Slate's Explainer: U.S. Apologies, Decades Too Late
ALEX CHADWICK, host:
There are so many ways already to watch movies at home, aside from normal TV. You can rent from a store, or free from the library or get them by mail or buy them, and now there's a new player. Media mogul Rupert Murdoch, who already brings you the Fox empire, wants to put a digital video recorder in your home and fill it with enough high-definition fare to keep you on your couch forever. Edward J. Epstein writes about the economics of Hollywood for our partners at Slate magazine, and he spoke with DAY TO DAY's Madeleine Brand.
MADELEINE BRAND reporting:
So, Edward, what exactly does Rupert Murdoch want to do with these digital video recorders?
EDWARD J. EPSTEIN (Slate): Well, Rupert Murdoch basically wants to deliver movies into the home in a system which is called video-on-demand. Basically, it's doing away with the video rental market, and what he's doing here is taking the satellites and what he's doing is deliver movies into what's called a DVR, which is a TiVo-type device. He already plans to put 20 million into American homes. And once you get those, the films will be delivered into your house and then you will pay to see the film whenever you want to see it, rather than taking a trip to the video store.
BRAND: And you'll be able to choose any movie you want?
EPSTEIN: You'll be able to choose any of the new movies that are released that week. In other words, every week, four or five movies are released.
BRAND: So if the technology exists now, what impediments have been in the way to actually getting this idea through?
EPSTEIN: Movie studios have up to now had an agreement to delay the release of movies that would be downloaded over television for at least six weeks after they're released in the video store. So if people can get them in the video store six weeks earlier, they're not going to watch them when they're released six weeks later even if they're more convenient and come right to their home.
BRAND: And this is an agreement that the studios have with the retailers? Or with the film entities?
EPSTEIN: An informal agreement, yes. Now what I think Rupert Murdoch's planning to do, once he gets these video recorders into the homes, and his satellites are already there, I think he plans to deliver the films into the home the same time they come out in the video store and break that agreement.
BRAND: So he won't have any problem breaking this agreement or getting the studios to break this agreement?
EPSTEIN: Well, he's going to have tremendous problems. The studios will be happy to go along because they'll stand to make much more money doing this because they're a much more efficient system. These stores that now sell most of the DVDs--the main store that sells them is Wal-Mart. And Wal-Mart has said that if there's any studio breaks the 45-day barrier, it's going to have problems getting its DVDs into Wal-Marts. So, basically, it's going to be a direct conflict between the largest retailer in the world, Wal-Mart, and Rupert Murdoch, if he does that. If Murdoch is able to deliver movies into homes at the same time that they're delivered into the video stores, that's the end of the video store rental market, and that means they'll cut out the middleman, the middleman being the stores which take 40 percent, not to mention the manufacturing costs, the warehousing costs, the return costs and all the other costs involved. It's very expensive to distribute a small item like a DVD for rent--you know, to thousands of stores around the country. It's much easier to put it on a satellite or through cable.
BRAND: So is this the end of the DVD?
EPSTEIN: It's the end of retailers carrying rental DVDs.
EPSTEIN: As far as people who want to buy DVDs for their collections, this may also be the end of that but that's a much longer process.
BRAND: So this will spell the end or the demise for Blockbuster, maybe for Netflix, as well?
EPSTEIN: Netflix has its own business model and--but it will certainly be a problem for Netflix because they'll be competing with people who'll be able to get them without getting something, mailing it in and having to mail it back. Of course, Netflix will have a much larger inventory. For people who like to rent an old Woody Allen movie, you're not going to be able to get it through this system.
BRAND: Well, why not make the whole library available through satellite? Why not have these old movies available as well?
EPSTEIN: Murdoch owns satellites. They can only broadcast so much information. And they can only store maybe 10 or 15 movies. So that's the only thing you're gonna have in your home is 10 or 15 movies. Cable companies like Time Warner, when they're delivering over the cable, can deliver hundreds and hundreds of movies. So Murdoch might wind up losing in the long run to cable companies.
BRAND: Opinion and analysis from Edward J. Epstein. He's the author of "The Big Picture: The New Logic of Money and Power in Hollywood," and he writes the Hollywood Economist column for our partners at the online magazine Slate.
Thanks a lot, Edward.
EPSTEIN: Thank you very much, Madeleine.
CHADWICK: And NPR's DAY TO DAY continues.