For £3.49 I'd expect to own a copy, like all the Steam games I've bought at about that price. Amazon.co.uk are offering me about 45,000 - not 11 - DVDs for less than that price.

One-shot viewing or 48h rental should probably be <£1.

If 3.49 is the to-own price, I don't think timed rentals have a place any more. Why complicate things? Louis CK's model has been $5 for DRM-free files, with a cap of 3 downloads and streams so the per-purchase bandwidth is capped. I kind of like that model.

Steam has discovered the money-making magic that it's better to collect $.50 from many thousands of people than to collect $.00, and presumably, that it primarily supplements full-price purchases rather than displacing them [1]. I'd observe that even the other gaming platforms still took years to also discover that even with Steam lighting the way. Movie houses are still apparently completely clueless about this analysis, though I will concede in advance whether cheap movies would displace full-price movies may be different. (But I suspect the only way to find out is to just try it.)

[1]: Bear in mind that the only "full-price purchases" that matter are ones that actually occur. With my gaming habits, I'm perfectly happy to work in the indie space and years behind the mainstream, plus my laptop isn't even in the running to run the latest & greatest right now. I buy many cheap things from Steam, but it doesn't displace full-price purchases because I was never going to make them. If Steam was just a "full-price game service", I wouldn't even have an account. Instead, they've probably made at least $100 from me of profit.

Steam has figured it out because they're the rake; it's like being the house at a casino where you let people gamble against each other at poker. You don't care who wins or who loses, because you're taking a cut of everything. Meanwhile, the user experience on Steam is getting worse all the time, and developers aren't really happy with them either.

And yes, Valve profits off you. But if you were the only game consumer there was, Steam would cease to exist.

"Steam has figured it out because they're the rake"

While that is not literally false, it is incomplete and leads to false conclusions. I've seen indie game developers report that they also see revenue bumps from seeing their games go on sale that they would not otherwise see, so it's not just Steam profiting. I have no reason to believe that the movie studios would not also see non-trivial profits from scraping the long tail. Pretty much everybody seems to win on Steam with those prices, which is why they've been going on for so long.

I have also seen indie houses report that they discounted too far sometimes [1], but all in all what I can see is that the indie houses have found that time-based pricing works quite shockingly well. By "shockingly well" I do not merely mean a rhetorical flourish... I mean, I personally have been surprised at what they've reported.

[1]: http://www.carpefulgur.com/drakblog/?p=9

It's really hard to sell a physical game for 5$ and make any profit. Pre steam ~90% of games had approximately 0 sales within 2 years of release. Steam / GoG / etc are a great additional revenue source for an incredibly competitive market.

Remember, steam sales are approved by the publisher because they make them more money.

This is solid economic theory. This will be taught to future generations. This is one of the paradigm shifts that globalization brings.

While Amazon offers you a lot of DVDs for less than that price, it also offers you a substantial amount of rentals via Instant Video at well above that price.

I'm going to assume - not least because we've paid for those rentals more than once - that they have a good idea about how to set the prices.

Movies that are interchangeable light entertainment will go cheap. Movies people seek out or decide they really want will cost more.

Funny, this is about the same price DVDs are on Amazon for me. $.01+$3.99 shipping. For something I just want to watch once, I think I'd come out ahead with Steam (not have to find a space for the DVD or ripped copy, etc).

There's an inventory cost to keeping DVDs on hand, so for older content that doesn't sell well, it can be worth it to sell a DVD for less than you bought it for wholesale, just to clear it out of your inventory. That's never going to be true of digital download.

For all I care it can be a million pounds, I probably won't use it either way. My point is that it's not a competitive price. For around £8 you can get a Netflix or Amazon Prime subscription (don't quote me on that, I'm not from the UK, but a few pounds don't weaken my argument, I believe).

These subscription-based services offer unlimited content for a month, whereas these £3.49 give you maybe 2h of entertainment. I'm just saying I don't believe it's a great business model in this day and age. I remember iTunes allowing you to rent movies for similar prices years ago, but that never became very popular, did it?

