Published:
25-Sep-08
Although a clear strategy has not yet emerged, there are indications that the video industry is actively considering the role rental is to play in the Blu-ray Disc (BD) business. In the US, Sony's campaign to boost BD movie watching in Sony PlayStation 3 (PS3) households is to be extended to encouraging the rental of BD titles. Sony Corporation and Sony Pictures Home Entertainment are to work actively with leading rental chains Blockbuster, Movie Gallery and Hastings Entertainment to promote BD titles in-store. This follows two recent BD rental initiatives: the first by Warner in Japan, still one of the world's strongest rental markets, and the second by trade magazine
VideoWoche and the Blu-ray Group in Germany—not a traditionally strong rental market but one where BD is currently punching above its weight; a new marketing package has been created to help boost video rental stores that already stock a BD range.
US online rental pioneer Netflix, which has stated that less than 10 per cent of its customer base rents BD, is planning to charge subscribers who do rent the hi-def format 'a modest premium' over its standard rental rates.
UK-based LoveFilm International, which operates online rental services in the UK, Nordic markets and Germany, currently has no plans to charge more for BD rentals although the company does charge a premium for game rentals.
Our take...
Studios have never ruled out BD rental, though none considered it a priority during the early development of the format. However, rental provides a cheaper way for BD owners to watch movies and thus is ideally suited to PS3 homes that effectively acquired a BD player as a bonus when buying their new games console. Rental may also help avoid a potential replication bottleneck for BD discs that Screen Digest has identified if average BD buy rates in PS3 households can be raised. In the US, the 'first sale' doctrine means that rentailers may simply buy standard DVD or BD units and rent them out if they wish. The issue is more complex in Europe, where under European law rights holders may charge a premium for the right to rent, even where no exclusive rental window exists. When first implemented by Warner in 2002 this strategy caused a significant backlash from the rental sector. This leaves studios with a dilemma in Europe: in order to build a viable BD rental market they must price BD discs low enough to encourage rentailers to stock them, but if they do not levy their hard-won rental premium from the start they risk alienating the industry all over again by re-introducing it later. Screen Digest anticipates that the most likely approach will be to offer heavy discounts on the 'official' rental prices.
