Paramount Pictures chief Jim Gianopulos made it clear in remarks at an investor conference on Friday that major film studios are working hard on finding a compromise with exhibitors on the launch of a premium VOD window for new theatrical releases.
“It’s inevitable,” Gianopulos said of premium VOD during his session at the Bank of America Merrill Lynch media conference in Beverly Hills, Calif. “At this point it’s now about what and when.”
Pressed by moderator Jessica Reif Cohen about the status of talks between studio chiefs and major exhibitors, Gianopulos said the process has “momentum” at present and predicted that some new offering could materialize sooner rather than later.
“Once things pick up this kind of momentum, you’ve got to be thinking about it in a period of months not years,” Gianopulos said.
Details such as pricing and the length of time between a film’s theatrical debut and the premium VOD offering are being hammered out. Those are the trickiest elements, along with the need to make sure that the content can be delivered in a way that protects studios from piracy, he said.
“It’s incumbent upon us to find the right business model and the right consensus on how to do it,” Gianopulos said.
The film veteran cited lessons learned from a previous experiment with premium VOD in 2011, when 20th Century Fox and a handful of others made select titles available via DirecTV’s VOD platform for $30, starting 60 days after theatrical release. He thought that was a “benign” experiment given the 60-day delay and price point, but it spurred an uproar among exhibitors and proved to be short-lived. He blamed the situation partly on “disconnected communications between the studios and exhibitors.”
But now there is a shared sentiment that premium VOD is an evolution that needs to happen for the good of the entire business. “The various stakeholders have come around that this is something that has to happen because consumers are demanding it,” he said.
The 2011 experience taught Gianopulos that 60 days is “probably too long” of a wait in an era when consumers are accustomed to getting instant gratification. Moreover, many movies are out of theaters long before the 60-day time frame.
Price points under discussion have ranged from $30 to $50, he said. The closer the VOD window comes to the theatrical release date will impact that pricing question, he said.
“Waiting until it has exited or about to exit the theatrical window — that’s the consensus that is being discussed,” he said. There have been no conclusions at this point, he added.
“There are varying approaches that involve invading the theatrical window,” he said, in which case “some accommodation needs to be reached with the exhibitor.”
Among other topics discussed during the 40-minute session:
Gianopulos, who joined Paramount in March after a long run at 20th Century Fox, said Paramount is looking to 2019 as the first big year of growth under the new regime that began with Bob Bakish taking the reins as CEO of Viacom last December. He came in on the heels of a year when the studio lost $500 million. The studio won’t come anywhere near that level of red ink in the next three years. “2016 was a disaster. That was unfortunate. Some of it is bad luck and some of it is other factors. It was an extraordinarily bad year,” he said.
On this year’s lackluster summer box office receipts, Gianopulos cautioned against over-reacting, but he also chalked it up to the product. “I think it’s cyclical. We now have a 12-month season. The first quarter (2017) was the biggest first quarter in history. I always go back and look at 10 years. 2014 was a big drop from ’13 and ’15 and ’16 were record years,” he noted. “It’s the movies, stupid. A lot of it is how well the industry delivers on its films.”
Gianopulos indicated that his executive team is mostly complete after making a flurry of hires during the past six months since signing on. “The core team is coming together,” he said.