Media price discrimination

Films price discriminate in many ways. First movies are released in the theatre -- you pay $8, and $8 more for popcorn. Per person. And you need to really like the movie to make the effort of seeing it in the theatre. Then it comes out on DVD -- you pay $20 and can watch it at home, forever. Then it plays on TV and now you don't pay anything at all, you just need to watch ads. People will watch movies on TV that they would never see in the theatre.

The internet is collapsing these windows. People use camcorders to record movies in theatres, and then sell DVDs which are quickly given away as torrents. Consumers who want a DVD are driven to the illegal DVD because there is no legal equivelent.

Moreover, the old system was skewed towards big budget action movies that look best on big screens. If theatres are the first tier of pricing, then you want to differentiate that experience from alternatives.

This excellent Roger Ebert review of Bubble details a movie that probably would not be treated too well by the theatre->DVD->cable cadence. Some theatre owners are boycotting the film because they fear the simulteneous DVD release will hurt them. Personally, I've added Bubble to my Netflix queue but will never have watched it in a movie theatre.