Movie Studios Just Don’t Get It, Part IV: Pay More For Movies On USB Drives

Transformers First it was the studios delivering two-hour movies to cell phones, even though consumers weren't and still aren't asking for the service. Then came the studios charging more for a digital download over the physical DVD. That was quickly followed by Sony charging $24.95 for a 24-hour rental and admitting it does not want to upset Walmart and the studios own DVD business.

Now comes word that Kingston, manufacturer of USB drives and SD cards, has teamed up with movie studio Paramount Pictures to release Transformers, Revenge of the Fallen directly on to a 4GB USB stick. The catch? A 4GB USB stick with the movie costs $29.99 through Office Max stores nationwide. Where is the value to the consumer with this offering? The physical DVD costs $17.99 on Amazon and a 4GB Kingston USB stick costs $8.89. So why is does it cost the consumer almost $4 extra to get the movie on a USB stick? Where is the demand in the market for this offering?

Keep in mind, the quality of the movie on the device is not at 1080p and it's only being offered online or at Office Max stores, not exactly the place most folks go when they want to buy a movie. But maybe that's exactly why the studios are doing it this way, since the average person visiting an Office Max store has no idea it's more expensive than it should be.

Paramount and Kingston have announced that they have signed a deal to deliver additional movies on Kingston USB drives and SD cards, so expect to see more of these pointless offerings in the market shortly.

  • http://www.ramprate.com Steve Lerner

    Even better, I can watch it for about $5.00 on-demand in HD on FIOS, instantly, without leaving my house. $29.99 vs $5 ?????

  • Marty P.

    Dan, the studios make your job easy. They keep doing dumb stuff and giving you plenty to write about!

  • http://marcellus.tv preetam mukherjee

    Irrational experimentation in search of meaning, perhaps? :)

  • John McObvious

    Dan the studios actually do understand what they are doing, it is you that is confused. They are simply maximizing their channels, in reality they receive a hefty guarantee just for forking over content for experiments like this.
    Stick to CDN.

  • http://www.BusinessOfVideo.com Dan Rayburn

    Please John, give me a break. What “channel” is being maximized here? You say the studios get it, but don’t say why you think that. You say they get a good pay day for this type of thing, but then call it a “experiment”. Well, which one is it? A real business, or an experiment? If they was such a good “channel” then they would tell us how many of these they sold, which they won’t do. Wonder why.
    When the CEO of Sony says they price digital expensive so as not to make Walmart mad, what more proof do you need? The studios, for the most part, do not get digital, do not want to adopt digital.

  • John McObvious

    Dan,
    Why do the studios “need” to get digital ahead of the business model maturing? Last I checked while Studio revenues were under pressure they are not facing the collapse that we have seen in the music industry. Consumers have still shown the ability to buy DVDs, Blu Ray Discs or pay the premium to see a movie first run in a theater.
    I still fail to understand how you say Studios don’t “get” digital when their distribution arms make money by doing guarantees and rev shares. Have you asked Netflix what they pay to studios? What about Blockbuster? Even for this article what is the guarantee that said company has to pay for content on a USB drive? It is the content that makes these consumer devices valuable more so than the technology and I don’t fault any Studio for being protective given the leverage.
    Finally if you are running a business you tend to not upset your most important buyers. Are you seriously faulting Sony for protecting their Wal-Mart relationship? We are talking about Billions of dollars in EXISTING revenue. Are you asserting that Sony forgo their Wal-Mart relationship to pursue digital distribution that has no proven P&L?

  • http://marcellus.tv preetam mukherjee

    I hear the Kingston drive will allow playback on 5 devices, and allow you to burn the video on to a DVD as well. Sounds like a perfect Pirate Bay set up to me, and you have to go to OfficeMax. Yuck.
    Here’s an alternate, or even complementary experiment:
    Release Transformers online, for $0.99, 5 full playbacks, a pre-roll and an intermission video ad. If you love it (yeah right), buy it for $5 online, unlimited playbacks, no ads.

    @John: I could understand the “content..consumer devices..valuable” argument if you’re talking about Pulp Fiction on the iPod, but Transformers on a 4GB Kingston stick? :) Really?

  • http://www.BusinessOfVideo.com Dan Rayburn

    John, not sure what data you are looking at, but DVD sales are way down and Blu-ray is not growing fast enough to make up for that.
    You ask me, “Are you seriously faulting Sony for protecting their Wal-Mart relationship? Are you asserting that Sony forgo their Wal-Mart relationship to pursue digital distribution that has no proven P&L?”
    Yes, I am faulting Sony and others like them for allowing their Walmart relationship to rule them and keep them from looking at the long-term potential they have with digital. I’m not saying do away with Walmart or DVDs, but they are so scared to do anything substantial that it will affect them in the long run. Everyone is thinking about now, current business. What happen when this market has evolved in five years and the studios are forced to have to change? By then, it can be too late for many of them still clinging to DVDs.