News

The Difficulty in Doing Windows

6/14/2010 4:05 AM Eastern

Time Warner Cable’s recent proposal
to movie studios to offer theatrical movies on demand
30 days after its release in theaters continues
to be hailed by industry observers as a potential watershed
for the fledgling video-on-demand category.
But, as some executives speaking at last Wednesday’s Multichannel
News/Broadcasting & Cable
On Demand Summit 2.0
conference lamented, that the proposal’s happily-ever-after ending
for VOD may be nothing more than a wishful fairy tale.

Certainly, there’s no argument that shorter movie
windows means bigger business for distributors
that off er VOD. Theatrical movies debuting on VOD
the same day and date as their DVD release perform
50% better than those released during the traditional
30-to-45-day VOD window.

Given those results, cable executives are salivating
at the potential revenue that could be generated
if top box-office movies like Shrek Forever After or
Avatar could be accessed by consumers from their
home lounge chairs with a push of a button from a
cable remote barely a month after debuting at the local
AMC or Clearview Cinemas theater — especially
at a proposed retail price of $10 to $20 per view.

Some MSO executives, like David Purdy of Canada’s Rogers
Cable, believe that offering movies on demand day and date with
their theater premiere is an even better and more practical business
prospect for both the studios and the theater owners.

“There’s a huge community out there that will never go to the
cinema. But they’re willing to pay a premium for that movie day
and date … They’ll pay multiples over what they currently pay for
VOD,” Purdy said during last week’s conference in Philadelphia.

But while the proposal looks great on paper, it might be more
difficult to implement in reality. First, theater-chain owners trying
to protect their profits will fight the shortening of the theatrical
window tooth and nail. While there will be some tests
revolving around a shorter theatrical-to-VOD window, one theater
chain owner who wished to remain anonymous said theater
proprietors will never accept a 30-day VOD window, much less
one that’s day and date with their movie premieres.

Summit Entertainment president of domestic television distribution
Alex Fragen also said during the conference that such
a radical move with respect to windows would also be detrimental
to the current movie distribution chain, which also includes
pay TV and basic cable syndication opportunities.

Even if the operators are able to achieve their goals,
they will have to employ a major marketing and promotional
campaign to train consumers on the new
VOD window opportunities, which could prove to be a
greater hurdle for operators than the theater owners.

Operators would have to create a new VOD movie
price level for these short-window titles, which would
ultimately confuse consumers used to paying $3.99
to $5.99 for traditional VOD movies. Further, the proposed
$20 to $40 price tag for a 30-day or same-day
VOD/movie-theater window for a newly released film
could present a negative value proposition for consumers.
For a consumer that doesn’t have a 50-inch HDTV
with surround sound in his home, suddenly paying $10
to experience a film in a theater could deliver a greater bang for
the buck than VOD.

“Convenience is great, but for the majority of households, the
VOD experience in watching movies is inferior to that of going
to a movie theater,” said Leichtman Research Group president
Bruce Leichtman. “It’s clear the knee-jerk reaction from theater
owners is that ‘this is bad for us,’ but there’s another part
of it that might put the price in perspective and actually benefit theater owners.”

Cable has provided a sneak peek at their grand plan for offering
Hollywood movies to consumers. But much like traditional movie
trailers, the preview may be better than the actual event.

September