Studios Still Don’t Get It: Paramount Charging $20 To Stream 10+ Year Old Movies

For all talk from the studios about how much they are "embracing" digital, they really aren't. Consumers are asking for more choices when it comes to being able to get first-run content in digital form, for multiple devices, yet the studios continue to launch services that are limited in playback, with pricing that's too expensive.

The latest example comes from Paramount which has just started offering the streaming of films from the cloud, using the UltraViolet platform, and are charging between $22.99 for HD and $12.99 for SD. Support for Android and Windows Phone are not possible and while it works on iOS devices, HD quality isn't possible, only SD. It also doesn't work on set-top boxes and on average, the DVD of these movies they are selling cost 2/3 the price of digital. On the ParamountMovies.com website, a recent movie from 2010 costs $22.99 to buy rent in HD, yet a movie that is thirteen years old is only $3 cheaper and still costs $19.99.

What studio executive thinks consumers are going to pay $22.99 to stream a movie when we can buy the DVD for $7 or rent it for less than $2? The economics don't make sense for how the studios price digital content and the fact they are keeping Netflix and others from even renting physical discs, only so they sell more DVDs, clearly shows where their true interest lies – and it's not in digital. At some point, the studios are going to get burned just like the music industry did and while they spend a lot of time complaining about piracy, they need to wake up and realize that consumers are demanding digital content, for a fair price. So far, the studios are not willing to give it to them and over time, are going to see their business models crumble as of a result. They own arrogance is going to be the death of their legacy business.

  • jerry

    link or name of movie?
    i see the prices you mention to BUY the movie, rentals are 2.99 and 3.99

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

    Thanks for catching that, meant buy. I have corrected that.

  • Greg Rudebaugh

    This is why I left Netflix. When I pay for the convenience of watching a movie by stream, I don’t care to watch pre 1995 films. On the other hand if I try to find a classic (pre 1965) I have the same problem. It’s not available.

  • http://applebox.com.au Simon

    And the names of the movies are?

  • http://ieba.com Anthony Burokas

    Absofriggin lutely.
    The studios have made their money off these old titles in the theatres, then off TV, then internationally, then from VHS sales, then from DVD sales and now they want to get millions more for each title _again?_
    Streaming content has comparatively no distribution costs compared to all the other delivery methods. Rentals priced at under $3 (regardless of quality) and purchases commensurate with bargain DVD bins ($5 or so) are apropriate.
    Also, there has to be a very large, multi-platform, multi-vendor system that allows purchases of “cloud” media to be assured that one company can’t change their minds, or go bankrupt and take their purchased media with them. We want the security of owning physical media (I bought it, I own it, forever) with the convenience of play anywhere digital media.
    Amazon does a good job here, but still they are a single-source company.
    The Ultra-violet platform has appeal, but the user has no way that is independent of the store where the media is purchased, to manage their media.
    And unlike physical meida, there’s no process (like for digital books) to “loan” a title to a friend, or even sell something we own. Those are two clear downsides to digital media and online stores (including app stores) that still need to be addressed.

  • http://mkvXstream.blogspot.com Robert Taylor

    This is so typical of large corporations. It is hard for them to change as they are so entrenched in their old way of thinking and are unwilling to come to the realization their old business model is quickly becoming extinct. Unfortunately until they come to the realization that their old way no longer works and come up with something radically different, as RedBox so cleverly has, they will continue to see their profits shrink year after year.

  • CL

    LOL. Redbox sells movies. Paramount is selling movies? How is that “Radically Different?”

  • http://www.wix.com/logossolaris/pictures Roy Stewart

    I know you mean well and you certainly know Streaming Media inside and out, but you don’t know how the Studios work. They have perfected their distribution strategy for years, many years.
    Digital Download of movies is cool and works well, but you must know that the revenue derived from such be it Netflix, iTunes, Redbox, whomever, whatever, ONLY accounts for a very small percentage of revenue obtained from the traditional markets of Theatrical Release followed by Hotel/Motel PPV followed by DVD distribution windows, licensing to Pay TV, TV, etc.
    The windows are in place to augment exclusivity of content and repeat consumption. That is why, most likely you will NOT see first run initial release movies available for digital download or streaming concurrently with the movie release, or if so, there will be a high premium for said content. Others tried simultaneous release (Theatrical, DVD, Cable) like HD NET who owns their own very small chain of theaters as well as their cable network, but it failed. HD Net could not scale simply as they don’t have the resources to get a movie of their own into the major theater chains aside from their own. 150 theaters doesn’t even make a dent.
    Many theaters will boycott the movie if they know that the movie is planned to be released online during the theatrical window. What will work is that digital download or streaming of movies online will be included and is included during the window of about 30 days after the DVD release.
    The KEY to understand how the Studios work is to understand their POV, not yours. An average movie cost $70 million to produce. A action/adventure movie with special effects can be $100 to $200 million or more. Usually they will also spend an equal amount of funds in marketing and advertising to make that movie BECOME an overnight BRAND on a weekend!
    So, “they” have to maximize their return keeping in mind that at Box Office Gross that we all hear about, half of that is retained by the theaters. “Film Rental” (what the Studio obtains from the theaters) then is subject to a distribution fee (35%) then the Studio reimburses itself for the print and ad spend, then cost of the movie itself, interest charges, overhead, then we arrive at NET which is split with Producer and Point participants.
    The Studios wish to or better said, have to generate as much revenue from the various markets that exist for their movies (Release Windows with the focus on multiple consumption), and rightfully so, once you know the inner mechanics. I can assure you what occurred to the music industry will NOT happen to the motion picture industry.
    In terms of pricing, they call the shots, it all comes down to how valuable is it for YOU to own the movie or watch it and during which window. Do you wish to see it in 3D with a shared audience? 2D is ok? At home in your home theater? On an iPad? All of the above? Then, you must be a fan.

  • Mike

    Someone convinced them that Ultraviolet was the wave of the future. Is Akamai delivering the stream too? So they are paying premium over premium. I bet they are paying a licensing fee to themselves as well.
    They could do so much better if they offered up an all you can eat service for $20 a month. Even if they only offered their back catalog and nothing newer than say5 years old, they could still turn a buck.
    I see this one going down in flames in about 11 months. How can this compete with Apple, Vudu, Epix, and HBO GO?

  • John Labs

    Oh come on… They don’t even have Raiders of the lost Ark on there. But they do have Beverly Hills Cop III

  • bathswana

    DECE studios have been trying to sign up retailers for the last 6 months. They have no intention to sell movies at deep discounts direct to consumers.
    They are merely showing retailers how it works, and shaking out the bugs, practically begging them to climb on the UV bandwagon.
    If Paramount started selling movies direct to the public in high-def for $12, then there would be a huge cause for alarm, because they would pose a threat to retailers.
    Eventually studios may sell to consumers, but for now, retailers are an important “one-stop shop” aggregator for consumers.