Hollywood Licensing Punishes Online Movie Watchers

Hollywood execs don’t yet understand how to utilize new media when it comes to distribution. It’s much the same way newspapers are still struggling with how to use the Internet in presenting their printed product.

Consumers love the ability to watch movies online through such offerings as Netflix, iTunes and even Hulu. And while the first two require some sort of subscription or rental fee, Hollywood still treats them differently than say Blockbuster or Movie Gallery.

TV has license to kill movies at iTunes, Netflix | Digital Media – CNET News: “Spokesmen for Netflix and Apple confirmed that they pulled titles due to these licensing requirements.

The big question many Apple and Netflix fans will have is why are Web stores being treated as though they are entertainment companies instead of merchants?

The answer, of course, is because broadcasters say they are.”

It looks to me that Hollywood would find a way to take advantage of the new ways in which they can provide their product to the masses. Instead, they continue to crap on those of us who enjoy an online entertainment universe.

But as these offerings continue to grow — via Microsoft’s deal with Netflix to stream movies via the Xbox 360 or the Apple TV and iTunes media hub — Hollywood will have to face the challenge of renegotiating licensing agreements with television networks.

“One would presume that there is some sort of licensing issue at stake here,” wrote MacWorld’s Dan Moren. “But it’s a little odd that these movies just vanished into thin air. Man, it’s like a bad horror movie.”

Yes, Dan, it is. And the culprit here is a system that for decades has pumped billions of dollars into the coffers of Hollywood studios and the television industry. What has happened is Apple and Netflix have crashed into windows. “Release windows” is the term used to describe periods of time a certain type of media is allowed to show a movie. Typically, a feature film is first released in theaters, then on DVD, followed by pay-per-view channels and finally on broadcast TV.

Normally, release windows don’t affect retailers or video-rental services after they’ve begun selling or renting films. Warner Bros. doesn’t go into Best Buy and pull DVDs off the shelf when Comcast airs Casablanca. The corner Mom and Pop video store doesn’t surrender copies of Gladiator to Universal Studios when the film appears on ABC. But Internet stores are being treated differently. What this means for iTunes and Netflix customers is that movies will pop in and out of the services.

Quite frankly, I rarely watch anything at the time it comes on TV. And I can’t tell you the last time I visited a movie rental store.

But I wear out Netflix, Hulu, Apple TV, iTunes and Boxee. (And after Christmas, my Xbox 360 will be my new on-demand Netflix player.)