Fox To Strip Special Features Out of Rental DVDs

As DVD movie sales continue to slowly dry up, some motion picture distribution companies are looking to make up lost revenue from other mediums, such as from Blu-ray movie disc sales and distribution deals with online media-streaming services, such as Netlfix, Vudu, and the recently announced ZillionTV. Blu-ray isn't anywhere as successful as the industry had hoped, and online streaming is a nascent business that is still just getting its financial feet wet. So, perhaps, desperate times call for desperate measures; which might explain why 20th Century Fox Home Entertainment will start making two different versions of its DVDs: a stripped-down version for DVD rentals, and a premium version with extras for DVD sales.

Variety's Video Business reports that starting with the March 31 DVD releases of Marley and Me and Slumdog Millionaire, Fox will put this new strategy into place. The retail DVD SKU for Slumdog Millionaire will contain "special features including deleted scenes and commentaries;" while the rental DVD SKU will only have the movie and trailers. There will be variations on this theme depending on the particular title; for instance, the rental DVD and Blu-ray SKUs of Marley and Me will both include special features, but the retail Blu-ray version will be "a combo pack with a DVD movie and digital copy."

Fox Senior VP of sales Don Jeffries sent a letter to DVD wholesalers that stated that they would be "authorized to sell rental accounts only the rental SKUs and to sell retail accounts only the retail SKUs"--Fox will abide by the same rules with all of its direct accounts as well. This has a number of wholesalers unhappy, as they are concerned that DVD rental stores will instead acquire the "premium sell-through version" of DVDs elsewhere, such as from Wal-Mart, and then use those discs as rentals. If rental stores did this, then they obviously wouldn't be purchasing the rental versions from the wholesalers. Some DVD rental stores are also unhappy with this strategy, as they are concerned that customers will feel cheated renting a stripped-down version of the DVD that lacks special features --especially since renters have come to expect these features on nearly all DVD discs, whether they are purchased or rented.

As to the justification behind this strategy, it is all about differentiation--making the retail version of the DVD movies appear that have more value than the rental versions. This might increase the possibility that someone would buy a DVD instead of renting it, as well as possibly reducing the likelihood that previous-viewed DVDs could also cannibalize new DVD sales. Fox provided a statement to Video Business that stated:

"We have developed product variations to feed different consumer consumption models and behaviors... For rental customers, we're delivering a theatrical experience in the home while promoting upcoming releases; for retail [or sell-through] customers, we're offering a premium product that expands the entertainment experience of that particular property to further enhance ownership."

This all might be a moot point, however, as first-sale doctrine essentially says that "buyers of retail DVDs in the United States are free to sell or exchange them, and rent and lend them to others." This was even established as a legal precedent (NEBG, LLC v. Weinstein Company Holdings, LLC, Mass. May 18, 2007):

"In which a film-industry defendant accepted that it had no right to restrict buyers of DVDs from renting them to third parties. Copyright owners sometimes affix warning notices to packaged DVDs, or display notices on screen before showing the content, which purport to list uses of the DVD that are forbidden under copyright law. Such notices do not always fairly reflect the buyer's legal rights established by the first-sale doctrine."

So while Fox can make its requests to wholesalers, and these wholesalers might very well enforce these requests; the retailers are still within their rights to get their discs elsewhere and sell and rent whichever versions they see fit. And while the rationale of this strategy makes sense on the retail side by providing a value-add, we wonder if it will wind up hurting the rental business, as rental discs could be perceived as value-removed.
Tags:  DVDs
bob_on_the_cob 5 years ago

And a rental store can't go pick up a few retail DVDs?

3vi1 5 years ago

That's exactly the kind of thing the MPAA would like to sneak in as a rider on their next "IP Protection and Anti-Theft For People Who Love America Bill".

Until then, they'll just tell retail chains that they'll be able to buy the limited DVDs a few weeks before stores get the "full" DVDs, and that renting any "full" DVDs automatically disqualifies you from their list of companies that can receive the limited DVDs early.

And, when everyone ignores them and rents some full DVDs anyway - since some films aren't worth making two versions, this will all die out and things will go back to normal.

digitaldd 5 years ago

This just makes downloading or streaming stuff via netflix, blockbuster, amazon and the many other available streaming services which are either fee driven or free.

jeremy 5 years ago

Know what? Keep your "value added" crapola extraordinaire. I often copy DVDs that I've bought and purposely strip out the fancy menus, "extras", cut scenes and other garbage that keep me from doing what I bought the DVD for: watch the damn movie. Put disc in, movie plays. Thankyouverymuch, goodnight. If I could buy it that way to begin with, I would.

digitaldd 5 years ago

You know one reason i like Anchoy Bay DVDs is that just before they start showing you previews of what they have coming soon to DVD they show a screen that says hit menu to start the movie at anytime during the previews to follow. Disney DVDs usually make you sit through at least 10 minutes of crap before the menu comes on and they hold you captive, unless you power off the DVD player and power back on then you go right to the menu for some reason.

turtle 5 years ago

@ Jeremy and other semi-knowledgeable dvd users:

I don't know if that was code for what I was thinking or not...but this sure makes life easier for rippers and illegal usage.

Standard operating procedure in 'scene' releases means that movies that are dvd9 (essentially everything) are stripped of all this crap anyway to keep the actual film bitrate at a certain level on regular DVD5, sometimes creating new intros/menus to not appear stripped. This does their job for them! That, to me, is hilarious. It also shows how far behind the times some large companies are compared to the semi-knowledgeable computer user.

This is not unlike mp3s versus the record industry, and the time it took between napster and itunes, or a blockbuster store vs. Netflix streaming, or the time it took from the wide downloading of tv-rips to the creation of HULU and other network alternatives with reasonable commercials, or...

Maybe someday they'll actually get it, and sell these lower-end copies at a very cheap price, hopefully all including a digital copy in a widely-accepted format for hand held devices. People want bang-for-buck and convenience...It's really as simple as that - the feeling you paid the right amount for what you've received and being able to use it as you wish. If that isn't met, people will pirate, and no amount of fluff will justify a higher price. With the smart move of R5 dvd retail copies (unmastered pro telecines) sold to combat bootlegs of current theatrical films, this is a ridiculous step backward that helps no one, and confuses many. Sure, some avg Joe coping his newly-received netflix dvd may think he's being cheated, but I sincerely doubt it, as again a dvd without these features will mean a higher qualilty bitrate on movies copied from dvd9->dvd5 without any need to mess with anything.

BTW: Thanks for the legal tidbit HH, I was unaware of that precedent, and appreciate you bringing it to light. It certainly makes sense!

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