Tuesday, April 04, 2006

Movies over the Internet or Price Elastics 

Price elasticity of demand is the tendency of demand to change as price changes, says Alex Saunders in his VON Canada presentation The Future is Here.

What about movies over the Internet?

One of the "future" killer applications around since years is Video on Demand, IPTV, TV over the Internet and Triple Play, you name it.

In discussions if telcos should provide VoD, IPTV and Triple Play I always ask the question: Why should anybody buy a movie from a telco, if you could as well buy it directly from the film distributer directly. Same is valid for TV, you could buy it from the TV station direct.

Of course the film industry was reluctant first, basically because they are stupid and paranoic, but a Apple has shown with iTunes that there is a lot of money to make, so finally it happened what was logical, movies will be now available at the same time the DVDs hit the market.

Movielink.com and Cinemanow.com opened their portals. I could not access Movielink.com (the leading movie download service - ha!) from Europe, because it is restricted only to be accessed from IP addresses in the US. Somebody definitely does not want to make too much business. Cinemanow.com is accessible without problems, announcing a free trial for 7 days. I do not know if subscription is possible from outside the US (I did not try), but the free movies can be watched. I tried one - Vice Academy - for some time and I see why it is free. It must be award-winning for the worst script, the worst actors and the worst director, basically to watch more of it somebody would have to pay ME some money ;-)

Rumors say that the price for a real movie will be somewhere between $20 und $30. What?

Why should I do this? Getting the plain movie without bonus track for more as I pay in the shop for the DVD, eventually not able to make a backup and in addition eventually paying something for download volume.

Back to price elasticity, they obviously do not want that anybody uses this, at least not now. Maybe there servers or broadband connections currently can only support three movies at a time, or something like this.

But believe me, prices will drop, elastically.

In Europe Amazon is planning to get in this business (see imdb.com) and Warner is teaming up with Bertelsmann (Arvato) to distribute in Germany, Austria and Switzerland.

What I still do not understand is why somebody should watch a movie e.g. Lord of the Rings on a 4x5 cm screen on a mobile phone. I also do not understand, why video distribution is always mentioned on the IMS killer application wishlist. Why does anybody need IMS for doing this?

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