By SARAH MCBRIDE, JESSICA E. VASCELLARO and SAM SCHECHNER
Google Inc.'s YouTube is in discussions with major movie studios about streaming movies on a rental basis, a test of whether the online video giant can persuade its millions of users to pay for premium content. For Hollywood, the move could represent a bold attempt to offset its dwindling DVD sales with online revenue.
YouTube is talking to Lions Gate Entertainment Corp., Sony Corp., Metro-Goldwyn-Mayer Inc. and Time Warner Inc.'s Warner Bros. about charging for new titles on the existing YouTube site. In some cases, these titles might be available on the site on the same day that they come out on DVD.
Some studios already make full-length movies available on YouTube free, though they tend to be older, lesser-known films. It is unclear to what extent older movies or television shows will be a part of the new agreements.
While details vary from studio to studio, generally speaking the agreements would allow consumers to stream movies on a rental basis for a fee. However, in some cases, the movies could be available in way that they have been previously -- free, with advertising.
Negotiations are continuing and there are no guarantees the deals will be struck. Many details remain in flux, including whether users will eventually be able to download movies. People familiar with the matter say that new movie rentals are likely to be around $3.99, the price Apple Inc.'s iTunes Store charges for new movie rentals. The companies hope to keep pricing on par with what consumers pay for video-on-demand for new titles, these people say.
In a statement, a YouTube spokesman said the company is always working to expand on "its great relationships with movie studios and on the selection and types of videos we offer our community."
The talks are a sign of how YouTube is emerging as a competitor to a broad spectrum of entertainment outlets, including Blockbuster Inc. and Netflix Inc. as well as iTunes and Amazon.com Inc. The Hulu LLC joint venture and Sony's Crackle allow users to watch full-length movies free, but don't generally include new releases. Hulu is a joint venture of General Electric Co.'s NBC Universal, News Corp. and Walt Disney Co.
YouTube began as a place for scrappy, home-grown videos, but it has become increasingly aggressive in striking deals to host television shows, movies and other professional content as a way to draw in advertisers and viewers. But movie studios and TV networks won't give up their most popular content for a share of advertising, which they complain isn't sufficient. The negotiations with the studios are part of an effort to open up new revenue streams by charging users themselves.
Hollywood has also been eager to distribute more of its films online -- as long as it can collect a reasonable fee. Though many studios now sell and rent movies online through services such as iTunes and Amazon.com, that has yet to produce meaningful revenue. By cutting a deal with YouTube, which had nearly 428 million global visitors in June, according to comScore, it can potentially reach a much wider audience.
Studios have been pursuing these kinds of deals with renewed urgency, as revenue from DVD sales has eroded more quickly than they had anticipated. Adams Media Research says studio revenue from DVD sales should fall by about $850 million this year to $12.9 billion.
However, YouTube users aren't accustomed to opening their wallets to watch videos. And the full-length movies that already exist on the service -- ranging from classics such as the 1940 "His Girl Friday" to more recent movies like the 1999 horror flick "House on Haunted Hill" -- have drawn a modest number of views compared to content like comedy clips and music videos. Many consumers balk at watching full-length films on a computer screen.
You Tube and the studios are still hashing out how to divide revenue from the new arrangement. For deals that involve advertising, YouTube is likely to give partners the majority of the revenue, as it has done with other partners in the past. Some deals may also guarantee the studio a minimum fee per title viewed, in some cases just under $3, according to people familiar with the matter.
YouTube is pressing studios to allow the movies to be streamed on mobile devices, but some of the studios are resisting, even though that is currently allowed under other online rental services such as iTunes.
Under current plans, 10,000 Google employees will test the service for a period of three months, people familiar with the matter said. The trial was supposed to start at the beginning of September, but was pushed back as studio negotiations dragged on.
The Motion Picture Association of America released a sharply stripped down annual snapshot of the film industry on Tuesday, abandoning its decades-long practice of compiling information about movie production and marketing costs. The organization’s “state of the business” report outlined routine box office and attendance statistics, but omitted the most heavily scrutinized section of the annual briefing: costs and whether they have gone up or down. The reports are typically over 20 pages in length and contain detailed (and rare) statistics on spending by the major studios and their specialty divisions.
Dan Glickman, the organization’s chief executive, said he made the decision to scrap the financial component because it has become too complex to gather the data. “There is nothing conspiratorial about this,” he said in an interview. “We don’t have the numbers. We didn’t do them. I’ve been concerned about the validity of those numbers for years”
Studios are notorious for keeping their financial information private – or generously rounding the numbers up or down – and the M.P.A.A.’s accounting has long been considered squishy given the difficulty in gathering such granular information across the globe. But moviedom typically pays close attention to the report because there are so few official sources of information about the industry.
