Cramer on the DVD market, NetFlix

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Blade_Jones

Anyone catch Cramer on Mad Money (3 days ago) talking about the current DVD market? Basically he said that in this recession consumers do not want to pay $15 for a new DVD unless it's something classic (such as a Disney movie that the kids will watch over and over). He said that NetFlix' stock has been going up because people want to rent.

As a filmmaker I think that filmmakers need to lower their prices. I believe that anything over $10 is too pricey. If it's an older title then not more than $8.

I think NetFlix is a rip off. They pay a 1 time wholesale price for your DVD and then rent it as many times as they can. They pay NO royalties. Sure they may order multiple copies of your DVD, but when divided by how many people rent your DVD, consumers may ultimately be only paying a buck or less to watch your movie. If only 1 out of 8 WOULD BE RENTERS buy your DVD then you break even. I don't know how many people rent the average NetFlix DVD during the "lifetime" of a NetFlix DVD. Does anybody know? I'm guessing at least 10. That's 80 cents per DVD (assuming an $8 wholesale price). Weak. I'm guessing that MORE than 10% of would-be renters will buy a DVD if they can't find it on NetFlix.

There's also a group of consumers out there that will wait for a movie to be available as a rental. If it NEVER becomes available for rent then some of these people are gonna eventually buy it.

Some people argue that it's "promotion". These are the same people that argue that PirateBay piracy is "promotion". If "giving your stuff away" is promotion then Amazon.com would give way more than just 30 second clips of songs.
 
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I have mixed feelings about Netflix. I think they're good guys because they carry everything. Frankly, it gives filmmakers an opportunity to be seen that they otherwise wouldn't have. Some of the movies I've rented look as if they used a VHS camcorder to film them.

On the other hand, I plan to sell to Netflix at the very end of my next distribution campaign. I believe VOD is the way to go especially for indies and Netflix diminishes other markets.

By the way, does anyone know how the Netflix VOD works? Do they pay royalties?
 
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It's an opportunity to be seen, but NetFlix is laughing all the way to the bank at the filmmaker's expense. Since November NetFlix stock has DOUBLED while the rest of the market is down 10% since November.

If you want to be seen for nothing then you can always post your movie for free on YouTube. It will get seen by a WHOLE lot more people than NetFlix. Maybe post 1/2 of your movie on YouTube, then ask for people to support it if they liked what they viewed by buying the full movie from your home website.

How does NetFlix VOD work? Do they pay royalties? I'm guessing that since it's "copies" they are renting (selling) then they have to pay royalties.

The vast majority of music sales are on Amazon and iTunes. So I'm sure that the future of VOD will be Amazon and iTunes, and perhaps NetFlix. I just wish iTunes and Amazon would get up to speed with VOD for indie filmmakers.

I read that Blockbuster is in danger of going out of business. I hope they do. This will be good for indie filmmakers who can't find distribution, or who have distributors who can't get their DVD into many stores. Once consumers are doing all of their buying online it will be a more level playing field for ignored indie filmmakers.
 
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Very few distributors offer a per unit royality.

I don’t know of any rental place that offers per unit, per rental
royality. Blockbuster doesn’t, Hollywood video doesn’t. 20/20
doesn’t. The few remaining Mon and Pop stores don’t.

I look at 20 to 80 units sold as cash in my pocket. I’m thrilled
to sell to NetFlix. And I don’t care about “being seen” - I want
to make money.

A documentary maker I work with has sold his DVD to libraries
across the country. They don’t pay a per unit, per rental
royality but he has made over $30,000 in sales. And gets no
royalties.

VOD seems interesting. Does the filmmaker gets paid each time
somone watches? If the marketing is good enough then several
hundred paid views can be reached. If the marketing isn’t - or
the movie is a difficult sell - then the paid views aren’t so
good.

How much is the typical VOD fee?

I see on VOD.com that the “pay as you go” price is .15 per minute.
You can buy plans that get it down to about .10 per minute. So
about $9 to $11 for a typical feature.

iTunes rents movies for about $4 - some less, some more.

Do these places offer a per unit, per rental royality?

So what rental or VOD places offer a per unit or per view
royality?
 
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$770 can actually be a good deal if you get substantial sales from iTunes. iTunes isn't going to take a single film so you are going to need to go through an aggregator or some other distributor who is going to take a hefty percentage (25 to 50%) anyway. There's also the chance your distributor may have to go through Tunecore also and pay the $770 which will be charged against your film.

Considering you are going to pay at least a thousand dollars to get professional DVDs created plus the hassle and cost of shipping. VOD is the way to go.
 
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I checked out FlickRocket. They don’t distribute or sell movies.
At least I couldn’t find a library. They seem to be an authoring
and content storage company. You pay them a fee and you can sell
DVD downloads from your own website.

And CinemaNow is a lot like iTunes. Top studio movies for rent for
about $4. I browsed their library. In order to get your movie in
their library you need to have distribution - like NetFlix.

Using either of those services doesn’t seem to offer more money to
the filmmaker than selling 20 to 80 units to NetFlix.

But bottom line - I’m not suggesting that you should sell to
NetFlix if you think it’s a ripoff.
 
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What do they need $770 for? An ego tax? The Internet is supposed to represent democratization of distribution, but at this point it looks like dictatorship. I would never buy into $770. I'm sure Amazon will undercut that price when they get set up for downloads.

Flick Rocket sells your movie online. You upload to their server using FlickRocket software, people pay and download, then FlickRocket pays you a percentage.

FilmBaby is one of CinemaNow's distributors.
 
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Blade_Jones said:
Flick Rocket sells your movie online. You upload to their server using FlickRocket software, people pay and download, then FlickRocket pays you a percentage.
Click to expand...



that's what I found out when I called. You put their link to your movie on
your website. You pay them an up front fee for the storage on their server.
When someone downloads your movie FlickRocket handles the transaction
and gives you a percentage quarterly.

If you're selling your movie for $10, FlickRocket pays you 25%. If you can
drive enough people to your site and get 100 downloads you make $250.

I'm not a marketing company. I don't have time to drive 10,000 people to
my web site and hope the higher end of the buying average is reached. I
make movies and let distribuors handle that aspect.

But there is no argument here, Blade. I'm not in any way suggesting you use
NetFlix or traditional distribution. VOD works for you and you make money
that way. I prefer to have a distributor even though I don't get a percentage
on each unit sold. They handle the marketing better than I could. And they
sell more units than I believe I could without them.

How many indie movies do you buy using VOD?
 
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FlickRocket also has a structure whereby you pay no upfront fee, but give them a higher percentage. In 2008 music downloads were only 15% of all music sales, and the vast majority of music downloads are only on iTunes and Amazon. Not nearly as many people are downloading movies at this point in time. The average consumer cant' deal with it. It takes too long to download and people are confused by the process of creating a DVD from a download and confused by figuring out how they can watch it on their TV. This is one more reason to shy away from shelling out $770 to get your movie on iTunes. Maybe in a few years downloading of movies will become more popular. When it does, expect most of the downloads to occur via just a few sites like Amazon, iTunes, and maybe NetFlix.

I sure as hell don't buy VOD.
 
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