×
You will be redirected back to your article in seconds

Premium VOD Paralysis Reflects Poorly on Studios, Exhibitors (Analysis)

It’s been a rough summer for the movie business. Box office for the season is down by double digits versus last year, and by single digits year-to-date. Exhibition stocks are getting hammered. And some analysts believe the third quarter of the year could be just as woeful.

Which makes recent reports suggesting the major studios are considering striking a deal to launch a premium VOD window with Apple and Comcast as soon as two weeks after titles begin their theatrical run entirely understandable.

The studios and exhibitors have been bogged down in negotiations that seem to have intensified in recent months, yet go back seven years without resolution. Yes, this is a complex situation, but it’s not the Middle East peace process, either. It’s well past time a deal got done for the sake of both of their struggling businesses.

Instead, we have this absurd new two-week proposal being floated, which just isn’t going to happen. Exhibitor backlash would be swift, perhaps in the form of the kind of boycott that could kill a movie before it ever appeared in homes. If the bulk of negotiations with the exhibitors has centered around 17- to 30-day windows, an even shorter duration is an even bigger non-starter.

The Apple/Comcast report seems like pure posturing — a flare sent up from the studios to signal their frustration with the stalemate. With AMC Entertainment and Regal Entertainment trading near 52-week lows, the time is now to put pressure on the exhibitors.

That said, both sides look equally pitiful right now. How much worse must it get for this dysfunctional duo to come to their senses and reach a deal? How much longer will executives continue to issue updates on negotiations in which progress never seems to actually get made?

All that’s been accomplished to date is negligible experimentation responsible for a smattering of select movies available in a post-theatrical window (anyone remember “Tower Heist”?). All the while, the home entertainment business that once provided a comfy cushion for the studios has shrunk significantly with no hope of ever coming back as the digital alternatives pile up.

Those alternatives are only going to get stronger as Netflix and Amazon move beyond just licensing theatricals in later windows to cranking out dozens of their own original titles. These efforts may still be nascent today, particularly for Netflix, but don’t be surprised if the streaming service catches up quickly to Amazon, which has taken a more exhibition-friendly approach than Ted Sarandos ever will.

Apple could also eventually join Netflix and Amazon as a threat, but for now, the studios have cast the Cupertino colossus as a PVOD savior. Accelerating the window on movie transactions doesn’t have the importance of, say, iPhone 8, for Apple, but it’s not a trivial matter, either. Coming days after the company made clear its intent to spend $1 billion on original programming, premium VOD would provide just the kind of boost Apple needs to follow through on CEO Tim Cook’s pledge to double the size of the services business in which its content-related efforts are house by 2020.

iTunes has seen its dominance of the transactional content business it pretty much invented seriously eroded by alternatives like Comcast. If ever there was a catalyst to revitalize iTunes and reach the goal Cook set, it’s premium VOD. It’s not going to be singularly transformative, but in combination with original series, that’s a terrific one-two punch it’s been lacking for over a decade.

Comcast probably sees the potential premium VOD can bring to its own Xfinity platform, but there’s a helluva wrinkle here: The company also owns a movie studio, Universal Pictures. Let’s see Comcast synergize its way out of that one.

Universal or otherwise, there is no way any studio is going to have the cojones to follow through on the two-week proposal because of the fear of exhibitor reprisal. Diminished as the box office may currently be, studios would be foolhardy to attempt the nuclear option such a runaround would represent. NATO has proven its pugnacity time and again; it doesn’t need an excuse to start a fight.

Studios and exhibitors have been signaling all year to the marketplace an intent to work something out. The ‘whither PVOD?’ question has hung in the air so long that the absence of an answer doesn’t reflect well on either side of the negotiation table. And still they’ve sat locked in a starting content for so long that they seem blind to the pressure building all around them.

Popular on Variety

More Digital

  • Elite Season 2

    San Sebastian: Spain’s SVOD Players Debate Competition, Brand, Talent

    SAN SEBASTIAN  — Executives from HBO, Netflix, Amazon and Movistar+ and “Elite” co-creator Darío Madrona took to the stage to field questions on the Global Impact of Spanish Series. Here, briefly, are five takeaways: 1.Spain First “La Casa de Papel” was watched by 34,355,956 Netflix accounts over its first seven days,  after a July 19 [...]

  • Tinder - Swipe Night

    Tinder's Apocalyptic 'Swipe Night' Interactive Dating Show Sets Release Date

    Tinder next month will bow its first original entertainment content — “Swipe Night,” an interactive adventure series in which viewers are forced to make dating choices on humanity’s last night on Earth. Variety previously reported details of the location-based social network/dating app service’s foray into original content, which recently wrapped production in Mexico City and [...]

  • Editorial Use onlyMandatory Credit: Photo by

    YouTube Rolls Back Verification Changes, Says Verified Creators Can Keep Their Badge

    A day after announcing significant changes to its verification program, YouTube announced Friday afternoon that it won’t be de-verifying existing creators after all. “We heard loud and clear how much the badge means to you,” said YouTube product manager Jonathan McPhie in a blog post. “Channels that already have the verification badge will now keep it [...]

  • BLive: BitTorrent Live Streaming App to

    BitTorrent to Launch Public Beta of New Live Streaming App

    BitTorrent is getting ready to open the floodgates for its new live streaming app, dubbed BitTorrent Live: The company plans to launch a BitTorrent Live Android app on various app stores as part of a public beta test late Friday, according to a spokesperson. BitTorrent Live, which is also known as BLive, is being described [...]

  • Netflix - Apple TV

    Netflix Stock Drops After CEO Acknowledges 'Tough Competition' Coming From Disney, Apple

    Netflix shares fell as much as 7% Friday to a nine-month low, coming after CEO Reed Hastings commented that the November launches of Disney Plus and Apple TV Plus will introduce a “whole new world” of competition. Hastings, speaking at the Royal Television Society conference Friday in Cambridge, England, said, “While we’ve been competing with [...]

  • Facebook

    Facebook Suspends Tens of Thousands of Apps During Privacy Investigation

    Facebook has suspended tens of thousands of apps ever since it began investigating potential privacy abuses, the company said Friday. The apps in question had been built by around 400 developers, and a suspension doesn’t necessarily indicate actual privacy violations. Facebook began combing through millions of apps that made use of its platform after the [...]

  • tivo logo

    Tivo Plans to Launch Android TV Dongle, Tivo+ Curation App

    DVR maker Tivo is getting ready to release a new device that may not record television at all: The company plans to launch a $50 Roku-like TV dongle early next year, its new CEO Dave Shull revealed in a conversation with CNN this week. The new device will be powered by Google’s Android TV platform, [...]

More From Our Brands

Access exclusive content