Sorry I haven’t been able to put up any new content lately but big things are afoot. First, as you may have noticed, is a brand new website which will be a hub for our blogs, multimedia presentations and information about upcoming events that Bill will be speaking at. Secondly, much bigger and much more afoot-er is the 2014 Value Stream Management Conference that’s coming up in Chicago in November (information and registration can be found here). Make sure to register soon as space is becoming limited quickly.
Recently, Netflix announced that it has entered into a deal with Adam Sandler to produce four movies explicitly for the digital content provider. Whether Adam Sandler is the best candidate to participate in such an experiment is debatable, but the idea is solid. With original series like House of Cards and Orange is the New Black, Netflix has shown that its capable of providing quality content while bypassing the traditional outlets of cable TV and movie theaters, and even DVDs for that matter. And they do it in two ways that their customers really appreciate, cheap and on demand.
For nearly a century, movie theaters provided an experience that customers appreciated. A night out to see the newest film for a relatively cheap price was considered money well spent by most people. But recently people seem to be less and less satisfied with the proposition. The average ticket price is actually down a bit from last year to about $8 (a lot of factors go into that figure like the number of movies released that are geared towards IMAX and 3D as well as what time of day you go to the theater).Although matinee prices might be around $8 per ticket, taking a date to a movie on Friday night will cost twice that, and twice more still if you’re a gentleman! And once you get into the theater, the concession stand is where you’ll really start paying. Right now, movie studios get around 70% of the revenue from ticket sale so theaters are pretty much forced to make their money with refreshments. After spending so much to get into the movie theater viewers are expecting to get the quality of content that they paid for.
However, movie goers are becoming increasingly disappointed with the quality of movies being released by the big studios as well. How many lame remakes or comic book hero movies are people willing to sit through? Steven Spielberg and George Lucas have predicted that Hollywood is only a few major blockbuster flops away from collapse and that film students who want to tell creative story lines should pursue work making mini-series for the small screen, overwhelming viewership and 22 Emmy nominations for a show like House of Cards gives this argument backbone. They see Hollywood investing in fewer movies that stay in theaters longer while the majority of content will be available on “internet television” where it can reach a niche market.
Netflix is driving a stake into the heart of the old way of doing things in the entertainment business. For roughly the price of one matinee movie ticket, viewers can get an entire month’s subscription to Netflix and watch as many movies or TV episodes as they like. There is resistance of course, particularly from theater operators. A spokesperson for Regal Cinemas, which operates nearly 600 theaters across the country, said that they, “will not participate in an experiment where you can see the same product on screens varying from three stories tall to three inches wide on a smartphone,” and they, “believe the choice for truly enjoying a magnificent movie is clear”. There may be value in going to a theater to watch a movie but with higher prices and lower content quality, movie theaters are losing their value added status. And in the internet age, Netflix has already tapped into a formula that provides value to their customers, namely low prices and an on demand distribution model. By producing their own quality content, Netflix is just adding one more nail to the status quos’ coffin.