In my Scientific American column this month I noted that Hollywood seems perversely determined to promote illegal movie downloads, rather than fight them. If the movie studios truly wanted to turn legal movie rentals into a popular, profitable, commonplace activity, it should quit kicking and screaming and embrace the digital age. It can start by taking these steps:

1. Include the DVD extras. In the DVD age there was real value to the extras: deleted scenes, director's commentary, behind-the-scenes featurettes and so on. Not to mention subtitles and captions—important options for millions of viewers.

Online movies generally don't give us any of that. But you still have to pay the same for a rental as you did for a DVD rental.

2. Offer a reasonable viewing period. You pay, what, $4 to stream a movie—and then if you don't finish the whole thing the first night, they expect you to rent it again just to watch the last 30 minutes? That's insanity.

It means that you can't start a movie after dinner if you have kids; you won't finish by bedtime. Or you start the movie after you put the kids to bed—but if you get sleepy, you can't finish it tomorrow.

You should have three days to watch it, just as in the DVD rental days. Or at least 27 hours, so you could finish the movie the next night.

3. Eliminate the starting time. You have to start watching a movie within 30 days of renting it. Okay, this isn't a big deal—most of the time you rent a movie because you want to start watching right away—but what's the need for the 30-day restriction? If we paid for it, we should be able to watch it whenever.

4. Eliminate the "release window" concept. When a movie's run in theaters is over, the movie studio doesn't make it immediately available for online viewing. Instead, it makes the movie available for a few weeks at a time to highly engineered series of outlets: DVD; pay-per-view TV; HBO and movie channels; and so on. Each of these "release windows" offers exclusivity to that particular viewing source. To Hollywood's mind, that's the best way to make the most money from each movie.

But during each window none of the other movie sources are making any money for Hollywood. While a certain movie plays only in hotel rooms, for example, nobody online can rent it or buy it. What if—gasp—a movie became available through all channels simultaneously, so that everyone could start paying money to the movie studios at once? Radical, I know, but it deserves an experiment at least.

5. When it's buyable, it should be rentable. Often Hollywood tries to gouge out a few extra bucks by making a movie available for sale online ($15) for a few weeks before you can rent it online ($4).

Here again the logic seems clear enough—$15 is a lot more than $4!—but what they're missing is the potential revenue from lost rentals during those weeks.

But there are some counterarguments, too. Plenty of people (I'm among them) would never dream of buying a movie that they'll watch only once but would happily rent it. And time is of the essence: more people will probably rent a recent movie—while the marketing, ads, and reviews are still fresh in their minds—rather than an older one.

In other words, while Hollywood is locking up a movie in its "sale only" window, it could be losing a lot more revenue from lost rentals.

Listen up, Hollywood: Nobody ever went out of business offering a good product for sale at a reasonable price with an eye toward pleasing the customer. You should try it some time.

9 Comments

1. 1. SeyelentEco 02:42 PM 8/21/12

   Can I Stream It? (http://canistream.it) actually helps alleviate the release window and the buyable/rentable issues by allowing you to set reminders. You don't have to remember when a movie will be available on the platform you choose.

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2. 2. pixelm 04:34 PM 8/21/12

   There is an organized community trying to justify piracy, and it seems as if Mr. Pogue is falling into the trap. No other business has to justify its business models against theft. The claim that pricing isn't "fair" is one that is normally addressed by consumer demand - if people don't buy it then charge less. But the cycle of competing against immediate and free means less revenue for content, and ultimately, of course, less content and therefore less of the movies so important to Pogue and users. The laws of supply and demand have not changed online - less demand for legitimate product and lower prices means less supply. The number of big budget pictures (and the number of high risk small budget ones) is declining rapidly. And where is the logic in asking companies like Netflix and Hulu to innovate and raise capital when other companies (like Megavideo) are building their businesses on stolen raw material?

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3. 3. tomkarlo 08:22 PM 8/21/12

   I have to think that the 30 day window is related to revenue recognition issues - their accountants probably told them they can't book revenue until the person has watched the movie (it's been "delivered"). If they gave an unlimited window, they'd have to wait to book the revenue until the person watched the movie, and there would be a corresponding liability.
   
   I don't think Pogue is trying to justify piracy here at all. He's just pointing out that if the industry really wants to reduce piracy and maximize their profits from online rentals, they should try making online rentals more consumer-friendly. (The 24-hour viewing window is a prime example of this.)
   
   Businesses don't have to justify their business models against theft, but if they're interested in maximizing revenues and reducing theft, they need to look at the whole picture. When the customer experience rooted in theft is better than the one offered for a price, it's unsurprising that you see a lot of theft. If I was giving outdoor concerts and charging for seats, but the hill outside the venue had a better view and was more comfortable, I shouldn't act surprised if people decide to watch from there.
   
   

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4. 4. Colin_Poly 12:08 PM 8/23/12

   Anybody see ghost rider 2? Hollywood releases trash that no one should ever be convinced to pay for. So maybe Hollywood releasing less stuff is a good thing, big hits are still doing great in theaters piracy or not. Stealing is wrong, but making someone pay for ghost rider 2 should be criminal.
   
   But all jokes aside this article is far from justifying piracy, it's more of like a common sense piece for stubborn old rich white men that refuse to get with the times. I have a Microsoft office license and I use a cracked version that I downloaded because the regular disk version i paid for crashes regularly. That's a damn shame but it's the truth and until Hollywood can match the ease and access that comes with pirating they have no shot in stemming it.
   
