With a deal from Disney to premiere “The Sixth Sense” on TV just 30 days after homevideo, the pay-per-view industry is expecting the 10th biggest theatrical release of all time to become the biggest PPV movie ever.
“The Sixth Sense” will premiere on DirecTV and on digital cable systems through the cable industry’s PPV service iNDemand on April 27.
It’s believed to be the biggest movie to be offered to PPV in such a short window, for which DirecTV and iNDemand pay Disney’s Buena Vista pay TV unit a guarantee of a minimum number of purchases.
Industry sources expect total cable subscriber purchases of “The Sixth Sense” to reach about 2 million, representing a buy-rate among the approximately 28 million households that have access to PPV of about 6% to 7%, or $7 million to $8 million in consumer spending.
But the buy-rate among the approximately 4 million households with digital cable, where the same PPV movie can be presented with start times of every 30 minutes on a “near-video-on-demand basis,” is expected to be much higher at about 20%.
Households without digital cable will have to wait an extra 28 days to get access to the movie on PPV through iNDemand because iNDemand was unwilling to pay the guarantee for the bigger universe of subscribers.
DirecTV’s buy-rate could be as high as 25% of its 7.3 million subscribers, some sources predict. DirecTV competitor EchoStar is also waiting till May 25 to offer the title so that it does not have to pay the guarantees.
“The Sixth Sense” set an all-time record for rentals in video stores two weeks ago with about $26 million in consumer spending and dropped off less than 9% in the second week, according to the VSDA VidTrac data tracking service.
“Pay-per-view has almost always followed the trend of VHS rentals,” said iNDemand executive VP of entertainment Mark Sonnenberg, who added that the short window, “amazing” word-of-mouth and Academy Award nominations will combine to make it the biggest PPV movie ever. “The Sixth Sense” is expected to outperform recent strong titles like “The Matrix,” “There’s Something About Mary,” “The Waterboy,” “Scream 2” and “Saving Private Ryan.”
Priced for rental
The fact that the video of “The Sixth Sense” is priced for the rental market will make it a stronger PPV title, said Dan Cohen, senior veep of Buena Vista pay TV. Most blockbusters like “The Sixth Sense” are priced low to be purchased by consumers, who then are not as likely to pay to see the movie on PPV if they have a copy of it in their house, Cohen said.
Even so, record consumer spending on the title on cable and satellite digital services would be $18 million to $20 million during the entire PPV run, of which Disney would get about half.
That pales in comparison to the $50 million that “The Sixth Sense” has generated from rental revenue at video stores and the $40 million or so in DVD sales in the first two weeks alone.
By April 27, video rental revenue is expected to still be strong, and could be adversely impacted by the availability of the movie so quickly on the less lucrative but more consumer-friendly PPV.
Bottom line boo-boo?
With Disney now splitting revenue from each video rental with video store owners rather than selling each copy outright to stores as in years past, the PPV strategy could come back and bite Disney in the bottom line.
Cohen said that his division works very closely with the studio’s video side to maximize revenue for the company.
Typical PPV windows are 45-60 days after video. Disney is one of the few studios aggressively pushing the option of a shorter window for those willing to pay a premium of a guarantee. Last year “Shakespeare in Love” was offered to digital PPV systems with a 30-day window in exchange for a guarantee, and “Inspector Gadget” was offered at 24 days prior to that. “Scream 2” was another title with a 30-day window from Disney in 1998. Others, like “The Waterboy,” were offered at 45 days.
But the window itself does not guarantee bigger numbers. “Shakespeare in Love” was not a strong performer, for instance.