About 6 years ago, a consortium of Hollywood studios – Warner Bros., MGM, Sony, Paramount, and Universal – launched Movielink. They had all been incredibly worried by the music industry’s failure to get ahead of the illegal downloading of music (Napster was, at the time they started, in its heyday) and wanted there to be a legal way for people to download movies. Unlike the music companies, they actually did something about it. They made a lot of decisions you can argue about – no burning, watching only on your computer vs. your tv, and other DRM issues mostly – but they did it together out of a mutual belief that giving people a legal alternative would potentially stem the rush towards piracy. They did another smart thing the music companies didn’t: they recognized that the studios aren’t really brands, the titles are, and banded together in a studio-agnostic effort rather than each try set up their own me-only services.
This week it was announced that Movielink is being sold to Blockbuster as part of Blockbuster’s efforts to take on Netflix, Apple, Amazon, and other players in the “delayed on-demand” game. By which we mean that users have shown that they don’t need on-demand to be instant, as delivered through cable companies, but are satisfied with a bit of delay in exchange for the portability they get from buying digital downloads from iTunes or ripping dvd’s from Netflix to other devices. (Like you don’t.) The studios never made money on Movielink and direct sales aren’t part of their core business. But I think that the fact that they are selling it is not in any way an indication of the failure of the business, but a vindication of their initial strategy. Now that there are a number of viable businesses selling legal downloads, and now that customers have the bandwidth and are starting to become acclimated to the idea of paying for digital entertainment downloads, the studios can get out of the business and leave further innovation to others. Strategy successful.
Don’t get me wrong – the studios have a lot of catching up to do, but as my friend Chad says, “Better to be 80% behind than 100% behind.”
Matt Rosenberg
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Strategists & Planners
Comments (1)
It seems to me that Blockbuster waited about 10 years too late to realize that its business model isn't distribution, necessarily, but consumer knowledge and experience re entertainment content. There's no reason to believe that people will 'shop' via Movielink-rebranded-Blockbuster than they would have before the purchase. The challenge is -- and always has been -- to help consumers find entertainment...and this is something that Blockbuster could have 'owned' because of its rental data history. Putting the name on another interim (or just various) distribution channel is a waste of money, I fear. I've written more about this at DIM BULB, http://dimbulb.typepad.com, if you'd like to check it out.
Posted by Jonathan Salem Baskin | August 14, 2007 6:03 AM
Posted on August 14, 2007 06:03