Reeltime Folds, ezyDVD Scampers - only Bigpond Movies left
Reeltime has hit the skids. From The Age:
RECENTLY appointed ReelTime Media chief executive Andrew Wilshire has conceded the company’s lofty video-on-demand ambitions are over after handing control of its core operations to an administrator.
Jim Zavos has quit his directorship, terminated ezyDVD’s agreement with Reeltime and isn’t saying anything.
Ummm .. call me naive, but what happened to a little thing called due diligance? Or did Reeltime misrepresent their position to Jim Zavos? It’s of course easy to look back and cry ‘obvious’, but Reeltime’s strategy always looked shaky to me. John Karantzis used to trumpet the licencing rights he had secured via Hollywood as a core asset to the business. And yep, they are clearly needed - but what about the basics of movie delivery? How are people going to watch their movies? Perhaps it’s classic chicken and egg, but for my money, the delivery of a video feed to TV is crucial to a VOD strategy; it comes first. And the delivery lies firmly in the arena of consumer electronics. Your bog standard DVD player rules supreme. At $40 for a commodity player, every electronics company does one from Sanyo to Bang & Olufsen.
To break into movie downloads, you need to solve the delivery problem. But to solve it you need a convergent device with the basics of internet, wi-fi, movie selection, movie storage and of course play capability. This isn’t easy to come by! Reeltime thinking they’ll just whip one up for the tiny Australian market, pitch it at a great price and watch their business grow was never going to work. Video Ezy has the same idea for their set top box, and sorry, but that won’t work either.
To break past the view-it-on-my-computer early adopters, watch Netflix as they partner with LG. Lesson: let a bona-fide consumer electronics company handle the hardware. Apple are probably the only company that can attempt their own device, and I think the Apple TV is perfectly placed for their strategy. It’s small, relatively cheap and focused on one thing - video delivery. And then there’s Microsoft’s XBox, which whilst primarily a gaming console, tries to cover movies as well. Yet with a prodigious hardware failure rate, the Xbox is bloated, noisy and expensive when all you want to do is watch a movie.
Forget broadband, licencing, even viewing costs - I see the key issue in Video on Demand is the playback experience. Once that is solved, and robust enough to be commoditised down to an off-the-shelf player below $200, only then will VOD finally begin to deliver.
In the meantime, Reeltime tried to tread water and reserve itself a place in a future market. However, along with AU Anytime, Reeltime has now expired. All that we have left in the Australian space is Bigpond Movies Download … it will be interesting to see how long Telstra keep that afloat.
February 12th, 2008 at 4:39 pm
Quick answer to your due diligence question
Deloittes and EzyDVD conducted an extensive due diligence process during November.
It was an integral condition that prior to the Zavis joining the board that;
a) due diligence is completed to EzyDVD’s satisfaction
b) the Company had funding to go forward
Both these criteria were met, with (b) being the Cornell $4m facility.
So, whilst I wont comment on the rest, as it is debatable, had EzyDVD completed their part of the bargain, which was leveraging their existing buying power to negotiate/renegotiate Hollywood terms that were more favourable, and actually launched the website within 4 weeks of signing the deal in September - things may be different.
Note that I am not a director, and have not had an operational role in ReelTime since early November. Note also that the incoming CEO conducted own due diligence, and that the company remained trading on the ASX some 3 1/2 months post my departure. So, I have no idea what went “wrong” in the last 2-3 weeks, but, whilst easy to criticise, the model and market is a difficult one.
February 12th, 2008 at 5:25 pm
Note that these comments relate to predominantly Apple Computer, not APPLEBOX, nor do I work for Apple Computer.
Last week I experienced Apple’s own movie rental system at a conference I attended. Although its not available in Australia yet, I can say that I was very impressed with both the implementation and delivery of the product. BUT, the delivery revolves around one crucial point: to get the best experience you need the AppleTV box. This essentially receives the digital content and displays it on your TV. Of course you can download the movie to your computer and watch it either there or on, say, an iPod, but there’s no denying that movies are meant to be watched on TVs and big screens. Similar to the stock standard DVD player that you can pick up from 7Eleven, the AppleTV is a piece of hardware that without which the whole system more or less falls apart.
With the AppleTV and Apple’s movie rentals (all done via iTunes) movies can be watched straight away. You don’t have to wait for the movie to download in its entirety, thus making it a true video on demand experience. While you didn’t go into the broadband issue in depth, Simon, you no doubt agree that its a big player in effective delivery of this medium. Apple run their movie and music download service from pretty hardcore servers in the US, but with the appalling state of broadband in this country, its difficult to see this method of delivery taking off in the near future.
Apple’s movie rental system is a great concept and has worked an absolute treat in the US (even though it is still in its infancy). Australia though….. that’s another ball game altogether.
But that’s where APPLEBOX excels. It combines the familiarity of iTunes (which 87% of the portable music player market currently use) with its iTunesesque interface, and still gives customers a fantastic “face to face” in store experience when they collect their DVD.
You might say that APPLEBOX is in the middle ground. From my point of view, for what its worth having seen Apple’s own system and knowing that it is in fact coming sooner than people expect, I can honestly say that I think APPLEBOX is going to be a huge success.
February 12th, 2008 at 6:15 pm
Hi John - many thanks for your clarification. And agreed, the VOD market (whilst a marketer’s dream - who doesn’t want video on demand??), is a very hairy beast indeed. Commiseration to seeing Reeltime (even though you’re no longer involved) run its course - best of luck for your next endeavour.
Hi Chris - I want to work for your company! I’d love to see Apple TV in action. And granted, broadband here is woeful and will continue to be so for quite some time. As you say, APPLEBOX is a good middle ground .. there’s a lot to play out in the VOD arena and I think APPLEBOX will sit comfortably as the home entertainment market evolves in the future!
June 22nd, 2008 at 10:29 pm
[...] a great lead in, such as for this article about EzyDownload, EzyDVD’s resurrection of Reeltime. The article begins “With the future of DVD clearly headed for the downloaded dustbin of [...]