Digital World Domination?

Revenue sharing with Blockbuster has been a pretty good deal for the studios so far, but it may get more expensive soon. With some of those deals set to expire next year, Blockbuster is already making it clear it intends to lock up digital-delivery rights along with any extension of video revenue-sharing terms. The video retailer has already secured limited video-streaming rights from MGM as part of a new revenue-share deal with the studio after MGM took its video distribution back from Warner Home Video. Coveting The FutureWhile video-streaming rights have little commercial significance right now, there are other players out there, from pay TV networks to pay-per-view distributors to dot-coms, who covet them, and they wonít be thrilled to share them with Blockbuster.The problem for the studios is that theyíre loath to lose the across-the-board minimum purchase guarantees built into their revenue-sharing deals with Blockbuster. Not only do those deals mean more video coins from hit titles, they provide the studios some downside protection on box office duds. And Blockbuster plans to use that weakness to get what it wants. In a conference call with analysts to discuss the video retailerís recent financial results, Chairman John Antioco said, ""Thereís no question we will utilize the benefits we now provide the studios, in terms of shelf space and so forth, to ensure we have an appropriate position in the new world.""By ""an appropriate position,"" the company means the flexibility to offer movies to consumers in whatever form consumers want, regardless of what other distributors may be doing. Those other distributors will also be looking for flexibility, however, and with the ultimate structure of the digital-delivery business still to be worked out, so will the studios. MGM was able to keep its video-streaming deal with Blockbuster non-exclusive; meaning the studio can make similar deals with other operators. Figure Worth But at this point, even Blockbuster admits it doesnít know what digital rights ought to be worth, and the MGM deal makes no attempt to put hard numbers on who gets how much money, at least for now. Other studios may also be able to work non-exclusive streaming deals initially. Sooner or later, however, the value of video streaming rights will become clearer, and the studios will have to decide who will get them. And as with any competition, there will be winners and losers.