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How the movie rental business disrupted traditional cinema is a well-known story. Over the years, studios have adapted to the trend by earning revenues from video rentals and later DVD sales of major productions, while never fully embracing direct-to-DVD films.

Recently, Warner Brothers created a new unit called Warner Premiere to fully embrace home video and create quality original movies for direct release on DVD. Warner Premiere is making headlines this summer with "Get Smart and its direct-to-DVD sequel to be released just ten days apart. With such a short release window, "Get Smart advertising can promote both the main attraction and its sequel simultaneously. With this strategy, Warner can innovate its business model by generating greater payoffs from one-time use resources like production assets and marketing budgets.

The core consumer Job to be Done is to be entertained. By now, the home viewing public is conditioned to wait for a films DVD release or seek illegal alternatives like street vendors and P2P networks. This summer, how many parents would love to treat their kids to the Shrek 3 DVD after watching it in cinemas? Unfortunately, studios are not capable of creating such an offering and disrupting themselves, as they are hampered by constraining contracts with industry players accustomed to the traditional business model. Mark Cuban is notable for accomplishing "simultaneous release, where a movie is released in theaters, on demand and on DVD concurrently. Warners new unit is a step in the right direction in giving viewers more options for entertainment and we look forward to others like Warner Bros. and Mark Cuban challenging Hollywoods business model.

See "Studios Have New Respect For Direct-to-DVD Films. WSJ. April 20, 2007.
"Warner Bros. Gambles on Direct-to-Video Sequels that Come Out Days After Their Theatrical Originals. Wired.com. May 7, 2007.