Relativity dives into VOD

Platform pits industry against itself

In a November, 2009 interview with Variety, Ryan Kavanaugh predicted that VOD was “going to be the biggest driver this business is going to see.”

The high-flying mogul had worked on a VOD project very early on in his career. It failed, but helped turn the Relativity Media founder and CEO into a staunch on-demand evangelist.

“Theatrical – no question about it – will always be the platform,” Kavanaugh said then, “but VOD, obviously, is the natural progression.”

It’s indeed progressing, but the rollout has been controversial as of late. Home Premiere, a new premium VOD service that launched last month, has pitted the industry against itself, prompting a standoff between movie theater owners and film producers on one side, and studios and multi-channel video distributors on the other.

With the atmosphere delicate – actually red hot – Kavanaugh and Relativity execs declined to comment on the VOD business just now. But the two studios Kavanaugh works most closely with, Universal and Sony, have backed premium VOD, as have 20th Century Fox and Warner Bros.

The service allows subscribers to pay $25-$30 to watch a movie on demand two to three months after its theatrical debut – while the film is still in theaters.

The National Association of Theater Owners and 23 prominent film producers have published a letter attacking premium video on demand. The service is still experimental and the price point may need to be tinkered with, but the general feeling is that technology marches on and that Hollywood needs to keep in synch with consumer demand.

“While the hostility toward PVOD from NATO is more than expected, we are quite surprised that top filmmakers are fighting this development – we believe they are making a fundamental mistake by fighting technology,” says media and entertainment analyst Richard Greenfield of BTIG.

Relativity has already made its mark on theatrical windows. Last summer it announced a long-term deal with Netflix allowing that company to stream Relativity-owned films to its subscribers during the pay-TV window. Traditionally, the films flowed through Relativity’s studio releasing partners to output deals with premium TV channels years after their release on DVD. Now they are out in months.