Universal, Warner Bros. Talking to Theater Owners About Offering Films in Homes Early

Furious 7
Courtesy of Universal

Universal and Warner Bros. are having discussions with theater chains about possibly limiting the amount of time between a film’s theatrical release and its debut on home entertainment platforms.

Bloomberg first reported that studios had engaged in talks with exhibitors about shortening the period of time in which films are exclusively on the big screen. The studios are looking for ways to bolster home entertainment revenue, which is suffering from an 18% decline in DVD sales. The talks are the clearest sign yet that windowing, the industry term for the amount of time a film is in theaters, is going to be hotly debated in the coming months and that a major change in release patterns could take place as early as next year.

Spokespeople for Warner Bros. and Universal confirmed that the studios are having discussions with theater owners about shortening release windows, but offered no additional comment. In a presentation this week at the Credit Suisse conference on technology, media, and telecom, Warner Bros. CEO Kevin Tsujihara said that he was having “constructive conversations” with the exhibition community.

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“If you start with the consumer, they’re telling us very clearly they want it [earlier],” he said. “That’s where all the pirating is occurring, right? And so we have to meet that demand with a legal solution. And so as I’ve said, we’re trying to work with our partners on the exhibition community.”

The studios have yet to determine whether or not the films will be just higher-priced rentals or will be available for purchase. Bloomberg reported that the time frame being weighed is two weeks to a month and that the price being considered is between $25 and $50. Insiders say that the price is likely to be on the higher end of that range and that a month delay between a film’s theatrical opening and its home entertainment bow is the most likely scenario. Theater owners would get a cut of the revenue in exchange for agreeing to the new windows.

Getting theater owners on board could be a challenge. In 2011, exhibitors were up in arms after news broke that several studios had a deal with DirecTV to rent several releases eight weeks after they landed in theaters. A plan to offer “Tower Heist,” a 2011 Eddie Murphy comedy, on demand for $59.99 some three weeks after its debut was scuttled by Universal after theater chains threatened to boycott.

It’s not clear if other studios are also having discussions with theater owners. One major player, Disney, is not involved in this push to shrink windows. That makes some sense, as Disney has emphasized making tentpole films such as “Star Wars” and “The Avengers,” that tend to do sizable business in theaters.

The issue of windowing was reignited earlier this year after Variety broke the news that Screening Room, a startup from entrepreneurs Sean Parker and Prem Akkaraju, wanted to offer new releases for $50 in the home at the same time as they open in theaters. As part of their pitch, the company would give users access to an anti-piracy-equipped set-top box that transmits the films and will give customers 48 hours to watch the movies.

Screening Room has not factored heavily into these latest talks with exhibitors, insiders say. Part of the reason is that the studios are not interested in giving one platform exclusive rights to content. They want the films to be available on iTunes and other retailers.

 

 

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  1. The Truth says:

    Why doesn’t Variety do some real journalism on this issue? Report on the upside/downside revenue projections for the studios and theater owners if theatrical windows were eliminated. How much would the studios have to risk losing initially in order to rebuild a new system where they eventually gain more? How long would it take for a new model to stabilize? And how much of a bite would digital piracy take out of the on-demand digital first-run model?

    There are many millions of prospective movie patrons who don’t want to schlep to the theater to see a first-run film. They’d prefer to enjoy the movie in the comfort of their own homes on their own schedules, just as they do with every other form of recorded media. The number of people in this category dwarfs those who actually want to see a movie in a theater.

    But no one in the movie industry has the balls to break the antiquated theatrical model in favor of an affordable first-run digital distribution model because (1) the theater chains threaten to wreak havoc with the current revenue model by refusing to show films by studios who buck their system, and (2) because studios fear that groups will watch home-delivered movies, depriving the studios of single-viewer-only revenues.

    If the studios had the courage to release first-run movies digitally on all platforms at the ticket price of the theatrical model (or less due to beneficial economies in the digital model), the marketplace would speak volumes. The only people going to movie theaters would be those who truly want the theater experience, which is as it should be. Any revenue decreases due to group or family viewing would be offset by general increases in revenues due to substantial expansion of on-demand first-run movie purchases because streaming first-run movies while the bloom is still on the rose would become a routine entertainment option. Rather than spending money on babysitters, gasoline, parking, and outrageously over-priced concessions — which do not show up on the studios’ bottom lines — movie fans will quickly become accustomed to watching several more first-run movies in a month, many that they would never go to see in a theater.

    Placing an artificially high premium price on digital delivery to appease theater owners simply prolongs a no-growth system, promotes piracy, dramatically reduces the potential digital delivery audience, and delays the development of the model everyone knows a massive audience really wants — equitably priced, in-home (or anywhere), first-run movies.

    • John Shutt says:

      Because you cant top the theatrical experience at home. You cant get as good a sound or picture quality at home then you do in a theater. That’s why movie theaters arent going away. Anyone who wants to watch a movie on thier phone rather then a theater clearly needs a gun to thier head and be put out of thier misery

  2. greg marotta says:

    Interesting.

  3. OB says:

    I wouldn’t pay $50 bucks just to watch a movie at home – the window is already short enough with most films hitting the home market in three months time either on HBO or Amazon or iTunes. Though, I suppose, with a big enough movie I could get people to kick in $10 each and come over. I have a projector and decent sound… but for me, the big movies are the ones i DO want to see in a packed theatre, so I’m not sure what the thinking here is.

    What I also don’t get is where the studios are losing so much money… I know there’s pricey, but people are renting and buying on iTunes, too… and the price point is the same (if not MORE) than it was for DVD and Blu in the last few years. I mean… $19.99 to “buy” a film on iTunes. Why is it so much? They’re not pressing discs, the cover art is pre-existing from the theatrical marketing… I’d honestly be buying more films if they weren’t so pricey. It just “feels” like I’m getting ripped off (even if I’m not) so they can make up that 18% loss we keep hearing about.

    What DID make a difference for me was when they started offering special features on iTunes, too. That finally took me off physical media. Of the iTunes purchases I’ve made, some of those decisions were based on availability of extras – A24’s EX MACHINA, for example, had great stuff in addition to being a good film.

  4. gcw07 says:

    If this is intended to curb movies being pirated, then they really don’t understand why people pirate. It is because they either can’t afford it or are just cheap. All releasing it early will do is create a much better copy to pirate from.

  5. Acid says:

    Make it anew studios-backed streaming service. Pay say $30 a month and get access to 3 movies a month a month after their release in theatres. $30 is around the same as paying for 3 movies in theaters, except without the theater operating costs so more revenue is going to studios and theatres.

    If you just release the film digitally for sale/rental a month after release, it will just be pirated that much quicker, whereas we have evidence to believe subscription based services as a legal option to piracy are something that works.

  6. maya says:

    are they insane???????? Why????? dont try and destroy theatrical. ugh

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