Open Letter To Vudu Management

[Limey]

To Whom It May Concern:

First, compliments on a great device; I just received my Vudu for Christmas, so far everything functions as-advertised, a rare feat these days!

Since receiving the Vudu, I've also taken some time to review the forums to get some insight into the what might be coming next - lot's of input from obviously avid users; bundle wireless/add storage/tweak the UI/refine navigation/extend modify rental periods dominate the threads, it seems.

That being said, this letter is directed at a variant of the rental period thread, and comes with the following request:
Stop all development and enhancement of the existing platform; it's good enough, fast enough and intuitive enough for your current target demographic - and - refocus every available dollar to:
a.) your legal team in support of renegotiating your current licensing agreement for rentals;
b.) leverage those funds to subsidize a competitive release schedule for tier-1 new releases;
c.) Refactor your financials and business model to accommodate equipment leasing with bundled rentals (tiered from freerentals with equipment - to - premium/incremental $$ rentals).

The box-cost and current lag between purchase-first and rental for several of your more popular titles makes no sense (long term) given that new releases available for purchase-only are readily available for rent elsewhere. I could understand/tolerate a ~5 day window, but, 15-20+ days is not going to work.

E.g. Eastern Promises, currently available for Purchase only w/ Vudu; scheduled rental availability mid-Jan; currently available for rent at Blockbuster/Netflix et al...

I'm both lazy and have disposable income, but will not buy this movie for $20 from Vudu out of convenience.

I understand that what I'm suggesting is a non-trivial undertaking, and glosses over the complexities of studio licensing model(s). However, I believe it is absolutely necessary for you to succeed, and me to enjoy my $400 investment in this service; you need a proverbial game-changer to make Vudu the "goto" for the content in question. There are too many other "good enough" channels for content distribution either available now, or in the works.

Again, high-praise on both the service and device, both very well executed.

Regards....

[dvcii]

Re: Open Letter To Vudu Management

ditto

[redwein]

Re: Open Letter To Vudu Management

Hi Limey,

I'm sure you've read that the rental improvements that you are asking for are wanted by everyone. The thing that I disagree about in your letter is that it makes the assumption that it is a matter of money and Vudu resources that is keeping it from happening. I'm not so sure that is the case. If they did as you suggested and stopped development on everything else, my guess is it would make no difference on the outcome of the rental situation. After all, sending twice as many salesman, lawyers, etc. to the same people won't make them move any faster. It may have the opposite effect.

Therefore, I think Vudu should continue developing the product while working on the rental issue. It makes the most sense since the quality of the box and service will be just as important to those that buy it as the rental thing. They need to lead in both.

[Limey]

Re: Open Letter To Vudu Management

Hi Limey,
....
Therefore, I think Vudu should continue developing the product while working on the rental issue. It makes the most sense since the quality of the box and service will be just as important to those that buy it as the rental thing. They need to lead in both.

Hi redwein - I was being a little dramatic for effect here. I look forward to new features and functions as much as the next person, but on balance want more content on-par with other outlets. I can see my interest and use of Vudu declining over time without changes here...I'll simply add all Tier 1 new releases to my netflix wishlist and likely receive that far sooner than they're available on Vudo.

Regards....

[longhorn]

Re: Open Letter To Vudu Management

Well said Limey. I am all too familiar with studio content agreements, and know that they are a challenge to deal with and get favorable (or even reasonable) terms.

I'd add that media extender functionality would be a nice bonus to existing boxholders in the interim, since I don't expect the content issues to be resolved in the short term (Vudu please prove me wrong!) and I worry that AppleTV v2.0 will quickly capture mind and market share in this space.

[redwein]

Re: Open Letter To Vudu Management

.I'll simply add all Tier 1 new releases to my netflix wishlist and likely receive that far sooner than they're available on Vudo.

Like I said, if you only want what you are getting with Netflix, then I agree. Right now you may get the new releases faster. However, for all of the people who either rent older movies too, or buy their own DVDs, Vudu offers much more. I truly believe that ultimately, Vudu will be on par with the new releases stuff too. VOD needs to mature a bit for the studios to loosen their grip. I believe that will happen.

[Petercarbo]

Re: Open Letter To Vudu Management

Vudu is headed to the same place as Moviebeam. Their two main focuses should be on lowering the cost of the device and allowing rentals day and date with the others.

I love the product but anyone who thinks otherwise is just wrong. Everyone here wants the same thing. We want to rent movies instantly the day they are released. If the movie is not available for rent from Vudu I just get it from Netflix. So that is money Vudu lost. I am not going to wait 3 weeks. Even if I wait for Netflix to deliver, which for me takes one day, I still have it by Thursday.

As for lowering the cost of the device or releasing a cheaper model, that is what the CES announcement should have been. They should be working on getting the product into more hands, not niche markets.

Anyone who wants to disagree and make excuses can, but 18 months from now Vudu will not exist if things don't change.

