Rentership beats ownership

There has been lots of recent buzz in the press about Redbox announcing its digital service in 2011. Today, Wal-Mart announced that it is (finally) doing something with its $100 million acquisition of Vudu. These announcements got me to thinking about the not-so-subtle shift  from Ownership to Rentership and my personal conflict of what this is doing to the entertainment industry.

Redbox and Wal-Mart are up to something

As way of background, Redbox insinuated that it would add a Web-based rental service to its network of DVD kiosks next year.  This means if the Coinstar-owned company is going to deliver on its promise, Netflix may have a competitor sometime in 2011.

Wal-Mart announced with that Toy Story 3, customers will receive a download code that they can use on their nearest Vudu player to stream the movie at any time without the disc involved.  Does this signal that Wal-Mart is finally getting into action in digital? Maybe Wal-Mart will do something else with Vudu, like team up with Redbox.

These movements tell me that big players are laying the groundwork to help me rent more content than ever before.

From Ownership to Rentership

A great article in Wired talks about how we are slowly moving away from an Ownership Society of the American dream of owning stuff like houses, cars and collections of CDs and DVDs.  Instead, we are moving to more practical Rentership Society where we can enjoy unlimited choice that comes without the cost burden of owning stuff.  For those of you who have thrown a ton of cash into a kitchen remodel only to find out that you break even on the sale of a house, you understand.

While I’m holding on to my house and not moving into a rental down the street, my personal shift from Ownership to Rentership is really clear in how I consume media.  I no longer faithfully go to Best Buy every Tuesday to get the latest.  I now wait a bit, sample stuff from iTunes or Grooveshark or Last.fm or Pandora and then, maybe I buy it.  Instead of buying the DVD, I rent it from Netflix.  And NOW, as I recently wrote, I am increasingly viewing stuff through Neflix my AppleTV.

What about entertainment?

But wait a minute.  I am conflicted.  I am a happy consumer, but what does this do to the entertainment business?  With labels (and just forget about artists) making fractions of pennies for each stream, subscription service revenues don’t really amount to a hill of beans. With this trend, artists will have to work a helluva lot harder to perform their music live and make money.  With more than 50% of a studio’s revenue coming from selling movies and TV, well, let’s just say that renting does not make them much money either.  At this rate, studios stop making movies.  Scary stuff.

So what’s the entertainment industry doing about it?  Lots of companies have invested in consortia like UltraViolet and Keychest to answer these questions, but what are they thinking in terms of rental?  I am skeptical of industry groups doing anything in the best interest of the customer.  Afterall, content owners just want to protect their bottom line. The entertainment industry needs to remember:

Everything, everywhere, all the time. That’s the dream of the Rentership Society. And we’re almost there. If you want to be able to possess some things, in some places, some of the time, well, keep on buying. But I vote for infinite abundance, on demand. Doesn’t that sound like the new century’s American dream? – From Wired’s Abandon Ownership!

Are you moving from ownership to rentership?  What does it mean for the industry?

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Comments on: "Rentership beats ownership" (8)

  1. In my opinion, when it comes to assets that have the potential to appreciate (real estate, stocks, etc) ownership is a must. For all else, unless control is necessary, rent. That leaves more funds free to purchase more appreciating assets.

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  2. Totally agree – I bought my last CD 3 years ago…But what on earth is Ultraviolet and Keychest? I did a search on Ultraviolet and came up with a bad movie from 2006. Keychest is equally as mysterious. Anyone?

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  3. It’s that one with Milla Jovovich…Crap name, I always thought UV rays were really bad for you…. When will I be able to buy Star Wars in yet *another* format..??

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  4. This must be what it’s all about. Some sort of cloud-based storage system..??

    http://www.uvvu.com/press/UltraViolet_Brand_Launch_Release_07_20_2010_FINAL.PDF

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    • Great question Brian, and thanks for the link, Adam! In a nutshell, Ultraviolet is an industry consortium made up of the major studios (less Disney), big device manufacturers (Sony, Panasonic), technology cos (Microsoft and I include Intel, Cisco) and a mix of other folks. Its goal seems simple – it is looking to create a digital standard to try to bring simplicity to the consumer. It’s focused on “interoperability” – meaning that you buy the content and it works on your devices. A user will be able to manage his content in the cloud and access it anywhere, on any device. Keychest is Disney’s go-it-alone attempt. You both have got me to thinking – I’ll write on this more in upcoming posts. Thanks for your comments!

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  5. […] recently got a comment on a blog which asked about Keychest and Ultraviolet, and I’m here to tell you I found out some not-so-good […]

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  6. how are you I was fortunate to look for your subject in yahoo
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    • Thanks so much! Go out to wordpress and find the Gravatar theme. I had to do a few modifications but this stuff is pretty simple if you take the time and have a little patience. I look forward to seeing your stuff!

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