To the exasperation of some studio executives, last year’s statistics depicted a sharp rise in spending by specialty labels, which make and distribute films intended for the annual awards races and others aimed at genres like horror. Such divisions’ investment in production rose 6 percent to an average $42.9 million per movie in 2007, while marketing costs jumped 44 percent to $25.7 million.
Mr. Glickman used a speech at ShoWest, a convention for movie theater owners taking place here, to note that entertainment has emerged as one of the country’s few major growth businesses. At a time when most industries are suffering harsh retrenchments, Hollywood is churning out one of the few products that people are still lining up to buy.
“It’s nothing to apologize for,” Mr. Glickman told ShoWest attendees Tuesday morning – a comment that appeared designed to debunk recent articles in the trade press that said he was reluctant to publicly tout a strong box office for fear of further hurting the industry’s lobbying efforts in Washington.
This is very cool. Recently saw a blog sharing the true story of making the film Dream Awake. Check out the below the lessons learned through the process.
Looking forward and backward at the same time ...
Guess it's that time of year once again, resolutions and all that? I'll certainly toss out a few here, but more importantly I'd also like to throw out what I'd do different when I shoot my next film. In other words, what lessons did I truly learn from this one? Now some of us might call this listing our regrets, but I prefer taking that in a more positive stride. I mean, aren't we all here to learn, life being quite a demanding school and all that? ...
Lessons Learned (I'm sure there are more)
1) Hire the 1st AD sooner -- Scheduling a low budget indie and then logistically pulling it off is paramount in the low budget realm. A good 1st AD is essential to making that happen. We had him, but he came aboard awful late in prep. That did handcuff us some, but it wasn't deadly. However, next time that will be higher on my priority list ...
2) Hire an editor for the shoot -- I now see the logic of that. Having someone doing a rough cut when we were shooting certainly would have helped, not only to see what we had but to insure that we go after what we didn't ...
3) Hire a publicist before, during and after the shoot -- Is there such a thing as too much publicity? For indies like us I doubt it, but when it's very minimal you're starting out of the gate behind the curve. We didn't hit this one right ...
4) Hire someone to really control the budget -- Since we didn't do #1 on cue, that put us behind the momentum of the shoot in keeping track of cash, cash flow and cash reserves. Having someone experienced and aware of this should help close that gap ...
5) Be more competent -- This one I direct directly at me, being the director and all, and everything else I was, or still am. As a perfectionist at heart, I was sometimes disheartened at how thin I had to spread myself out. I knew sometimes I had to set certain priorities of the moment and let other things drop by the wayside, always hoping others could pick up the slack. Sometimes that happened, sometimes not. But no matter what, I was (am) always responsible in the end ...
6) Fewer challenging locations -- Yeah, let's go film a feature on a high mountain and bring up a lot of people and equipment where no motorized vehicles can go. And then let's do it in the heat of the summer and go where there are no facilities for everyone. And let's do it all low budget under the regulations of the federal government and local Native American tribes. Right ...
7) More prep time -- Don't we always want this luxury? Yeah, but I only want a couple more days. Just a couple more, can't I? It may seem that upfront more prep time will add to the budget, but properly managed more prep time can certainly save you time (and money) on the back end ...
8) Less post time -- This is only so because ours has gone on longer than normal, and certainly longer than was ever intended. If we had done things normally, this probably wouldn't be here. Anyway, next time we will have a real Post Supervisor, as I've shockingly realized this is not my forte ...
9) More $$$$$ -- Ha, no brainer, huh? Cash dough, we can always stand to swim with more. The trick is taking those extra dollars and stretching them out better than before, since this is where the rubber will always meet the road. Good luck doing that in this economy. You may have to hit up that rich eccentric Uncle, or learn to count cards in Vegas ...
10) Less hats to wear -- As a low budget indie filmmaker this is usually difficult to avoid. But, please forget about the romance of being a filmmaker, because just being in love with the idea of being a filmmaker can never sustain you when you have to actually do the hard work. On the other side of that coin, when those hard realities do set in, don't try and to do it all. You may harm the project beyond what you can repair. In other words, get out of the way of your ego and don't fall in love with yourself ...
11) Relax & have more fun -- At the heart of it all. Always keep your vision and grow with it, but let go, relax and have fun within it. There were times I got so caught up in the frenzied moment that I didn't savor it enough before it passed. Each day slow it down a bit and take it all in, because who knows, you may never get to make another film again ...
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