Thursday was the first day of an experiment in home entertainment that is likely to fail, at least the pricing element of it. You probably know that box office receipts and sales and rentals of DVDs are way down—as much as 40%–so the movie studios are looking at other ways to maximize their profits. Some of them banded together with satellite provider DirecTV to launch premium video on demand.
The first offering: the Adam Sandler – Jennifer Aniston comedy “Just Go with It” that opened in theaters 69 days ago. The deal is that consumers have to pay $29.95 for a two-day rental of the Sony Pictures film.
Why? For those not familiar with the system that is been in place for decades and decades, there are “windows”– windows of exclusive profit-making opportunity– that a film goes through from the date it’s released theatrically to years later when it might be sold to broadcast television.
That theatrical window lasts for about three months, even though most movies make the bulk of their money within the first six weeks in theaters and then peter out. Of course that doesn’t hold for major blockbusters that pack them in for months and offer theater owners huge moneymaking runs. Their trade organization, NATO, has been extremely powerful in keeping things the way they are, so this is the first shot over the bow that might break the system.
In addition to the Sandler film, three other films are scheduled for premium VOD on DirecTV. They are Universal Pictures’ thriller “The Adjustment Bureau,” Warner Bros. comedy “Hall Pass” and the Fox Searchlight comedy “Cedar Rapids.” Exact release dates have not been set, but DirecTV’s agreement with the four studios signed on calls for them to provide additional movies in the future. Of the rental fee, the studios will receive $21-$24.
Meanwhile, a month later said films come out on DVD for sale or rental for just a few dollars.
Hmmm. As consumers navigate a still rugged economy, we predict not many are going to jump on board this rather costly train.
In fact only about 6 million of DirecTV’s 19.2 million subscribers have high-def digital video recorders that are needed to access premium VOD. The most likely target demographic is families with young children for whom it’s difficult and costly to take out to the theater, but this first slate of films isn’t exactly kid fare.
The powers that be at DirecTV and the studios have been quoted as saying they aren’t really expecting much. But at the same time they’ve aroused an outspoken A-list of directors and producers, including James Cameron, Gore Verbinski and Peter Jackson who have criticized the initiative and taken the side of theater owners– not exactly brethren in creativity.
They contend that encouraging people to watch movies at home rather than in the theater cannibalizes movie business revenue. Meanwhile, it’s already getting ugly inside the theater. Top chains said they won’t show trailers from movies released on premium VOD and/or will negotiate for a larger cut of ticket prices for such films.
We’ll be staying top of further developments, after we get back from movies.
