Sony Pictures layoffs explained

Fred from the Electronic Frontier Foundation sez, "Paul Sweeting, one of the smartest analysts covering Hollywood's collision with the Internet, does a great job reminding us of the real reasons behind the recent spate of layoffs at Sony Pictures. 'Hitting the snooze button when the alarm goes off doesn't mean that what happens in the meantime is beyond your control. It means you're asleep.'"
The shift in consumer behavior toward rental? That was a function of wholesale pricing and the consumers' perception of value, which are entirely under the studios' control. If 40,000 supermarkets in America were selling new release DVDs for $8.99 by the checkout counter, how many consumers do you think would be lining up at the Redbox kiosk in the parking lot? How many supermarkets do you think would let Redbox on the premises?

Don't believe me? Then how is it the studios were previously able to alter consumer behavior from rental to purchase when they introduced the (comparatively) low-priced DVD to replace the high-priced VHS cassette?

Alarm bells come too late for Sony Pictures (Thanks, Fred!)


  1. I have never pirated a movie.

    I have purchased over a thousand.

    But, as the studios keep raising prices on DVDs, they’re quite often simply passing the point at which I’ll buy one.

  2. No, no, no! We are all SLAVES to CORPORATE ADVERTISING. Companies like Sony have complete and total control of all of our minds. This is why the U.S. needs a constitutional amendment to restrict the nefarious effects of the First Amendment, at least as applied to corporate advertising. Or maybe a few other areas, too, while we’re at it.

    1. So what does Sony have to do with the retail pricing of movies? They own one studio, not all studios.

      The sales of DVDs, Blu-ray, etc is an Oligopoly. The market is dominated by a small number of sellers. This means that whenever one of the major sellers act in a certain way, all other sellers will react. They might react differently, but their certain to react. If company A drops their prices, companies B and C might drop their prices to compete whilst company D might ‘increase the value’ of their product to compete in a slightly different area. Company E that doesn’t lower their prices or change their product will very quickly find their profits dropping rapidly.

      So yes. Sony certainly has a certain level of control in the pricing of movies.

      They have a monopoly on their own movies. It’s not like you go buy the Universal version of Spiderman because it’s cheaper.

      There’s no reason for the studios to compete on pricing.

      Yes they do have a monopoly on their movies, but of course they still have to compete on pricing. They might decide that Movie X is the greatest movie ever made and that people will be willing to pay $5 more on it, but I doubt their going to hedge the same bet on $20 extra on the price.

  3. deckhard68;
    As Amazon so recently said of Macmillan:

    They have a monopoly on their own movies. It’s not like you go buy the Universal version of Spiderman because it’s cheaper.

    There’s no reason for the studios to compete on pricing.

  4. Well my local Target is selling a goob of Blu-Ray discs at like $12… They might not be the newest releases, but then again they aren’t moving any either. Perhaps that should tell Hollywood something.

    It is sort of like the succesor to CD audio (at least in a lossless format). The only real thing you might get is a higher bitrate (which really isn’t needed) and multichannel support…both of which aren’t a huge reason to upgrade. Just like Blu-Ray.

    1. Wellll… Bluray offers an awful lot over regular DVD if you have a halfway decent video setup. If you’re running HDMI to your display and the display is large (say 40″+) and 1080p capable, you’re going to notice a big difference between a DVD and a Blu-Ray. Now, I’m not going to go out and buy a bunch of Blu-Rays of movies I already have, but you can bet your ass if the DVD was $10 and the Blu-Ray was $12, or even $15, there’s no way I would buy the regular DVD. On my screen, there’s an enormous difference between the two.

      What Sony’s failed to do is price accordingly, quickly enough. Very few people will pay $30 for a Blu-Ray of a movie they can get for $10 on DVD. (I certainly won’t.) Now they’ve finally realized their price is unreasonable and started to discount, but that’s taken years.

      CD offers pretty much the best 2-channel audio quality an average individual will want. That’s where SACD fell down.

  5. It’s not very complicated. When VHS came out everyone was excited to have their own library of movies. Something you could go to again and again for entertainment.
    Then DVD’s came out. And they were much more convenient and the quality was great. Plus they we were told they’d last (almost) forever. So again we ran out and bought all our favorite movies and had created large collections.
    Now they’re doing it again with Blu-ray. And they’re expecting the same response. Screw it. I’m done trying to amass a library of media. I’ll rent and If I like it enough I’ll rent it again. Or stream it, which is the more likely future.

  6. Knowing that hi-def streaming is either available or just around the corner, the attraction of building a library of physical media seems, well, gone. I keep wondering why Sony couldn’t see this coming and, frankly, I can’t figure it out. The only thing I can imagine: old men in an old industry getting buggy-whipped.

    1. Yeah, streaming is pretty incredible. I use Netflix a lot. But the quality isn’t comparable to a Blu-ray disc. For some stuff that doesn’t matter, but for other stuff it’s worth it to get the media. For now! Unfortunately, if the ISPs get their way and enforce bandwidth caps it will always be that way.

      @ackpht: I’m right there with you. There’s a movie worth having on bluray! I have a few others, notably Road Warrior (who knew there was stuff going on in the dark scenes?) and Pan’s Labyrinth. All stuff worth seeing in high def.

      @Ugly Canuck: Yeah, once you’ve built up a big enough library, you realize you can’t watch what you’ve got and so either start to get selective or just let it get ridiculous. I’ve gotten more selective, especially having Netflix at hand.

