Tesco, the leading grocery retailer in the UK, is just about to offer what we think is the dumbest online movie service ever. It is very similar to one that failed at Wal-Mart in the US a few years ago, relying on the consumer getting their digital rights through the act of buying a DVD.
The whole idea of shifting to an online experience is so that you don’t have to go out into the cold and go buy the DVD, and you don’t have to wait. Netflix in the US has got around this by offering any subscriber to a high enough level of its online DVD rental service, the chance to watch free online movies, and that has been a huge success.
The idea is to start out showing DVD quality movies on an online service at your PC using Microsoft’s Silverlight. The dumb business model is clearly not the fault of the technology or its provider, and we’ve seen streamed movies in Silverlight at last year’s IBC, so we know it works. The likely culprit are the UK arms of the US studios which have pushed this model for about five years ‘ if you buy the DVD you can have an online version.
Tesco has taken this mission to heart and will offer all the extra that you get on a DVD at first, such as the behind the scenes footage and the director’s cut etc’, and then try to differentiate by adding more interactive sessions later, such as auto-updated trailers, bonus content, movie viewing parties with online chat, MP3s and movie theme ring tones, as well as networked games.
LoveFiLM tried to offer online films to its subscribers in the UK, mostly for free, like Netflix to existing paying customers, in order to improve churn. Interestingly LoveFiLM is the online DVD supplier to Tesco and could have told it how badly this system works.
Dumb, dumb, dumb. This is the studios burying their collective head in the sand and saying ‘let’s support DVD sales with online’ and try to preserve the status quo. By doing that they promote piracy. One thing we have learned over the last 9 years is that trying to keep things as they were in digital media, is a recipe for disaster and the US studios will go the way of the dinosaur (and the record label) if they do not change their attitude. They need to stop thinking about how to keep their declining DVD revenues, but how to change their business to online digital as fast as possible, before it ALL goes away.
The online world is additional, come right in, the water is fine. People that watch online films go to a lot of trouble to buy the DVD later if they (really) liked the film. Otherwise they just pirate it or not bother and watch something else.
There are no prices given for the new service which will start some time this autumn, but who cares anyway, it will fail.
We say that it’s not the technology’s fault, but Microsoft must come across this kind of thing all the time and would do its customers some good if it spoke up on their behalf. If YouTube (see separate story) can convince studios in the US to allow online movie rentals, given its track record of content abuse, then why wouldn’t Microsoft get a far better hearing?
At the moment Tesco is calling this a ‘download’ so we’re not even sure that a streaming service exists. By limiting the film to a PC and by making the customer wait for the download (including what that does to your broadband data cap), this makes the service even less attractive. At least Tesco should be marketing a cheap way to shift this PC held copy to your TV set. This is a 2004 idea masquerading as innovation. Must do better.