Hollywood’s major studios are close to deals for a “premium video-on-demand window” to put movies on TV screens just 60 days after theatrical premiere for $30, prompting denunciation from theaters and some in Hollywood.
The timing is odd because studios and theater operators just met in Las Vegas for the CinemaCon convention but the studio premium VOD plans only surfaced immediately after the industry event ended. A CNBC report by Julia Boorstin suggests that Warner Bros., 20th Century Fox and Sony Pictures Entertainment are negotiating a deal with DirecTV and other TV platforms. Those studios are most gung ho. A “Hollywood Reporter” article by Pamela McClintock adds Universal Studios to the mix.
The $30 price may seem high, but pay-per-view events like wrestling and boxing command a similar price that is far above $5 for regular VOD. A price up to $50 and windows as long as 90 days were discussed—and are more palatable to theater operators. Currently, DVD and VOD release comes 120 days or more after theatrical.
Hollywood distributors are negotiation such P-VOD deals for $30 consumer price with cable and satellite TV operators. If distributors deliver the movies for P-VOD, theaters are left to decide whether or not to book them in cinemas. If booked, the contractual terms offered by theaters would be reduced from normal because of anticipated audience losses to P-VOD runs. Expect a long-running battle because distributors want to scoop up money from high-priced VOD and theaters fear carving out such a window will undermine their cinema business.
John Fithian, head of cinema trade group the National Assn. of Theatre Owners, issued a statement calling the studio plan a “misguided adventure.” Some members of the Hollywood creative community are also expressing misgivings that premium VOD will kill off theaters.
The studios have said that they are pressed to early windows to blunt piracy. But they’ve also told Wall Street they like the economics because they get a bigger cut of consumer revenue from VOD (typically 55-90%) than they do from cinema tickets (just over 50%). It’s thought just the top films will land in the premium VOD windows, while middle of the pack and poor performers will skip it. “Marketing to Moviegoers” notes that cinema has its own economic advantages. It is one of only two movie windows where exposure is limited to just one viewer (the other is airline). In TV and video, many viewers can watch. With its one person-gets-one-view proposition, cinema is a window where films don’t suffer over-exposure, which undermines their long-term earnings.
Related content:
- DirecTV, Cablevision’s Upcoming Home Entertainment Options Face Backlash from Theaters
- Theaters Fuming over Studios’ P-VOD Plans
- AMC Theatres Chief Calls Studios’ Premium VOD Plans ‘Problematic’
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