Behind Universal’s $60 VOD Misfire - Multichannel

Behind Universal’s $60 VOD Misfire

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Universal Pictures’ aborted plan to offer
a $60 video-on-demand airing of its upcoming comedy
Tower Heist three weeks after the theatrical premiere would
have been a difficult sell to consumers at that high price tag,
industry observers said.

Universal — in an effort to test the viability of short theatrical-
to-VOD windows — planned to sell the Ben Stiller-Eddie
Murphy comedy to Comcast subscribers in Atlanta and
Portland, Ore., just three weeks after its Nov. 4 debut. Typically,
theaters have three to six months to exhibit a film before it
goes to VOD and home video.

But Universal (part of Comcast-controlled
NBCUniversal) pulled the plug
after several theater chains such as
Cinemark threatened not to exhibit the
film, claiming the short windows would
adversely affect box office sales.

MODEL ‘CAN THRIVE’

Universal officials could not be
reached for comment, but in a statement
the studio said it “continues to
believe that the theater experience and a premium videoon-
demand window are business models that can coincide
and thrive.”

The National Association of Theater Owners said that while
various theater owners didn’t support Universal’s Tower Heist
experiment, the organization “recognizes that studios need
to find new models and opportunities in the home market,
and looks forward to distributors and exhibitors working together
for their mutual benefit.”

Universal isn’t the first studio to try a premium VOD window:
DirecTV’s Home Premiere service launched in April and
offers select Warner Bros. Home Entertainment,
Universal Pictures, Sony Pictures
Home Entertainment and 20th
Century-Fox titles two months after
their theatrical release for $29.99.

Some independent studios, such as
IFC Films and Magnolia Pictures, also
offer VOD movies at the same time —
and in some cases weeks prior to —
their debut in theaters. But Universal
was the first to offer a theatrical movie
on VOD such a short time after the theatrical
window — and for such a high suggested retail price.

Bruce Leichtman, president of media research company
Leichtman Research Group, said operators and studios will
have a hard time convincing consumers to fork over $60 to
watch a theatrical movie at home, even if it were concurrent
with the theater premiere.

TOUGH SELL AT $60

He said a $60 VOD price tag — which is reserved in today’s
environment for big-ticket boxing events like HBO’s Sept. 17
Floyd Mayweather-Victor Ortiz fight — doesn’t equate to the
value and overall experience consumers get when they go to
theaters. The average $10 to $20 movie ticket for Tower Heist
would have been cheaper than viewing it via VOD. And with
pay-per-view fights, unlike movies, buyers typically invite
their friends over to watch.

While cable has made inroads toward offering movie titles
on demand on a day-and-date basis with a home-video release,
former Warner Bros. movie, PPV and TV executive Ed
Bleier was unsure if the premium VOD window was a major
draw for consumers at such a high price tag.

“People still want to see movies in the theatrical environment
first, and then love having it at a more convenient and
lesser price on the big screen at home,” he said. “I don’t believe
that there are that many movie-going shut-ins because
of kids or budget limitations who would pay a $25 to $50 price
to get it sooner on TV.”

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