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Premium VOD War Is Back: Disney, Sony Early Releases Sure to Enrage U.S. Exhibitors

Studio tests in South Korea could rekindle conflict in the States

Another all-out battle may be brewing between studios and U.S. exhibitors over release of blockbusters on video-on-demand while pics are still playing in theaters.

In recent months, Disney and Sony Pictures Entertainment have tested premium VOD releases in South Korea, with titles available online or on cable VOD three to five weeks after theatrical debut, according to a Wall Street Journal report. The trials, involving Sony’s “Django Unchained” and Disney’s “Wreck-It Ralph” and “Brave,” mark the first time Hollywood movies were available to home viewers in the region while they were still in the theater windows — something movie theater owners have vehemently fought against in the U.S.

South Korea has very high levels of piracy, and many studios have even abandoned the home-video market there as a result. The relatively early-release VOD trials in the country may be an effort to capture some marginal revenue given rampant file-sharing.

Still, while U.S. piracy has not hit crisis proportions, studios frequently float trial balloons in international markets before launching them in the States — and the Korean experiments could mean majors are on a path to again try early-release premium VOD in the U.S. Execs at other majors are closely watching Disney and Sony’s tests in South Korea and may follow suit, according to the Journal.

Disney and Sony declined to provide results of the VOD tests. But South Korean cable operator HomeChoice said buy rates for premium still-in-theaters titles was 30% higher than other movies, the Journal reported.

Theater chain operators, which in the U.S. include Regal Entertainment, AMC Entertainment and Cinemark, fret that early-release VOD would directly cut into box office sales. According to the National Association of Theatre Owners, releasing a title on VOD while it’s still playing in theaters “muddies the value proposition” for consumers.

Exhibitors have fought past attempts by studios to provide premium VOD.

In the fall of 2011, Universal Pictures scrapped plans to release “Tower Heist” on VOD — for a $60 one-time rental fee — three weeks after theatrical premiere, following boycott threats from major exhibs.

Earlier that year, DirecTV launched select VOD titles, available for $30 rental 60 days after theater release, which also raised the ire of theater owners. But the satcaster eventually abandoned the effort, likely because of poor sales.

(Marc Graser contributed to this article.)

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