All Things Digital

Hollywood is finally embracing day-and-date film releases.

Yesterday, Time Warner (TWX) CEO Jeffrey Bewkes said that Warner Bros. plans to experiment with VOD releases day-and-date with DVD later this year. And now this morning, Apple (AAPL) announced that a number of major and independent movie studios have agreed to make their films available on iTunes day-and-date with DVD–$9.99 for library title purchases and $14.99 for new release purchases. Among the studios participating in the deal: 20th Century Fox (NWS), Walt Disney Studios (DIS), Warner Bros., Paramount Pictures (VIA), Universal Studios Home Entertainment (GE), Sony Pictures Entertainment (SNE), Lionsgate (LGF), Image Entertainment (DISK) and First Look Studios (FRST.PK).

An impressive lineup and one that clearly heralds a shift in the movie industry’s view of digital distribution. A shift in iTunes movie purchases as well–upward. The removal of Hollywood’s typical 30-day lead time on DVD releases will no doubt boost new-release sales on iTunes, assuming customers don’t mind paying $14.99 for films that lack the extra features and picture quality of their DVD counterparts. It will boost movie studio revenues as well. With no manufacturing and reproduction costs to speak of, margins from day-and-date download releases are presumably quite high.

So much for that hard-fought DVD format war …

I’m not sure that the driving reason to get a DVR in the first place is just to skip commercials. I don’t fundamentally believe that. People can understand in order to have convenience and on-demand (options), that you can’t skip commercials.”

– ABC President of Advertising Sales Mike Shaw, July 2006

Looks like Walt Disney has finally come up with a theory to explain plummeting ratings at ABC and ESPN–as well as a plan to fix them. The company’s two big TV networks have struck a deal with Cox Communications to offer free on-demand broadcast of hit shows and sporting events, as long as Cox disables its fast-forward feature that lets viewers skip advertisements.

To Disney, the price of free entertainment is suffering through inescapable advertising, and its DVR-empowered viewership hasn’t been holding up its part of the deal. And so, beginning this fall, Cox will offer episodes of four ABC prime-time series, along with select ESPN on ABC college football games in the FreeZone section of its on-demand service. They will be available the day after their original broadcast, and Cox will disable its on-demand fast-forward option.

Will viewers accustomed to fast-forwarding through advertisements watch on-demand programming with unavoidable ads? And, more to the point, if they so clearly dislike watching advertisements, why would they watch programming like this at all? Why wouldn’t they use their DVRs to record the same shows as they air live and use that device’s fast-forward function to skip the ads? Cox President Pat Esser says viewers will understand the transaction it’s proposing. “People want their content, and they want it for free, but I think they realize that there is a business model to keep intact for them to get it that way,” he told The Wall Street Journal.

We’ll see, I guess. But I hope for Esser’s sake that Cox and other cable operators like it are investigating other ways of solving this problem. Like figuring out how to take advantage of the attention fast-forwarding requires. Because while DVR users often fast-forward through commercials, the very act of paying attention to what they’re forwarding through vastly increases ad recall. “There’s a pretty good basis for thinking that the active attention required to fast-forward could reinforce brand awareness,” said Kenneth Wilbur, associate professor of marketing at the University of Southern California’s Marshall School of Business. “There can be a real effect on purchasing behavior due to the attention required. … You could see extensive changes coming to creative formats and a great deal of research into how creative can best be adapted to fast-forwarding.”