   It's unfortunate that people steal things that took effort on someone else's part but if that's the byproduct of having the Internet, it's a small price to pay...shutting down/limiting the Internet in order to stop piracy would be like killing Nicholas Cage so that ghost riders 2 couldnt be filmed...it may look enticing but In the end it's just silly.

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5. 5. crashoverride 03:23 PM 8/23/12

   One of the most underreported story's is how Hollywood's greed has killed off the innovation in movie houses. Theater owners typically don't make a profit on ticket sales until the third or fourth week. Thus the overpriced concession stands and understaffed megaplexes. It's amazing that an entire industry is built around someone else's product that your (theater owner)in charge of presenting yet you don't make a profit from your main purpose (showing movies)
   
   
   Many have tried and few have had success in trying to offer better service, food and meals, Alcoholic drinks, cleaner and more accommodating theaters etc.... Simply because there is no profit incentive for offering a better viewing experience i.e. more butts in seats doesn't translate into higher profits (unless overpriced (highly profitable)concessions are purchased)
   
   If a theater owner was given a more reasonable share i.e an incentive to get more butts in seats just imagine how much more of Hollywood's product would be sold at a higher ticket price (higher margins), free of worry of mass duplication. Again selling the experience not just the bits and bytes.
   
   
   
   Unfortunately Hollywood's greed will be it's demise.

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6. 6. georgebull in reply to pixelm 03:26 PM 8/23/12

   "And where is the logic in asking companies like Netflix and Hulu to innovate and raise capital when other companies (like Megavideo) are building their businesses on stolen raw material?"
   
   The point you miss is that Netflix can't GET the raw material that Megavideo has, because the Studios won't license that material.
   
   What the studio is saying is "Because people are stealing our product, we won't sell you our product."
   
   No one has to raise capital or innovate here. The studios need to sell their product in the same market as the criminals. There IS demand, and there IS supply, but the Studios have chosen not to participate in the market--seemingly to justify their fear of innovation. The problem is that at this point, the "innovation" would be free for them to implement; they're foolishly afraid that if they allow digital distribution, digital copying will run rampant. But it has already happened, and it happened because of the MPAA monopoly interference with the freedom of the market.
   
   I think your problem is that you believe--wrongly--that the "Black Market" isn't part of "the Market". The Market's the Market, and Power is Power, whether it's Corporate or Government.

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7. 7. Clairel 06:32 AM 8/24/12

   4. The window concept.
   
   Bollocks, if you are going to "solve" the problem, at least try to get a grasp on what is really happening.
   
   "DVD; pay-per-view TV; HBO and movie channels; and so on. Each of these "release windows" offers exclusivity to that particular viewing source."
   
   So when the movie is on a movie channel all the retailers are banned from selling the DVD? Really? In what world does this happen? Once the theatrical window is done there are almost always at least 3 windows running side by side, with full availability.
   
   The only way in which windows block others is where the format is almost the same - E.G. Pay TV window will block out Free TV, but have zero impact on DVD, iTunes etc.
   
   As for "a few weeks at a time", if by that you mean "18 years" as for example the typical DVD window or EST window runs for, or "5 years" as most free TV windows run for you are spot on.
   
   Arf!
   
   That's a stunningly poorly researched bit of writing, by someone with a very shaky grasp on the industry. Its akin to the oft quoted Harry Potter studio accounting example where people failed to grasp that box office does not equal revenue.

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8. 8. uberpippi 10:56 AM 8/27/12

   Even if you completely ignore the piracy issue, you're still left with the movie industry desperately clinging to a dying media and losing the potential profit.
   
   For example, I see a preview for the movie "Bridesmaids" - it could be entertaining for a night, but I'm certainly not going to pay $10.50/ticket to see it in a theater, and I'm not going to pay $15.99 to watch it once, and then have to find somewhere to put a DVD that I'm never going to watch again. For all of the DVD's that you own, what percentage of them do you actually ever rewatch? They just take up space.
   
   But I would pay $4 to rent it for a night, make fun of it, and move on. Even if there was no such thing as piracy, they're still never going to make money off me using their traditional means, and if it wasn't available for online rental, I would move on and watch some other nonsense. My choices are limitless.
   
   I can't tell you how many times that I would have paid money to rent a movie if it was available conveniently (through some app on the XBox or PS3 with a convenient checkout process) instead of potentially exposing myself to viruses, waiting for a movie to download and dealing with whatever crappy encoding process the release group used.
   
   The movie industry is charging artificially inflated amounts to make more profit. If piracy didn't exist, the free market would take over, and people would pay for whatever was convenient and a reasonable price. Independent movies have gained huge popularity through availability on Netflix, and you'd just continue to see that increase. Your movie just isn't worth me getting off my couch.

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9. 9. HubertB 11:23 AM 8/30/12

   A number of theater owners could sell more beer to women if they would install more toilets in the ladies' rooms! The theater owners do not think, "How can we move that line from the ladies' rooms to the concession stand?"
   Likewise, Hollywood executives do not consider the needs of a family watching a downloaded film when band practice ends early and a kid must be picked up. The Hollywood executive sends out his chauffeur to pick up the kid. The au pair comforts the child with the scraped knee. The maid has cleared the table so nothing interrupts the start of the movie. The gardner takes care of the tree branch that just fell down. The wife calls a plumber to take care of the leak the dishwasher just developed. He considers it stupid that anyone would ever have a reason to want to have more time to see a movie. His model is fine.

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