Cinema chief warns against VOD

Early premium releases tempt pirates

The plan by some studios to shake up the windows release schedule by offering premium VOD of films much sooner after they bow in theaters is bad business, the head of the theater owners trade group charged on Thursday.

“They will make a nickel and sacrifice a few dimes,” John Fithian, president of the National Association of Theater Owners said during the Gabelli & Co. Movie and Entertainment Conference in New York.

The idea of premium VOD, led 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. movies could debut this summer.

The effort is a way studios can create a new 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 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 existing theatrical window.

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.