Films accessible down the phone line are the future of entertainment
If you can see past the resignations, the allegations and recriminations (and what fun they were), something else quite important happened last week. Amazon bought Lovefilm, the DVD subscription rental service that could shake up how we consume media far more profoundly than the exit of one particularly well-known individual from Downing Street. Because Lovefilm doesn't just want to send out DVDs in the post in return for a monthly subscription; it wants to make them accessible down the phone line, which is ? of course ? the future of all entertainment.
Lovefilm's problem, though, is that it is a relatively small company (with 1.6 million customers in Europe) competing in a jungle where larger creatures knock about. Elsewhere there lurk the Hollywood studios, Paramount to Universal and so on ? and BSkyB, the satellite broadcaster that every amateur stock picker knows is 39.1% owned by Rupert Murdoch's News Corporation. And after one long scroll down Sky film channels, it won't surprise any film buff to be told that Sky has contracts with all six of the major studios, which is what allows it to offer such a comprehensive popcorn-at-home service to its customers.
So far, so fair enough. But there's more. Sky's deal with the studios gives it control of both the right to show films on its various Movies channels ? and of any on-demand rights. The contractual arrangements are such that others, ranging from BT and Virgin Media to Lovefilm, have yet to be able to break in, which helps entrench Sky's position as the number one player in pay television, video on demand and general entertainment in the living room. Meanwhile, the studios like Sky because it is a closed system that has proved to be hack-proof ? once you start to get into streaming all sorts of piracy can follow.
Rivals cry foul, but lack clout with the studios. When Virgin Media allowed customers to both download and get a DVD of Clash of the Titans three days before it hit the shops in the summer, the company thought it was getting somewhere. But latterly studio enthusiasm for this kind of release has dampened again ? while the whole vexed subject of films on demand has now been turned over to the Competition Commission for examination.
Meanwhile, over in the United States, Netflix ? which provides a streaming movie on demand service ? is offering a real challenge to the cable operators. It has racked up nearly 20 million customers, almost all in the US, grown at over 31% in the last quarter and has a market value of $9.7bn. And while Netflix is not (yet) in the UK, Lovefilm is. Which is where Amazon, and the hope that last week's �200m takeover brings, comes in.
Many people cheerfully buy Sky because they like the hundreds of channels of choice that it offers, even if they spend their time staring at a mixture of BBC1, Sky Sports, the latest joy offered by high definition, plus the odd late night show on E4 or Living TV. But not everybody is like that, which is what the success of Netflix in the States shows ? some people just want to spend their nights with the latest releases alone and get their telly the way they want it.
Fortunately, with Amazon striding into the picture (and, if necessary, the Competition Commission willing), Lovefilm has a better chance than most of doing the right kind of deals with the Hollywood studios ? who will be mindful of maintaining a good relationship with "Earth's biggest selection", or whatever Amazon calls itself.
With luck, the end result will be more choice for the hapless Briton. And we will be able to spend happy evenings watching movies on our laptops in the comfort of the bedroom, or wherever the computer happens to have ended up this time.
Source: http://www.guardian.co.uk/media/2011/jan/24/amazon-lovefilm-deal-films
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