Hollywood Pushes FCC to Prevent Consumers’ DVR Use

Published November 27, 2009

Hollywood is continuing to put pressure on the Federal Communications Commission to prevent consumers from recording and storing movies on their digital video recorders.

Recording and storing movies for playback any time, the industry says, interrupts a long-standing movie release system–from theaters, to hotels and airplanes, to pay-per-view, to video, and then to cable and broadcast television–that generates revenue for Hollywood.

The Motion Picture Association of America (MPAA) argues customers’ ability to retain movies they watch on pay-per-view will reduce or eliminate the incentive to buy DVDs or watch movies later on cable television.

Not on ‘Same Page’

Alex Velasquez, president of Legacy Consulting in Baton Rouge, Louisiana, said it’s clear consumers and the MPAA “are not on the same page”–with one side wanting more choices and the other wanting less.

“They are not only not on the same page; they are in different books,” Velasquez said.

“When a supplier of any product or service is truly looking out for his consumers, they will first inquire directly from them how to best meet their needs and wants. They will go out of their way to make sure that there is so much value in their upcoming product that the consumers would feel inclined to purchase it as soon as it became available,” Velasquez added.

But the MPAA, Velasquez said, is trying to leverage its power against consumers’ interests.

“The MPAA wants more control in order to place the consumer in a position to have to spend more money in order to obtain more value,” Velasquez said. “But again, the starting point is misguided. In this scenario, the supplier is looking out for his interests more than for the interests of the consumers.”

Movie Studios Resisting Change

David S. Bernstein, president of New York City-based Able Press Consulting, says the dispute is a “classic case of how ‘old media’ companies try to compete in the digital age” by trying to force revisions of the rules instead of fixing their business model.

“Rather than offer compelling reasons for consumers to want their products, they instead trot out the lawyers and lobbyists,” Bernstein said. “There is no doubt that emerging technologies pose incredible challenges to movie studios, just as they do to magazine publishers, TV networks, and newspapers. But they need to face these challenges head-on rather than trying to cling to dying, old business models and an era of near-monopoly that has come to a brutal and painful end.

“What’s even more shocking is that the FCC would even consider supporting such an egregious anti-consumer move as this–although given the auto and Wall Street bailouts, this seems to fit the current mood of Washington,” Bernstein added.

Hollywood’s Argument ‘Weak’

Adrian Moore, vice president of the Reason Foundation, a Los Angeles-based think tank based, calls Hollywood’s argument “weak.”

“They’re saying that if they don’t get this sort of mandate [from the FCC], then the market won’t provide the service,” Moore said. “That argument ignores the fact that the market is already moving to provide the services.

“It reminds me of the line in The Wizard of Oz: ‘Ignore the man behind the curtain.’ It’s purely self-serving,” Moore added. “Hollywood is lobbying for something that will help it make more money, not help consumers. It will limit choices for consumers, pure and simple.”

Industry Has Adapted Before

Samuel Slom, president of Smart Business Hawaii, notes the entertainment industry bucked change before but eventually found ways to profit from the switch to video cassettes and DVDs, just as it now faces the dawn of digital video on demand.

Slom says the markets sorted it all out in the past and should be free to do so again.

“You’ve got more sophisticated DVDs and products now, but forcing everybody to use a one-size-fits-all model isn’t really what the market is about,” Slom said. “And I just shudder to think that if the government had been talking about regulating computers from the beginning, we would all have one type of computer. It would be big and bulky and not have the kinds of computer advantages we have today.

“Any time people are forced to do things or purchase products in the market, that means some special interest is benefiting from the mandate and the consequences for consumers are not good,” Slom added. “If the idea, the technology, or the consumer product is so good, then people will buy it voluntarily.”

Krystle Russin ( [email protected]) writes from Texas.