it remains to be seen with content if customers will buy if the product is in the network in and not in their hands. It would seem that most don't pay to buy products that don't physically possess.

-Value. The problem with selling movies after having rented them for so long is that flicks aren't even the most coveted content (with a few exceptions). That distinction is shared by live sports and original programming series http://technews.tmcnet.com/videoworldinsider/topics/from-the-experts/articles/322068-original-programming-price-pressures-devalue-movies-as-consumer.htm.

If selling TV shows is an option, what happens to what you already pay for with pay-TV subscription services that do or don't include premium "movie" channels like HBO, Showtime and Starz which are focused heavily on continually launching and growing original series?

-TV Shows? A case can be made for buying movies before they hit DVD, but selling individual episodes of TV series such as Chicago Fire, Suits, Mad Men and Bates Motel for $2.99 a pop is a tough proposition at best. HOWEVER, selling complete seasons of original programming shows from premium "movie channels" could prove alluring if Comcast can work out deals with Starz, Showtime, HBO and others.

Since some of the most popular original series – e.g. Spartacus – are done – buying this content in per-season series packages or all in one would be particularly attractive.

-Bought Content, Anywhere. Perhaps the most attractive aspect of the Comcast TV store effort is the ability to download an app that enables owners to view content on mobile devices be they smartphones or tablets, and so on. This is a big entertainment boon when a TV, or even a laptop, is not available. Think outdoors and in transit, for starters

-Payment Options/No Returns. Comcast allows customers to pay via their monthly invoice, but they must use a credit card for content bought from the cablecos website. Purchased content, however, can't be returned.

-Synchronicity. Seeing content bought on from one channel show up on another, online to TV, is a work-in-progress. From Comcast's FAQ:

"The titles you purchase online from xfinity.com/store may appear in the purchases menu in the XFINITY On Demand section of your TV, and your purchases on your TV may be available in the XFINITY TV website (xfinity.com/store) and the XFINITY On Demand Purchases app. Please be patient, it may take up to 30 minutes for website purchases to appear on your TV, and vice versa. Some transactions can take up to 24 hours to appear on different platforms."

More issues are addressed via Comcast's FAQ at http://xfinitypurchases.com

Comcast Knows Content

It's easy to understand Comcast's thinking given flat VoD movie rentals combined with its ownership of TV network NBC and movie house Universal Pictures.

To understand Comcast's potential entry into selling movies and TV shows, one must first remember that Comcast is a media conglomerate, not just an ISP selling cable TV as a onetime near-monopoly video provider. When the company bought 51% of NBC Universal for billions in a deal announced in 2009, it did so with at least a two-fold strategy. The first focus was to contain/control soaring content costs (especially for live sports) while the second is to find new ways to monetize it the content assets.

Owning one of the original big three broadcast TV networks and combining its live sports programming into a re-launched sports network, along with landing Monday Night Football and the Winter Olympics in February are monetization milestones. Comcast simply seeks more whether it's movies from its Universal movie house holdings, independent studios like Magnolia (whose movies it rents before theatrical release for more than VoD PPV) or others.

Comcast knows OTT streaming subscription services and relate advertising through NBC, a founding member of Hulu.com along with Fox broadcasting and ABC-Disney. The cableco has holdings in diverse but inter-related entertainment categories.

The Bottom Line

Closing the theater-to-DVD window is of paramount important to the future of movies and the evolution of content monetization. Comcast's TV store and Netflix' interest in debuting movies the same day they're shown in cinemas is just the beginning.

The fairly obvious first target is physical DVD sales in retail stores. Given that Comcast worked with other content owners to offer titles weeks before DVD, these same players are clearly looking to further slash the waiting time going forward. Netflix just wants to cut to the chase. Expect other stakeholders to air their interests in the months ahead.

It's simple; the bottom line here is the bottom line for content owners and distributors of all types. We'll have to wait and see if the TV store expands beyond movies and TV shows to truly coveted content: sports and original programming series. Imagine the opportunities.

You can bet the stakeholders – like Comcast and Netflix - already have.

Stay tuned.