Amazon, Playstation Network also allow you to rent films at this price point, they seem to be doing OK. You're simply not in the target audience.

Netflix is not unlimited, it is a buffet where you might not like what's on offer.

I suspect more people watch specific films rather than just have them on as background anything-but-the-silence-of-my-brain fillers. If that's an accurate suspicion then the Lionsgate approach isn't so odd.

True. The pricing does seem a little off though compared to Netflix. The breakeven point there is like 3 movies per month. Thats not a lot...

They aren't competing with Netflix. They are competing with all the other movie on demand services.

Netflix streaming has a poor selection of movies. Netflix dvd in mail is great but there are days of delay in mailing them back and forth.

Netflix is like an all you can eat buffet and this lionsgate is like a streak house. You wouldn't tell the steakhouse that thier food is overpriced because the golden coral sells all you eat for 7.99.

>They aren't competing with Netflix.

It think in practice it will. I don't think that difference in type VoD vs streaming library is as well defined in most people's minds as it is in yours. Same for attaching (much) more value to the one per movie as you do.

You're not wrong about the steak thing, but cheap price plus "unlimited" goes very far in practice I think. And in fact has judging by Netflix performance

It's low enough that for a lot of people it doesn't really matter. I've got Prime and I've got a FireTV. Sometimes I just want to watch "something" and I'll pick from the "free" (included in my Prime subscription that I'd have anyway) selection. Sometimes I want to watch something a bit more specific, and it'll be a ~10 second impulse choice whether or not I think the rental price is worth it.

EDIT: Just browsed through my watchlist on Instant Video, and most of the titles on it are available for rental at GBP 3.49 or 4.49, but quite a few are not available to rent at all, and have purchase prices ranging from around 5 to 15 pounds. I'm going to assume that Amazon knows what pricing works for them, at least in aggregate.

Not a lot for you. I probably only watch a movie every couple of months.

> I probably only watch a movie every couple of months.

In which case you're an outlier and frankly entirely uninteresting as a customer to all these companies from a commercial poverty anyway.

That logic hasn't worked out so well for Tidal. Why is film any different to music?

When I play music it's usually the background for another activity (coding, exercise, parties, etc.). When I play a movie, it is the activity - I actively minimize distractions so I can focus entirely on the movie. It's easier to use a substitute for something that isn't being focused on.

You should try making listening to music an activity.

It's good for code, but you don't notice a lot of the detail; it's a different experience.

Often it works out that there is a substitute though - and if there isn't, I'm not convinced most would seek out movies in the way you describe.

I wanted to watch a BBC drama the other night and was offered the choice between paying to 'rent' it from Xbox, or watch it on iPlayer for free.

Assuming I do want to watch the movie, by the time I've found it, found that it's available on x cloud platform and will cost me y to subscribe / buy / rent - odds are that foo discovery mechanism has surfaced something I'd be happy to watch on something that I already subscribe to.

There are still substitutes, and I will gladly admit that it's rare for me to say "I only want to watch movieName, no other movie will satisfy me". It's much more likely that I'll want to watch something in a certain category. However, my experience that last few times I've looked through a Netflix category was that the overwhelming majority of the results simply looked like bad movies to me (and I've already watched the handful that actually looked appealing). When I play a music station, it's usually "good enough".

What I was trying to communicate that I am much more choosey about the movies that I watch than the music I listen to. I think this is because the enjoyment I get out of an activity that involves music isn't completely defined by the music. If the music isn't good, the activity can still be very fun. If the movie isn't good, it's very unlikely that I will get any enjoyment out of watching it.

Well, that is actually what a movie ticket costs here, and the obvious alternative has a way bigger selection for free. That is the competition. When I see the news how well blockbusters do in the movies, I think studios should just put up older titles for free. E.g for an upcoming Hunger Games you should just release the other parts and generate hype, turning home video from a direct money stream into pr.

Related films often show on cable prior to a new release. Don't know if one side or the other is driving that.

I think the per viewer ad revenue of a lot of cable screenings is awful close to $0, but the content owners are more comfortable taking that $0 than they would be eroding the price point that they have established for short term rentals.