The Weird World of Hollywood Finance (2001) | Hacker News Reader

The Weird World of Hollywood Finance (2001)

guardian.co.uk

I have a question for anyone who knows: What does Netflix pay to the studios for renting out the DVDs? It can't be the same as we pay in the shop, or they'd make pennies per 100 rentals. Is it a kind of royalty system or - as in video shops - the 'tape' itself is very expensive?

Also, I have an old original (paid) Carolco bond (!) used to pay for Terminator 2, as a kind of 'good luck' charm.

The exact # I don't know, but the rental copy of a movie is usually about 4x the retail cost of a consumer DVD - so around $80 - split between distributor and studio in a ratio that varies considerably, but returns about 50% for a major studio and maybe 20% for an indie flick.

Interesting though this is (I work in this field), I'm not sure what the relevance of this (slightly inaccurate) 8 year old article is to HN. Although it'd be great if there was a HN/YC for film...

You could always make one :D

http://www.slinkset.com

In the United States, this is not the case. First sale doctrine allows one to resell, lend, or rent a DVD once one purchases it.

Yes it is, for practical rather than legal reasons. The rental version of a movie is issued to video wholesalers before the consumer DVD becomes available. If you just bought the consumer copy and rented that out to your customers, you'd never have new releases at the same time as other video rental services.

I think it is a one time balloon fee, sometimes hundreds.

In the United States, Netflix has the right to pay the same for a DVD that they rent out to others that you do, if they chose. Google "First Sale Doctrine."

The implication in this article is that Rental DVDs actually cost _less_ than Retail. The Studios are cutting off the supply of DVDs to redbox, forcing them to pay "Retail" prices.

http://www.azstarnet.com/sn/biz-topheadlines/304047

Also see for the general phenomena: http://en.wikipedia.org/wiki/Hollywood_accounting

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