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May 13, 2010
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The home video store chain HOLLYWOOD VIDEO just went under. The death toll must be ringing for BLOCKBUSTER VIDEO soon. This is not good news for the independent filmmaker. The business model of the video store has been decimated by the mail order DVD service like NETFLIX and video on demand services, also NETFLIX and AMAZON.COM. What that means to the indie filmmaker is that one of our biggest revenue sources has just faded away into dust.



In the late 1970’s VHS (and the Sony Betamax format) started to bloom. It was close to $1,000 for a player (not even recorder) and to buy a tape of a Hollywood movie title was $79-$100. Within a few years, a crop of home video rental stores opened on every street corner, especially in small towns.

As years went on, VHS decks dropped in price to under $30 each. VHS saturated the market until 98% of the homes in the U.S. had a VHS deck and more than 75% had more than one.

The studios and the home video market had a great deal for almost 20 years. A movie gets released initially for $100-$120 per tape, but it’s not made available to retailers just yet; only to home video stores for rental for about 6 months exclusively. After that, the tapes are released to retailers for $15-$20 and also to cable TV.

There were thousands of video rental stores in the 1980’s and 1990’s. Because of the $100 per tape cost of the Hollywood big titles, they would need to fill their shelves, so they also needed more new content on shelves when the big movies were rented out. This created the DIRECT TO VIDEO business. Movie that were made, never intended for movie theaters, just filling shelves at video stores and also might wind up on Cinemax at 1:00AM.

In the early 1990’s the “indie film” boom started to happen. With SEX LIES AND VIDEOTAPE, RESERVOIR DOGS, EL MARIACHI, CLERKS, SLACKER, BROTHERS MCMULLEN, and all the movies that created this new market for finding unknown talent, there was a new influx of material on the market. A whole new aisle appeared with a new type of movie that was floated by the need for content at stores and press to hype these movies. It was making so much money for these small businesses; it was doomed to be incorporated.



Companies like BLOCKBUSTER, WEST COAST VIDEO, and HOLLYWOOD VIDEO started to gobble up the profitability of the mom & pop independent companies. Similarly, megastores like Wal-Mart and Best Buy started to specialize in movies.

Then DVD entered the scene. In order to crack the VHS nut, DVD’s started the day and date release and pricing. When the movie was first released on VHS, there was no exclusivity for DVD, so the lower priced retail DVD was put out at the same time as the rental. Mathematically, if you watched the movie more than twice, it was the same price to rent it twice as it was to buy the movie. Rental costs went up, retail prices went down. This started the demise of the home video market.

Enter NETFLIX and the mail order movie rentals. You have one small hub covering a large area, with one bulk price for the rentals. Also, AMAZON.COM is the retail version of this. They don’t need to have a lot of copies in stock of no-name movies, and because there is less demand for those titles, they need even less copies than the retail rental stores.

This is how independent filmmakers got boned. In the old business model, we could sell 1 single copy of our movie to tens of thousands of stores and make a profit. Now with Netflix, Amazon.com, and even Best Buy and Wal-Mart going to online retailing, they only buy literally tens of copies of a movie without name stars or a theatrical release. They have made the system more efficient and put a lot of people out of jobs and films without an audience.

The current home video market as it stands in 2010 is simply an extension of big business Hollywood movies. Why spare the shelf space with 10 alternate titles when you could have 10 more copies of the latest Hannah Montana movie? The reality is, they make more money this new way. It’s no different than the megaplex theaters. They have 30 screens, all the more to show the latest comic book adaptation on more screens, not offer more choices. It makes them more money, so why change it?

Sure, we can sell our own movies on AMAZON.COM or stream them as pay per view on YOUTUBE now, but without the big corporate marketing machine, unless the girls are very pretty and wearing very little, the profit numbers are still no where near the industry as it was in the 1980’s and 1990’s.

This is all going to spin the popular culture cycle back to 1994 again when the public gets sick of regurgitated swill and TV show remakes. Everything is cyclical and the desire to see something alternative and the profitability of the independent film will return. But when?

It gives me hope to see something like THE RAVEN. A posh, amazing looking movie that I found more entertaining (and technically better in many ways) than the last 3 seasons of HEROES on NBC, with better effects work too. Done for under $5,000 to boot. What the studios and networks are churning out and what an indie can create has narrowed.



I have no idea what the next big independent surge will be. I don’t know what the new business model will be. All I know is that the old ones are dead in the water and have no chance at survival.
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