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Sony sharing revenues to promote Blu-ray rentals

18 July 2007 8:09 by Rich "vurbal" Fiscus | 13 comments

Sony Pictures Home Entertainment is offering "revenue sharing" deals for Blu-ray rentals. According to SPHE president David Bishop, �Virtually all retailers can have Blu-ray on a revenue-sharing basis."

He adds "We think it�s important to the retailer, so they are perceived as being on the cutting EDGE of new technology.� He believes it will it enables retailers to stock Blu-ray discs earlier than they might otherwise.

This seems like a very bold move in light of the European Commision's investigation into Blu-ray's developers. The investigation seems to be centered around possible anti-competitive business practices in an attempt to prevail over the competing HD DVD format.

As recently as two years ago Sony BMG Music Entertainment, the music division of the entertainment giant, paid $10 million in a settlement with the State of New York for bribing radio station employees to promote their artists. While other companies, including major Sony rival Matsushita (Panasonic), stand to gain financially from Blu-ray's success, the stakes are arguably much higher because the success of either hi-def format ensures companies holding related patents a revenue stream that could be profitable for many years to come.

However, the similarities between Sony's marketing activities and the music industry's recent "payola" scandals seem similar enough on the surface to at least merit a second look.

Sources: Video Business, MSNBC

Permalink to this article

Revenue sharing helps Blu-ray gain better rental presence (30 September 2007)

Microsoft announces Xbox hi-def Promotions (26 July 2007)

Blu-ray group claims HD DVD sales claims are inflated (16 July 2007)

Blu-ray backers launch new website (12 July 2007)

Blu ray begins "five free discs" promotion (27 June 2007)

Blockbuster goes Blu-ray only (18 June 2007)

Sony remains confident in Blu-ray (14 June 2007)

High-Def revolution hurting DVD rentals? (8 April 2007)

Blu-ray will replace DVD within three years? (15 March 2007)

Sony says Blu-ray is winning format war (6 February 2007)

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Discuss this article!
BurningAs (Senior Member) 18 July 2007 8:19
well it's sony what can you expect? [ + quote]
hughjars (Inactive) 18 July 2007 8:32
LMAO. Resorting to naked bribery now? Hopefully the EU screws them to the wall. Without their anti-consumer Blu-ray exclusive studio cartel trying to monopolise content and shove consumers to one format alone they have nothing. [ + quote] This message has been edited since posting. Last time this message was edited on 18 July 2007 8:34
c1c (Member) 18 July 2007 8:59
Ill stick woth my beatamax [ + quote]
duckNrun (Member) 18 July 2007 9:02
Sony: Are Format IS the best Hi-Def format Others: I'm not so sure...there is HD-DVD.... Sony: Well OUR format IS so great we'll PAY you to use it.... Blockbuster: Oh yeah? Well I guess bd format IS more awesome! (now only stocks BD) [ + quote]
plutonash (Member) 18 July 2007 9:19
Pretty much thats how it went down lucky BlockBuster aint shit anymore and is on the brink of a Chapter 11. [ + quote]
lxfactor (Senior Member) 18 July 2007 10:01
*Originally posted by duckNrun:* Sony: Are Format IS the best Hi-Def format Others: I'm not so sure...there is HD-DVD.... Sony: Well OUR format IS so great we'll PAY you to use it.... Blockbuster: Oh yeah? Well I guess bd format IS more awesome! (now only stocks BD) that is how it pretty much went =] if you cant beat them. buy them out. i love that strategy. same one microsoft been using for a while. sony is going to win. microsoft owns too much. let apple and sony have some fun. [ + quote]
eatsushi (Senior Member) 18 July 2007 11:45
Revenue sharing deals between studios and rental companies is nothing new. Blockbuster pioneered revenue sharing with movie studios in the mid 1990's. It's the basis for their business model which allows them to obtain the videos at little cost, retain 60% of the rental fees and 40% goes to the studios - at least at the start. Rentrak was involved in reporting rental data even then. Netflix has been doing this for DVD's since they started in the late 90's. They have revenue sharing deals with most major studios including Universal, 20th Century Fox, Dreamworks SKG, Artisan Entertainment, Columbia Tri-Star Home Video, Lion's Gate Films, USA Films, and Warner Home Video. This revenue sharing deal with Sony pictures allows rental chains and retailers to obtain the BluRay discs at lower up-front cost and is therefore beneficial to Blockbuster or Netflix or whoever rents out these movies. Down the line this means more movies available to the consumer so it benefits the consumer as well. In fact, according to a Rentrak user, retailers/video rental businesses who do not have some form of revenue-sharing with studios usually go out of business within a year. I'm trying to look for the link but I think I read an article a few months back that said that Netflix's revenue sharing deal with Universal also included its HD DVD releases. [ + quote] This message has been edited since posting. Last time this message was edited on 18 July 2007 12:25
vurbal (Staff Member) 18 July 2007 12:40
Given that Sony won't comment on whether they also have a revenue sharing agreement with Blockbuster - the major chain that's actively sided with Blu-ray - I'd say they still have some questions to answer. [ + quote]
eatsushi (Senior Member) 18 July 2007 12:51
*Originally posted by vurbal:* Given that Sony won't comment on whether they also have a revenue sharing agreement with Blockbuster - the major chain that's actively sided with Blu-ray - I'd say they still have some questions to answer. I think you can safely bet that Blockbuster has one in place with Sony Pictures - along with every major studio out there including Universal. Revenue-sharing is the essence of their business model. Besides, Sony is only one of several BluRay studios. How about Disney, Fox, MGM, Warner etc? Do they also have revenue sharing deals with Blockbuster? Like I said in my previous post, rental chains who don't have some form of revenue sharing with the studios usually end up out of business. Also this deal thru Rentrak is not only for Blockbuster. It's for any retailer or video rental business out there, no matter how big or small, that wants to stock thier discs. I've also noticed that Netflix is more open about its revenue-sharing deals. Blockbuster is a little more secretive. If you're concerned about one format gaining an advantage over the other then maybe we can ask Universal to "sweeten" its revenue-sharing deal with Netflix so it gets preferential treatment with its HD DVD movies. [ + quote] This message has been edited since posting. Last time this message was edited on 18 July 2007 13:31
borhan9 (AfterDawn Addict) 18 July 2007 17:19
Sony will try anything to win out the format war. [ + quote]
webe123 (Inactive) 18 July 2007 21:21
*Originally posted by plutonash:* Pretty much thats how it went down lucky BlockBuster aint shit anymore and is on the brink of a Chapter 11. Do you have any PROOF to back that statement up? I have not heard of them going under......tough times yes...but not going under. [ + quote]
Mez (Member) 21 July 2007 11:50
Sony justs sucks big time! I try to give then as little business as possible. [ + quote]
Unfocused (Junior Member) 16 August 2007 16:24
Still sound like bribery to me. [ + quote]