Firm explores new digital distribution technologies
No one can say they weren’t warned: After dropping some very loud hints for some time, the major studios are moving forward with plans to offer up movies via video-on-demand at home as the pics are still playing in theaters.
Time Warner said Wednesday it will be one of the first to do so by next summer, charging $30-$50 per film. Disney has also been eyeing such a move. The major congloms conducted focus groups and other polls this summer, zeroing in on that price.
“We’re near agreement with our distributors on the right window and the right price point,” Time Warner CEO Jeff Bewkes said Wednesday as he revealed the VOD plans during the company’s third quarter earnings call.Specific titles were not revealed, but “Hangover 2,” “Sucker Punch” and “Green Lantern” are likely contenders: If Time Warner wants to make a big splash with its new VOD offering, it will need a high-profile pic that either appeals to early adopters or families who don’t want to make the trek to the megaplex and empty their wallets on tickets and concessions.
Time Warner’s video-on-demand service will also offer films in 3D, and the latter two pics fit the bill.
No matter which films are offered, however, such a move is guaranteed to rile theater owners, who have long opposed losing sales to early homevid releases. Movie rental outfits like Netflix and Redbox will face more competition if the film biz throws its support behind premium VOD.
The National Assn. of Theater Owners was quick to respond to Bewkes’ news.
“Exhibitors were surprised today to read Mr. Bewkes’ comments,” said John Fithian, president and chief exec of NATO. “They assume that Warner Bros. would discuss new models with their existing exhibition partners prior to finalizing radical agreements that could damage the entire movie industry.”
But Time Warner’s move shouldn’t come as a surprise. Since the start of the year, studios, especially Warner Bros., have aggressively been working to hold off Netflix and Redbox, imposing a window that prevents them from offering up movie rentals for as low as $1 a day until 28 days after a movie hits store shelves as a DVD or Blu-ray for purchase. Deals were done to make sure sales of discs aren’t hurt from cheaper rentals.
“We’re just trying to maximize the value of our content as we see these alternatives develop,” Bewkes said. “The vast majority of (disc) sales do occur in the first 28 days, and it’s helped sales.”
Yet there is discussion of lengthening that window even further to keep consumers interested in buying discs. The pricier VOD option Time Warner wants to roll out would occur before movies bow on DVD or Blu-ray.
Warner Home Video president Ron Sanders has expressed that he would like to renegotiate the window because it’s not long enough.
“To be honest, I think it’s a little short today versus what we probably need,” he said Tuesday at the Digital Entertainment Group’s Blu-Con symposium at the Beverly Hilton. “That will get revisited as those deals expire” next year.
Time Warner has also been part of a consortium of studios and cable providers to promote video-on-demand through a $30 million campaign, dubbed “the Video Store Just Moved In,” with a new logo and marketing campaign since March. That effort has focused mostly on rentals of pics that are offered day-and-date with their disc counterparts — an area of the homevid biz that has been growing at a rapid rate for studios.
But the pricetag of each premium VOD pic would be much higher, given the earlier release window, and fall in line with the amount demanded for pay-per-view broadcasts of sporting events, which are increasingly watched by groups.
While Bewkes didn’t provide too many details, he said the company was still trying to work out how soon movies would be available after their bows in theaters. At the $30 pricetag, that should fall within the 28-day window, creating a potentially lucrative new revenue stream for Hollywood’s homevideo divisions.
Bewkes said he is happy with that time frame but didn’t rule out pushing the window back even further.
“We aren’t religious” about the windows, he said, and those time frames are under constant “scrutiny.” He added that while digital distribution presents big challenges to Time Warner, ultimately the “opportunities outweigh the risks.”