Television and media industry are stuck in a wasteful rear-guard fight for the preservation of an analog era relic: the Release Windows system. Designed to avoid destructive competition among media, it ends up boosting piracy while frustrating honest viewers willing to pay.  

A couple of months ago, I purchased the first season of the TV series Homeland from the iTunes Store. I paid $32 for 12 episodes that all landed seamlessly in my iPad. I gulped them in a few days and was left in a state of withdrawal. Then, on September 30th, when season 2 started over, I would have had no alternative to downloading free but illegal torrent files. Hundreds of thousands of people anxious to find out the whereabouts of the Marine turncoat pursued by the bi-polar CIA operative were in the same quandary (go to the dedicated Guardian blog for more on the series).

In the process, the three losers are:
– The Fox 21 production company that carries the risk of putting the show together (which costs about $36m per season, $3m per episode)
– Apple which takes its usual cut. (The net loss for both will actually be $64 since the show has been signed up for a third season by the paid-for Showtime channel and I wonder if I’ll have the patience to wait months for its availability on iTunes.)
– And me, as I would have to go through the painstaking task of finding the right torrent file, hoping that it is not bogus, corrupted, or worse, infected by a virus.

Here, we put our finger on the stupidity of the Release Windows system, a relic of the VHS era. To make a long story short, the idea goes back to the 80′s when the industry devised a system to prevent different media — at the time, movie theaters, TV networks, cable TV and VHS — from cannibalizing each other. In the case of a motion picture, the Release Windows mechanism called for a 4 months delay before its release on DVD, additional months for the release on Pay-TV, Video-On-Demand, and a couple of years before showing up on mainstream broadcast networks (where the film is heavily edited, laced with commercial, dubbed, etc.)

The Western world was not the only one to adopt the Release Window system. At the last Forum d’Avignon cultural event a couple of weeks ago, Ernst & Young presented a survey titled  Mastering tempo: creating long-term value amidst accelerating demand (PDF in English here and in French here).

The graph below shows the state of the windows mechanism in various countries:

Europe should be happy when comparing its situation to India’s. There, it takes half a year to see a movie in DVD while the box-office contributes to 75% of a film’s revenue. Ernst & Young expects this number to drop only slightly, to 69%, in 2015 (by comparison, the rate is only 28% in the UK). Even though things are changing fast in India, internet penetration is a mere 11.4% of the population and movie going still is a great popular entertainment occasion.

In the United States, by comparison, despite a large adoption of cable TV, Blue-Ray or VOD, and a 78% penetration rate for the internet (84% in the UK and higher in Northern Europe), the Release Windows system shows little change: again, according to the E&R survey, it went from 166 days in 2000 to 125 days in 2011:

Does it makes sense to preserve a system roughly comparable to the one in India for the US or Europe where the connected digital equipment rate is seven times higher?

Motion pictures should probably be granted a short head start in the release process. But it should coincide with the theatrical lifetime of a production that is about 3-4 weeks. Even better, it should be adjusted to the box-office life — if a movie performs so well that people keep flocking to theaters, DVDs should wait. On the contrary, if the movie bombs, it should be given a chance to resurrect online, quickly, sustained by a cheaper but better targeted marketing campaign mostly powered by social networks.

Similarly, movie releases should be simultaneous and global. I see no reason why Apple or Microsoft are able to make their products available worldwide almost at the same time while a moviegoer has to wait three weeks here or two months there. As for the DVD Release Windows, it  should go along with the complete availability of a movie for all possible audiences, worldwide and on every medium.  Why? Because the release on DVD systematically opens piracy floodgates (but not for the legitimate purchase on Netflix, Amazon Prime or iTunes).

As for the TV shows such as Homeland and others hits, there is not justification whatsoever to preserve this calendar archaism. They should be made universally available from the day when they are aired on TV, period. Or customers will vote with their mouse anyway and find the right file-sharing sites.

The “Industry” fails to assess three shifts here.

–The first one is the globalization of audiences. Worldwide, about 360m people are native English speakers; for an additional 375m, it is the second language, and 750m more picked English as an foreign language at school. That’s about 1.5 billion people likely to be interested in English-speaking culture. As a result, a growing proportion of teenagers watch their pirated series without subtitles — or scruples.

–Then, the “spread factor”: Once a show becomes a hit in the United States, it becomes widely commented in Europe and elsewhere, not only because a large number of people speak serviceable English, but also because many national websites propagate the US buzz. Hollywood execs would be surprised to see how well young (potential) audiences abroad know about their productions months before seeing them.

–And finally, technology is definitely on the side of the foreign consumer: Better connectivity (expect 5 minutes to download an episode), high definition image, great sound… And mobility (just take a high-speed train in Europe and see how many are watching videos on their tablets).

To conclude, let’s have a quick look at the numbers. Say a full season of Homeland costs $40m to produce. Let’s assume the first release is supposed to cover 40% of the costs, that is $16m. Homeland is said to gather 2 million viewers. Each viewer will therefore contribute for $8 to the program’s economics. Compare to what I paid through iTunes: my $32 probably leave about half to the producers; or compare to the DVD, initially sold for $60 for the season, now discounted at $20. You get my point. Even if the producer nets on average $15 per online viewer, it would need only 1.6 million paid-for viewers worldwide to break-even (much less when counting foreign syndication.) Even taking in account the unavoidable piracy (which also acts as a powerful promotional channel), with two billion people connected to the internet outside the US, the math heavily favors the end of the counter-productive and honest-viewer-hostile Release Windows archaism.

–frederic.filloux@mondaynote.com