      1. In fact, over enough time, being selective in purchases is not enough: you’ll still end up with more than you need.

        I get a feeling that these collections of books, fotos, music and movies are to some extent simply a function of the relative novelty of the media – fotos are just 150 years old – combined with the industrial changes over the past two centuries.

        At some point (and it will be some time before the Media Corpse get out of the way), this electronic stuff (music & movies) will fall into the public domain, and watching old movies and listening to old music will be as costly as reading old books from the public library is now: you’ll pay only with the time spent viewing or listening.

        With internet libraries, you should even not have to spend the time to walk or drive or ride to the library.

        It will take time to get to that: but say 300 years from now, it is unthinkable that these kind of “data dumps” for past media would not exist. Indeed, technically, we are already there, there is nothing stopping us from creating such “media-dumps” or libraries of net-accessible old and out-of-copyright multi-media content: but legally and socially we aren’t.

        Give it time.

    2. @tomrigid:

      While I like having shows available to watch “on demand” digitally, I still prefer buying physical media to online streaming formats. Or downloadable formats with DRM. There will come a day when a company goes under and their media vanishes from the various legitimate streaming sources. If I have that shiny disc, I can still make use of the content well beyond the death of the company that licensed it for release. (There are more companies making DVDS and BluRay releases than just the big movie studios, you know.)

  7. I hope Sony goes under. Just tired of them and all of the media companies treating me like a criminal even though I spent money to buy the movie or whatever. The whole thing with HDMI and Blu-Ray makes me seriously question if I want to get a Blu-Ray player and such…

    Still if I do, it will only be to see Avatar in HD..outside of that, my Mac plays DVDs perfectly fine.

  8. I bought a Blu-Ray player. A year later, I still own only one Blu-Ray disc: Blade Runner.

    Totally worth it.

  9. @anonymous re: “[Sony also owns the patent on] Blu-ray. Want to release a movie on disc in hi-def? Pay the Sony tax.”

    Well that accounts for eleven cents of the disc. Eleven cents.

    Granted, that’s higher than the 3 cents of royalty for a compact disc. But it’s not exactly a contributing factor to studios charging too much for their BluRay movies.

  10. re: the “Sony tax”. Anyone who wants to release a film on Blu-ray has to pay $3000 for AACS digital rights management. Even if they don’t want it, even though it’s been cracked.

    It’s not just 11 cents per disk. It’s $3000 up front, and that’s enough to stop a lot of great independent films from ever being released on Blu-ray.

  11. @14 That hasn’t been true since late 2008. It’s a $500 annual fee and $500 per title. So yeah, it is more than 11 cents after all — it’s a dollar, if the print run is 1,000. I’d like it to be free too.

  12. We’ve sure come a long audio-visual way from limelight magic lantern shows and edison cylinders, eh?

    Live music & theatre is still the best, of course.

    But I have recently (past two or three years) slowed my buying of dvds & blu-rays simply because my old film collection is complete (and it took ten years to do it…): and they are not making any fresh new “great old movies”. Mind you, there’s usually 10-20 fine films IMHO worth getting every year: and I’ll always go with the best presentation available for those, which is almost always blu-ray, these days.
    There is also the simple math of aging combined with the size of the catalogue: the day will come when it will become physically impossible to view or re-view my own stuff before I die. The larger the collection, the sooner that day comes, eh? So why should I be in a hurry to add to my collection? As it’s pretty well big enough already…
    There was a time when single 45s got my spare change, then LPs, then audio cassettes, then VHS videotapes, then DVD, and now blu-ray. For all, there always came a time when the newer format simply gave you “more bang for the buck”…and I’d stop buying the old, and buy the new.
    FWIW, I have found that there is always something on the older format that seems to never become available on the newer format. So for all of these, I have remainders from the previous cycle. (Although it has literally been years since I’ve played the LPs and 45s I yet have, I’ll not sell. I’ll let the executors sort them out, I guess.)

    There’s always something that gets lost in these “format shifts”, eh?

    PS I well remember Studio-released Pre-recorded P&S videotapes of movies going for $100.00 plus….thought that’s back in the 1980s, IIRC.

    Well, regardless of the industry’s current situation, I take this opportunity to say “Thank You!!!” to all the engineers (and others) who have enabled and brought about this revolution in media. Who have by their work created “home media”. Who have by their work enabled me to enjoy the best of the arts, in the comfort of my snow-bound remote and isolated cabin, in these northern, dark, frozen and silent winter forests.

  13. here’s no way I’m buying a Blu-ray because the next generation of media player/storage will make my old movies obsolete again.

    I was glad to get rid of my VHS because the quality was crap, but I’m not really interested in getting rid of my DVDs.

    The only thing I’m interested in are open or practically-open (i.e. like mp3) formats that I can store safe in the knowledge that I’ll always be able to watch them in the future.
    I’ve got my favorite movies converted to Xvid or mp4 now. Blu-ray seems like an obsolete format, given how locked-down and nontransferable it is. It won’t be long until digital distribution of multi-gb files becomes easy. It probably is already for those nations with crazy-fast 100 mbps internet speeds. Terabyte HDs are already about $100, so storage of HD data is not a problem.

  14. Blue Ray isn’t just about being able to view it on your enormous display – I have blue ray player and it won’t play all of of the Blue ray discs that we get from our local rental shop due to the chip in the player not being recognised.

  15. The problem is not with the first amendment. It is with the concept of considering an organization as a person.

    For over 100$ the supreme court of justice understood the danger until we got the most stupid supreme judge ever in the history of this country who put people and corporations on equal footing regarding the bill of right.

    This is nonsense to grant corporations the freedom of speech particularly while so many corporations are acting like parasites Sony being one of the worst offender.

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