Bad for business — that’s how NATO chief John Fithian describes the plan by some studios to push the envelope on premium VOD offerings this year.
“They will make a nickel and sacrifice a few dimes,” Fithian, prexy of the National Assn. of Theater Owners, said during Thursday the Gabelli & Co. Movie and Entertainment Conference in New York. The idea of premium VOD, spearheaded by Time Warner, is that studios would make first-run movies available on-demand through cable and satellite operators as early as 60 days after they are released in theaters. Consumers would pay anywhere from $30 to $60 to watch those movies.
Time Warner CEO Jeff Bewkes has said premium VOD for Warner Bros. films could debut this summer. DirecTV will reportedly be the first distributor to launch the premium service.
The effort is a means for studios to create another revenue stream at a time when DVD sales are in decline.
But on Thursday, Fithian pointed out that theater ticket prices have risen steadily over the years while the studios have allowed alternate homevid distribs such as Netflix and Redbox to “de-value” their product.
“So moving a decreasing price point into an area of an increasing price point is a bad business decision,” Fithian said. “We do not think that will work.”
He did say he would support launching VOD before the release of DVDs as long as it was in the existing home-entertainment window and not impinge on the traditional theatrical window of about 90 days.
Premium VOD will also bolster piracy because “you will be handing a much more pristine copy of a film to the pirates much sooner,” Fithian warned.
In a later session, Chris McGurk, a longtime film bizzer who is now CEO of tech outfit Cinedigm Digital Cinema, said there are other ways for studios to make up for lost revenues on DVD sales. He said the studios “have done a lousy job” of managing marketing costs for films and could easily reduce those costs by up to 20% without impacting theater attendance. Emphasizing the importance of maintaining the theatrical window, McGurk said: “Theatrical is what sets the market and all these other businesses downstream.”