Exhibition chains won a major battle here in 2011 when they forced Universal to back off its plan to offer the Ben Stiller-Eddie Murphy caper comedy Tower Heist on VOD just three weeks after it opened in theaters. But studios remain infatuated with premium VOD — competing with exhibition companies by renting new movies even before they’ve completed their theatrical runs: Theaters in South Korea had Django Unchained for just three weeks before Sony began to rent it online and on cable in April, the Wall Street Journal reports today. And Disney made Wreck-It Ralph available five weeks after its December theatrical debut, following Brave which was up for rental four weeks after it opened in September. Hollywood execs say that theaters typically collect the lion’s share of revenues from a film in just a few weeks, and premium VOD gives studios the opportunity to take advantage of the marketing effort they make to open the movie — while also helping to to make up for some of the revenues they’ve lost as DVD sales decline. “I know that if we don’t experiment we’ll have a business problem that will affect all of us,” Universal Pictures‘ Adam Fogelson told exhibition execs at ther CinemaCon confab in April. “We have to find a way to claw back some of that revenue.” Carmike Cinemas’ David Passman countered that exhibitors just get “one bite at the apple” and “if just one patron chooses not to go, then the exhibitor is hurt.” But he said that there might be room for compromise if they look at “an entirely new model, not just a tweaking of the model…. We need to jointly think of a way to grow the pie.”
The controversial proposal is still alive — but will have to be part of a much bigger effort to restructure the studio-theater relationship — reps from both camps said at a CinemaCon panel this morning. “I don’t …
UPDATE, 6:40 AM: CEO Alan Stock made his comment in a conference call with analysts who asked what he’d do if Sony continues with its plan to stop paying for 3D glasses — leaving it to exhibitors to manage the expense. ”We think the way the glasses model works in the U.S. is a great way to work it,” he said. He added that there’s still a lot of time to negotiate before next summer, when Sony wants the change to take place. “I’m pretty confident we can work out a solution,” Stock says. “If we can’t, we’ll have to head in a different direction.” Regarding Universal’s plan, which it canceled, to show Tower Heist on cable VOD just three weeks after opening in theaters, Stock says the studio “thought they had something the exhibitors would comply with.” After Cinemark threatened to boycott the film, “there hasn’t been any further discussion of that particular test, or anything else they’re working on.”
Time Warner Jeff Bewkes comes across as the media world’s most laid-back CEO. But he asked a lot this morning when he told movie theater owners to cool their jets about Premium VOD. “There’s been too much excitement about this,” Bewkes said at a panel discussion sponsored by investment firm Jefferies & Co. “Our interests are aligned.” That will come as a surprise to the National Association of Theater Owners and its members who loathe PVOD as much as the Tea Party hates taxes. Exhibitors say many would-be ticket buyers will wait to watch films at home as studios including Warner Bros begin to offer 8-week-old releases on cable and satellite VOD services for about $30 a showing. Bewkes says theater owners are wrong: “I’m saying (box office revenue) doesn’t go down.” Everyone will suffer, he says, if the studios can’t provide an alternative to pirates who sell bootlegged copies of recent movies to people who don’t want to wait for the official home video release. Other panel members — none of them exhibitors — supported Bewkes. CBS chief Les Moonves said that although theater owners are scared, “you have to change a bit.” And Sony Corporation of America CFO Robert Wiesenthal said that “everybody is experimenting and being aggressive,” even though studios should recognize that theaters are “the foundation of the economic value chain for a feature film.”
UPDATE, 3:15 PM: Add NewsCorp COO Chase Carey to the list of executives of studio owners who characterize Premium VOD as merely a test that shouldn’t hurt theater owners. In a quarterly earnings conference call with analysts and reporters, Carey said that Fox and other studios are beginning to offer 8-week-old movies to cable and satellite VOD because they had little choice: Services such as Netflix and Redbox are renting DVDs for as little as $1 a night ”and that doesn’t work,” Carey says. “We have to build appropriate values and windows into our business.” Fox is “in the very early stages (of the P-VOD trials) with one small film.” He doesn’t want it to affect exhibition chains because they “set the pace for the film industry.” Still, he hedged when asked whether Fox would let exhibition companies see how well P-VOD movies perform — something that the National Association of Theater Owners says it wants. Carey says he “doesn’t know what request has been made,” although he adds that it’s “important for everyone to understand what’s going on.”
The National Association of Theatre Owners today asked the Hollywood studios involved in DirecTV’s Premium VOD trial to release sales figures for the movies that have appeared since the service’s launch April 21. The films offered to DirecTV customers so far — at a price of $29.99 and a windows-shortening …
The propaganda battle over the decision by four studios to supply their films for VOD viewing 60 days after release is intensifying. Today, NATO released an open letter by a group of filmmakers speaking out against the shortening of theatrical windows: Michael Bay, Kathryn Bigelow, James Cameron, Guillermo del Toro, Roland Emmerich, Antoine Fuqua, Todd Garner, Lawrence Gordon, Stephen Gyllenhaal, Gale Anne Hurd, Peter Jackson, Karyn Kusama, Jon Landau, Shawn Levy, Michael Mann, Bill Mechanic, Jamie Patricof, Todd Phillips, Brett Ratner, Robert Rodriguez
Adam Shankman, Gore Verbinski, Robert Zemeckis
AN OPEN LETTER FROM THE CREATIVE COMMUNITY ON PROTECTING THE MOVIE-GOING EXPERIENCE
We are the artists and business professionals who help make the movie business great. We produce and direct movies. We work on the business deals that help get movies made. At the end of the day, we are also simply big movie fans.
Lately, there’s been a lot of talk by leaders at some major studios and cable companies about early-to-the-home “premium video-on-demand.” In this proposed distribution model, new movies can be shown in homes while these same films are still in their theatrical run.
In this scenario, those who own televisions with an HDMI input would be able to order a film through their cable system or an Internet provider as a digital rental. Terms and timing have yet to be made concrete, but there has been talk of windows of 60 days after theatrical release at a price of $30.
Currently, the average theatrical release window is over four months (132 days). The theatrical release window model has worked for years for everyone in the movie business. Current theatrical windows protect the exclusivity of new films showing in state-of-the-art theaters bolstered by the latest in digital projection, digital sound, and stadium seating.
As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry.
Nikki Finke (who’s just fnishing up her medical leave with a last visit to the doctor) will be posting a complete update on the battle over DirecTV’s recently announced premium plan in partnership with Sony, Warner Bros, Fox and Universal to offer on-demand movies only 60 days after they premiere in theaters. On Wednesday, …