Long before studios launched their new premium VOD window, Hollywood was already offering films shortly after their theatrical bows — in hotel rooms.
In fact, studios are increasingly turning to LodgeNet Interactive, the nation’s largest provider of VOD services to the hospitality biz, as a case study for the kinds of films that will be offered 60 days after they unspool at plexes and as proof that an audience exists for higher-priced rentals.
Last year, the top-selling pic for LodgeNet was Warner Bros.’ “The Blind Side,” followed by “Couples Retreat,” “Date Night,” “Robin Hood,” “2012,” “It’s Complicated,” “The Twilight Saga: New Moon,” “Sherlock Holmes,” “Avatar” and “Salt.”
Sony was the top-performing studio for LodgeNet in 2010, with two of its titles among the top 10 sellers and many other solid performers.
Overall, LodgeNet’s service offered 359 titles, the highest number ever in a single year, with 35 of those films each generating sales of more than $1 million.
That kind of coin is hard for Hollywood to ignore, especially at a time when the biz is eager to exploit any new revenue source. It also demonstrates the importance of other nontraditional distribution platforms for films. While digital has stolen much of the spotlight, hotels and airlines have also stepped up their appeal.
Films typically play for six months on LodgeNet’s VOD system, which is available in more than 1.8 million rooms in more than 9,000 hotels throughout the U.S., Canada and Mexico, with much of a film’s revenue earned over the first couple of months. System is accessible to more than 500 million travelers annually.
With rentals increasing over the years, LodgeNet is now readying a complete redesign of its VOD service, with a new interface, that will start appearing on hotel screens later this month. Effort will promote early film rentals and push a tiered pricing model to generate rentals of less-expensive titles as well.
Relaunch will be backed by a considerable marketing campaign that relies on the tagline “Why wait” for new releases and hypes the availability of some pics two months before they’re available on DVD and 90 days before Netflix.
“Even though we’ve talked about films still being in the theater, we recently found that a good number of our guests aren’t aware of these special windows,” said Derek White, prexy of interactive and media networks for LodgeNet.
DirecTV is charging $30 for pics that play 60 days after their theatrical bows; LodgeNet charges around $15 for the same titles. The majority of the films LodgeNet offers, however, are priced at under $10, with select “daily deal” titles offered for as low as $4.99.
In some cases, films have been offered 45 days after their bow, with others available day-and-date and some indies playing on LodgeNet’s system before their theatrical runs.
“LodgeNet has enjoyed special windows for a couple decades now,” White said. “It’s nothing new.”
The early availability and pricing of the new Home Premiere service has irked theater owners, who have expressed concern that auds may get used to waiting for films they want to see at home rather than making a trip to the megaplex.
LodgeNet, however, hasn’t been part of the debate because “we’re dealing with travelers and people out of the home,” not individuals in their living rooms renting movies with family members or friends, White said. “In the (hotel) room, there’s usually just one or two people. We’ve never been controversial and don’t think it will ever be an issue for us.”
To add more titles from studios, LodgeNet recently tapped former On Command exec Brent Jenkins as its new head of theatrical business, based in Los Angeles, and Brian Bickford as its new VP of guest entertainment.
“We’ve underscored our focus on the space and will be adding titles,” White said.
LodgeNet has been pitching its new VOD service to hotel chains by saying it will generate “increased guest satisfaction, higher revenues and more marketing support.”
Company believes premium VOD rentals will increase with the installation of more HD flatscreen sets in rooms. Rooms with those TVs have boosted revenue per room by 6%. Only 17%, or around 290,000, of the TVs on which LodgeNet’s VOD service is available have been converted to HD so far, but with the cost to convert rooms going down and the economy rebounding, more rooms will likely make the high-def switch moving forward.
“There’s a huge increase in movie buying for guests when there are flatscreens vs. old tubes,” White said. “The television continues to be the dominant centerpiece of the room and where people spend their time.”
At the same time, LodgeNet is investing heavily in introducing its interactive TV service, dubbed Envision, in more rooms. The service puts app-like features on TVs that connect to the Internet.
Envision will enable LodgeNet to expand its VOD biz to offer more films via cloud-based services like Hollywood-backed UltraViolet that will launch later this year and make films accessible online using any device.
LodgeNet also happens to be the largest supplier of Internet services to hotel chains. And because of that, it would be able to collect a fee from movie downloads or a customer accessing pics from their digital lockers.
Embracing UltraViolet would also enable LodgeNet to start selling movies and create a new business for the company, turning it “into an e-tailer,” White said. “It makes a lot of sense for us.”
“We analyzed the trends in media consumption in the guest room, and it was clear to us that the future of interactive television will be apps-driven and cloud-connected,” said Scott Petersen, chairman-CEO for LodgeNet, in a statement. “The flat-panel HDTV will remain the focal point of the room as it represents the optimal display device.” Turn-on rates, he said, are at over 98%, and the average viewing time is more than three hours per day.
Ironically, LodgeNet is a little concerned that consumers’ acceptance of premium VOD at home may start cutting into its own sales, just as the exhibition biz worries about its impact on its own bottom line.
“We think it’s positive and will help demonstrate our value proposition with guests,” White said. “On the flipside, there is the potential that if this takes hold and premium VOD becomes the norm at home, we lose a little bit of our point of difference.”