Movie Industry Continues to Pursue Premium VOD Solution

Movie Industry Continues to Pursue Premium VOD Solution​

(May 30, 2017) Major film studios and domestic theaters know they’re in a fight with the in-home experience offered by modern consumer electronics (not to mention changing consumer viewing habits), and yearly statistics collected by the Motion Picture Association of America (MPAA) prove it. On the one hand, US/Canada non-3D Box Office sales have continued to rise over the last two years, following a general trend in the industry. During 2016, the MPAA reports that ticket sales hit $11.4 billion (the highest box office take in the last 10 years). However, overall admissions have been trending downward over the same period, with roughly 1.4 billion recorded in 2007 and 1.32 billion recorded in 2016. Obviously, this is a case of prices going up and attendance going down.

In order to keep revenues high and combat internet piracy, studios like FOX, Universal, Warner Bros, and AMC Entertainment have been pushing for a service called Premium Video on Demand, which would allow for movies to be offered to home viewers during the same 90-day period that movies typically occupy commercial theater settings. The true cost of an in-home premium rental hasn’t been established, but indications point to a one-time fee of $30 to $50 per film.

Interestingly, Disney’s CFO (Christine McCarthy) has said her company isn’t interested in Premium VOD. Last week, Home Media Magazine quoted the CFO as saying: “A lot of people get invested in the characters through our trailers. When we release, we believe, and I believe our consumers believe, that our movies are best seen on a big screen.” She went on to explain that Disney feels its genres are different than those of other Hollywood outfits, and that Premium VOD might not be a bad option for other studios.

Premium VOD raises obvious concerns for the exhibiter side of the equation, potentially removing customers and valuable concession sales from their theaters. Several months ago, theater owners gathered at CinemaCon (a yearly owner conference) and Premium VOD was on the discussion list. According to The Hollywood Reporter, studios and theater owners specifically discussed a reduction in the standard 90-day commercial film run window, which could open the door to a Premium VOD reality. How revenues could potentially be shared is a sticking point, which The Hollywood Reporter says is complicated by antitrust laws that dictate how cinema owners and studios can negotiate (in essence, individual theater owners will need to negotiate terms with each studio).

Several days ago, the inevitable seemingly took a few steps back, with AMC’s CFO (Craig Ramsey) stating that negotiations have stalled. According to another article in The Hollywood Reporter, Ramsey indicated that studios still haven’t figured out how to affectively offer Premium VOD during the sacred 90-day commercial cinema window. He also stated that cinema owners have serious concerns about such a service and its impact on revenues.

Tapping an evolving consumer market is critical to the health of Hollywood, but is the industry looking at the right solution? This problem could actually work out quite well for stubborn enthusiasts that prefer watching films in the home theater setting and consumers that favor watching movies on a device (where convenience trumps the theatrical viewing experience).

How does the potential for streaming current theatrical movies ring in your opinion? Would you pay a significant premium to stream current films into your home? Join the discussion and let us know your thoughts!

 

[Todd Anderson]

I couldn't feel them in action at our Dolby Cinema --- I do have them in my home theater. Love'm!

 

[phillihp23]

Don't see this taking off. Sony tried a version of this with there download box and there is a high end company that does it for a subscription I believe, hundreds a month if I recall. And both those services download then you watch them which likely will result in less bandwidth issues and better quality. I think the reality is that alot of people, the youth today, are less interested in high quality audio and video as they are in being able to watch movies as soon as they come out. You know the gotta have it now generation.

 

[1_sufferin_mind]

I think the reality is that alot of people, the youth today, are less interested in high quality audio and video as they are in being able to watch movies as soon as they come out. You know the gotta have it now generation.

I think your right, phillihp23. Without starting a bashing session, I'd just like to add that "now" equates to "wherever." Portable viewing is all the rage. I can understand an occasional film to pass the time, but how much further from an immersive experience can you get? It's the anti-thesis of home theater!

 

[Leonard Caillouet]

I just don't get watching a movie on a portable device, but as pointed out that seems to be a trend with youth. The whole premium VOD idea is going to be hard to implement and I don't see it getting very far. But then I see the prices continue to rise at theaters and the moves to more deluxe options that people are buying and I have to think again. Maybe the market is deeper than we think.

 

[JBrax]

I do think there's a deeper market for premium VOD. I'm not sure the targeted audience is youths though. For many youths going to the movies is as much a social event as anything else. Although I could see teenage girls ordering up a movie on a slumber party night. I'm sure most non enthusiasts of our hobby could never see themselves spending what some of us do on gear.