A Successful Business Model Must Utilize the Internet and Digital Technology
The Internet is the only way that the movie industry can fully match what piracy offers consumers. Instead of trying to destroy successful businesses like RedBox, the movie industry should be taking notes and figuring out how it can take what is good about certain business models and apply it in a way beneficial to the industry. For example, if people are willing to rent a DVD for $1 a night from a Kiosk, maybe consumers would rent a DVD online for $1.
The MPAA and the movie industry must first realize that switching their business model to the Internet will not necessarily cause them losses in box office or DVD sales.73 Industry analysts have shown that downloading movies has little effect on a person’s movie theater activities.74 Further, downloaders are the industry’s core customers and enjoy watching movies many times in the theater, at home, and on mobile devices.75 Second, box office sales keep hitting new record highs every year. And third, box office sales only account for 15.7% of the movie industry’s revenue.76 Therefore, the excuse that changing their business model would kill box office sales must be put to rest.
DVD sales, however, will decline the same as music CDs have, whether or not the movie industry adopts an Internet business model. This may not happen as fast or dramatically as CDs because of the lingering inconveniences of storage and bandwidth limitations, but with the progress of digital technology it is certain that one day, most video entertainment will come from digital files and not physical formats. So, instead of going into denial about declining DVD sales and forcing the public to buy as many DVDs as possible, the quicker the movie industry starts making up for declining DVD revenue sales on the Internet, the better their future outlook will be.
Moving onto the Internet is only the first step though. To be successful, the movie industry must offer consumers a perfect, or better, substitute to piracy. Figuring out what alternative to piracy consumers will embrace is going to be a trial and error process. The following describes one possible business model that could satisfy consumer demand and, therefore, solve the movie industry’s piracy problem.
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