[redwein]

Re: Open Letter To Vudu Management

I agree that more movies should be rentable and sooner is better. However, I don't feel the same way you do at all about it needing to be the same day it is available from Netflix. For me, VOD is so much more important than that so I don't care if it is a few weeks, as long as everything that is available is rentable in a reasonable time frame. If you choose to go to a theater (and many people still do), do you have to go on the first day it is out?

I'm sure there are people who feel like you and those that feel like me. It is always a mistake to speak for "everyone" as you have done here.

One other thing, anyone who doesn't think things will change and improve over the next 18 months is ignoring all of the signs of progress that have occurred in the last 2. It is ridiculous to judge their fate in 18 months based on the assumption that Vudu will remain unchanged in that timeframe.

[NA9D]

Re: Open Letter To Vudu Management

I work in an industry dominated by small high tech companies. If hardware sales are not what they should be, the first thing a company will do is stop all future hardware and product development. They will then focus on cost reductions of current hardware and possibly feature improvements to that hardware.

The fact that Vudu is releasing a newer box, with more capacity speaks to me that sales are going well. If sales are meeting or exceeding Vudu targets and they make good margin on what they have now, there's no need to lower the price. I've seen too many companies in my industry bail on products because the prices and the margins got too low. One customer of mine had the opportunity to win a contract making probably 50 to 60 million of a device. They bailed because their gross margin on each part was going to be perhaps 1 penny. At that sort of margin ($500,000), you can't make money after you pay your people and the electric company,etc. Higher volume sales and lower profit margins are not always good.

[Petercarbo]

Re: Open Letter To Vudu Management

I said if things don't change and I am not speaking for everyone, but I am speaking for the majority.

Everyone I know that has one has the same complaint. They hate that they still have to go to BB or use Netflix because Vudu doesn't have day & date releases. Or they refuse to buy one because of this and that it costs to much.

I would think Vudu intends to make money thru renting movies. So a cheaper box with a smaller Hard drive maybe would be wiser than $999. larger box. There is nothing wrong with the 999 box but they should have released a cheaper also.

Then again maybe I am completely wrong and they intend to be a hardware company. If so good luck to them.

[NA9D]

Re: Open Letter To Vudu Management

It's no so easy to simply release a "cheaper" box. If anything, the price of the current 250 Gig box will probably drop in a couple of months.

Again, if Vudu can sell 50,000 boxes and make $100 profit on each one, that is $5 million dollars.

If they sell 200,000 boxes and make $10 profit on each one that is $2 million dollars.

If I have two checks in my hand with one being $5 million and one being $2 million, which check would you like?

Too many companies fall for the lie that they have to have ultra cheap hardware and sell millions of pieces to be successful. WRONG. That is actually one of the quickest ways to put yourself out of business.

[Petercarbo]

Re: Open Letter To Vudu Management

I don't realy care to continue arguing about this. I like Vudu but others will come to market with bigger names than Vudu. And if Vudu doesn't have a good jump on them then I don't see them lasting.

I also don't know what their sales are but if they are looking for the quick buck on hardware in my opinion it will be a big mistake. 5 million now and nothing later or 2 million now and continued rental profits later, I will take the 2 million.

You can be sure if Netflix or Apple start to doing boxes(that work good) and Vudu doesn't have good penetration then they are all done or will be looking for a buyer.

[redwein]

Re: Open Letter To Vudu Management

I said if things don't change and I am not speaking for everyone, but I am speaking for the majority.

Everyone I know that has one has the same complaint.

No, I speak for the majority. Everyone I know that has one (and I've convinced a number of people to buy them) feels like I do. There is no way you can conlude that a majority of the people require getting the movie on the very first day it is available on Netflix. Also, a majority of the people gave the current content a vote of "good" or better in the survey. It is a big mistake to take your own personal sampling of people and conclude that is the majority.

[redwein]

Re: Open Letter To Vudu Management

I don't realy care to continue arguing about this. I like Vudu but others will come to market with bigger names than Vudu. And if Vudu doesn't have a good jump on them then I don't see them lasting.

I also don't know what their sales are but if they are looking for the quick buck on hardware in my opinion it will be a big mistake. 5 million now and nothing later or 2 million now and continued rental profits later, I will take the 2 million.

You can be sure if Netflix or Apple start to doing boxes(that work good) and Vudu doesn't have good penetration then they are all done or will be looking for a buyer.

I honestly don't understand the "doom and gloom" mentality here. You talk about how bad things can be for Vudu if the planets align against them and you are sure that will happen because you know what every company is doing and what everybody wants.

Look at the thread on the Netflix box. It certainly sounds like it may have limitations that may make it unattractive to the Vudu customers. Did you even consider that, or do you just know that Netflix can't make any mistakes and Vudu can't do anything right?

[NA9D]

Re: Open Letter To Vudu Management

And even if Netflix and Apple get in on the game with their own version, who is to say that Vudu won't continue to innovate. They are going to be 9 to 12 months ahead of everyone else in this space. They aren't standing still.