Sony boss Michael Lynton complains that rampant piracy and legal commercial P2P has put the country on the verge of “no longer being a viable home entertainment market.”
According to Michael Lynton, chairman of Sony Pictures Entertainment, piracy is so rampant in Spain that Hollywood studios are considering discontinuing the sale of DVDs there altogether.
“People are downloading movies in such large quantities that Spain is on the brink of no longer being a viable home entertainment market for us,” he told the LA Times.
In the last few years illegal movie downloads have soared from 132 million to 350 million while DVD sales have declined by some 30%. This means Hollywood could soon find itself in a situation like South Korea where they simply gave up and left.
“It is very sad and very shameful for Spain that we should reach the stage where companies are thinking of leaving,” said Octavio Dapena of the Spanish film rights association Egeda. “I hope it doesn’t happen and that Spain reacts in time.”
Spain faces the rare juxtaposition where the courts there have ruled on numerous occasions that individual file-sharing is legal so long as there is “no talk of money or any other compensation beyond the sharing of material available among various users.”
To do what it can to prevent people from profiting from copyright infringement the govt recently passed legislation that will allow a judge with the National Audience, the country’s federal court, to close or block websites accused of facilitating copyright infringement within 4 days as compared to the current year-long process.
The real problem in all of this is that studios bosses like Lynton don’t seem capable of monetizing the future of content distribution. Lynton, if you recall, is the same person who said last year that he “doesn’t see anything good having come from the Internet” so it’s not surprising that he hasn’t developed a way to formulate an effective online distribution model to compete with illegal alternatives like file-sharing and streaming.
In fact, he said he’s “worried” about the spread of faster broadband connections, even in the US.
The only words of wisdom seem to come from an unlikely source, Bob Pisano, the MPAA’s interim chief executive.
“We need to get a handle on it (piracy) if we don’t want to end up like the music industry, where their business model didn’t keep pace with the realities of the new marketplace,” he said.
Retooling the business model is the key to competing in Spain. All businesses that don’t heed the marketplace will fail unless artificially supported by govt intervention. If Hollywood wants to maintain a viable home entertainment market in the country then it ought to focus on giving consumers what they want, which seems to be online content distribution.
Delivering a digital product is far cheaper than producing and a physical one, and so it could even afford to drop the price dramatically and make the product more enticing. Spaniards may not be willing to pay $10 for a physical DVD, but surely they’re willing to pay $1 to stream or $2-3 to download it at home or on the go.
I’m no fancy movie boss, but even I could figure this one out.
Stay tuned.
It would appear that the only content industries to realize and adopt are the publishing industry and video game industry, both of which have develop decent business models around online distribution.
In the publishing industry we have seen the development and adoption of Ebooks and Ebook readers. Due to the lack of physical copies, the cost of an Ebook is usually significantly cheaper, and many out of print books are free.
In the Video game sector, we have seen Steam, Direct 2 Drive, Microsoft Marketplace, and all 3 consoles have some form of online distribution. With these distribution channels the industry has created new revenue streams with smaller, cheaper projects, priced accordingly. At the same time the larger projects are often sold at a 10$ discount, with the only exception being companies reluctant to drop prices due to retail complaints.
Personally I was downloading 50% of my video games prior to Steam. With the deals that are given on steam, in the last year I bought about 80 video games. In terms of dollars spent, I spent about 200$ more on video games than I did in past years.
The point is, people will make purchases, but the industries need to cater to different price points. A student living on a $5 000 a year budget, can’t afford the same priced music as someone making $100 000. There is a reason why piracy is mainly teens and young adults, the price isn’t reasonable.
This guy earns his $20 million a year for figuring this out. It only makes sense that as music has gotten away from fragile, easily scratchable and bulky CDs to digital. Just as music got to CDs about 10 years before video went to DVDs, music went to being digital about 10 years before movies, so they better be prepared.
Spain will only benefit if Hollywood stops selling in here. And despite the talks they will loose too much shall they go ahead with such solution. Selling a film for more than 5 Euro is a crime anyway – so Sony may want to reconsider its price strategy first.
Exactly. Its not a piracy issue, but rather a PRICING issue. If people are streaming it or downloading it for free anyways, why not offer a service for $1 streaming and $3 downloading? At least they’d make some money. Giving up seems to be poor logic on the part of a movie studio chief executive.