<story><title>Hollywood as We Know It Is Over</title><url>http://www.vanityfair.com/news/2017/01/why-hollywood-as-we-know-it-is-already-over</url></story><parent_chain><item><author>TACIXAT</author><text>I love movies. Whenever I visit my dad (other side of the country), we go to see movies. However, most of the year I live with my girlfriend who falls asleep in theaters and can&amp;#x27;t justify the cost. This leads to me not seeing movies in theaters anymore.&lt;p&gt;Now, I am subscribed to two streaming services. I don&amp;#x27;t pirate. I refuse to watch anything with ads, happy to pay, and somewhat ironically, the only ads I watch to completion are trailers that I haven&amp;#x27;t seen. I would love to catch movies as they are released but I have to wait until they&amp;#x27;re available on the streaming service. When they are available it is usually 5$ for a &amp;quot;rental&amp;quot;. Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees! They&amp;#x27;ve priced their digital content in such a way that I will only pay to see the movies that I really want to see. If it was cheaper, I&amp;#x27;d be a constant consumer.&lt;p&gt;It seems that is how most things in society get priced. Not for ultimate consumption, but to maximize the profit curve. I get that is how capitalism works, but that logic doesn&amp;#x27;t make sense to me for digital goods. They are practically zero cost to distribute once they are manufactured and your competition is people pirating them. If you&amp;#x27;re worried about audience size, lower the cost. You&amp;#x27;ll enable a lot more people to see a lot more movies.</text></item></parent_chain><comment><author>ttcbj</author><text>Assuming you are a software developer, I think you should reconsider your &amp;quot;price should approximate production cost&amp;quot; reasoning.  I think it will hold you back if you eventually try something entrepreneurial.&lt;p&gt;When I started a small software company, I originally had a similar understanding.  I subconsciously thought that the software should be priced to pay for its development cost, plus some profit.  I was not very successful, until I realized that the product should be priced as a percentage of the value it delivered to the customer.  Customers don&amp;#x27;t want you to do a lot of work, they just want their problem solved for a price that is reasonable relative to the benefit of the solution.&lt;p&gt;This idea reverses several of your conclusions:&lt;p&gt;1. The product should be priced based on how much value it delivers, and only those companies that can deliver the product for significantly less than that price will stay in business.  Once a company finds a need that people will pay for, it generally makes sense to drive the cost of production down while maintaining the same benefit, thus maximizing profit.&lt;p&gt;2. The more value a company creates with the resources it uses (the greater its margin), the more left-over resources it will have to invest in producing still more benefits, or to return profits to its original investors.&lt;p&gt;So, going back to the cost of digital content, I am happy to pay for it, as long as I end up feeling the movie was worth watching for the price.  And if they can produce great content without many resources (or with lower cost of delivery), all the better.  My problem, right now, is that there is so much great content I cannot ever hope to watch it.  But that is not a problem that really bothers me, I am happy to keep paying to have a long list of shows I&amp;#x27;d like to watch, if I could just find the time.</text></comment>
<story><title>Hollywood as We Know It Is Over</title><url>http://www.vanityfair.com/news/2017/01/why-hollywood-as-we-know-it-is-already-over</url></story><parent_chain><item><author>TACIXAT</author><text>I love movies. Whenever I visit my dad (other side of the country), we go to see movies. However, most of the year I live with my girlfriend who falls asleep in theaters and can&amp;#x27;t justify the cost. This leads to me not seeing movies in theaters anymore.&lt;p&gt;Now, I am subscribed to two streaming services. I don&amp;#x27;t pirate. I refuse to watch anything with ads, happy to pay, and somewhat ironically, the only ads I watch to completion are trailers that I haven&amp;#x27;t seen. I would love to catch movies as they are released but I have to wait until they&amp;#x27;re available on the streaming service. When they are available it is usually 5$ for a &amp;quot;rental&amp;quot;. Is that a joke? I used to pay that at Blockbuster, and they had a physical location and employees! They&amp;#x27;ve priced their digital content in such a way that I will only pay to see the movies that I really want to see. If it was cheaper, I&amp;#x27;d be a constant consumer.&lt;p&gt;It seems that is how most things in society get priced. Not for ultimate consumption, but to maximize the profit curve. I get that is how capitalism works, but that logic doesn&amp;#x27;t make sense to me for digital goods. They are practically zero cost to distribute once they are manufactured and your competition is people pirating them. If you&amp;#x27;re worried about audience size, lower the cost. You&amp;#x27;ll enable a lot more people to see a lot more movies.</text></item></parent_chain><comment><author>ctdonath</author><text>Supply and demand. A thing is worth what another is willing to pay for it.&lt;p&gt;Those $5 streaming &amp;quot;rentals&amp;quot; are for those actually willing to pay $5 to watch &lt;i&gt;that&lt;/i&gt; movie &lt;i&gt;right now&lt;/i&gt;. It&amp;#x27;s worth it to them. Eventually the $5 rental crowd is satiated, and the &amp;quot;not more than $4&amp;quot; crowd gets a chance as the price is lowered to match what others are willing to pay for it. Eventually that price tapers off to &amp;quot;$8&amp;#x2F;month buffet&amp;quot; and ends up on my Netflix queue.&lt;p&gt;They DO lower the cost - as those willing to pay higher prices do so, are satiated, and the audience temporal&amp;#x2F;economic demographics shift. It&amp;#x27;s not just about price per rental, it&amp;#x27;s price &lt;i&gt;plus time&lt;/i&gt; per rental. Some movies I&amp;#x27;ll pay $15 to watch on day of release; some I&amp;#x27;ll happily &amp;quot;spend&amp;quot; time waiting for so I only spend $1 to watch it.&lt;p&gt;And yes, I&amp;#x27;d happily get &amp;quot;that, here, now&amp;quot; for $5 rather than pile 4 people into the car, drive to Blockbuster, ask if they have it, find out the 2 copies are out, and wander the aisles for an hour reviewing what they &lt;i&gt;do&lt;/i&gt; have and picking something (&amp;quot;Masters of the Universe&amp;quot;!) just to not completely waste the whole exercise (and decide that just leaving would have been better than watching &amp;quot;Masters of the Universe&amp;quot; only because it was the only thing vaguely appealing at the moment). Even with Redbox I at least have the option of looking for something new in particular and reserving it, from whichever of several nearby locations, for $2 from the convenience of my phone. Come &lt;i&gt;John Wick 2&lt;/i&gt; I&amp;#x27;ll have already pre-ordered it and be watching it, without the crowd, the moment it&amp;#x27;s available (and happy to pay the $19 to do so, having seen &lt;i&gt;John Wick&lt;/i&gt; twice thanks to the $1 streaming specials).</text></comment>