Riding an unusually early 30-day digital pay-per-view window and aggressive industry marketing, Buena Vista's The Sixth Sense is on track to become the most successful and most lucrative PPV movie of all time.
But the success of the box-office blockbuster has again inflamed the issue of early PPV windows and their potential effect on both PPV and home-video revenue-especially since home-video sales for the movie took a nosedive once it premiered on digital-PPV systems.
The Sixth Sense, which earned $300 million at the box office and several Academy Award nominations, will pull in more than $8 million in combined digital and analog PPV sales, besting Buena Vista's The Waterboy, which earned $5.6 million, sources close to the situation said.
The Sixth Sense generated 20 percent to 25 percent buy-rates in digital-cable homes. Even after its 30-day digital run, the movie was strong in analog distribution, generating an early 6.5 percent to 7 percent buy-rate, according to In Demand executive vice president of entertainment Mark Sonnenberg.
In contrast, The Waterboy generated a digital buy-rate around 20 percent and a 6.4 percent analog buy-rate.
A rare 30-day PPV window, which In Demand was able to provide to its digital-cable subscribers, aided the film's success. Typical PPV windows average from 45 days to as much as 90 days.
In Demand paid Buena Vista an upfront guarantee buy-rate of around 20 percent for the early-window rights, according to sources close to the situation.
"We felt that Sixth Sense could be the biggest PPV movie of all time because it was a highly successful box office film that did about $300 million, it had star power in Bruce Willis and it performed very well in home video," Sonnenberg said. "Also, the nature of the movie showed that people would come back to see it again."
Buena Vista vice president and general manager Dan Cohen said he was "extremely encouraged" by the movie's PPV results. The movie also set a studio record in the hotel PPV market-in which the distribution window precedes home video and PPV-further illustrating the staying power of the film, Cohen said.
"There aren't a lot of films that have had the combination of a strong box-office run, a rental video window and a 30-day PPV window," he said. "Based on what we've seen, it certainly will be the top grossing PPV movie that we've ever had."
DirecTV Inc., which also enjoyed a 30-day window for the movie, was not able to provide numbers at press time.
The movie also performed very well in the home-video market, according to video retailers. But its rental business took a sharp dive after the title hit digital PPV.
Sixth Sense rentals dropped 39 percent the first week of PPV distribution-the biggest single-week drop in its five weeks of release, at a time of little serious competition, according to Video Business, a sister publication of Multichannel News.
The title's rental drop at that time was bigger than when the popular Star Wars Episode I: The Phantom Menace was released during The Sixth Sense's second week in stores.
The Video Software Dealers Association, a home-video lobby group, has been vocal in advocating the increase of PPV windows to at least 60 days to protect video rental and sales revenue, which last year topped the $17 billion mark.
VSDA vice president of marketing and public relations Carrie Dieterich said The Sixth Sense's video drop-off shows that the reduced PPV windows adversely affect home-video revenues.
"Home video works well with an ideal 60-day window," she said. "You sabotage revenue for everyone when the window is shortened."
But some video retailers felt The Sixth Sense had already maximized home video revenue prior to hitting PPV.
"We kind of knew it was going to tail off, not only because of PPV, but because May is our quietest month," said Michael Richards of Massive Video in North Attleboro, Mass.
Cohen added that with the digital subscriber base at about 2 million-and an addressable analog base of only 29 million households-there weren't enough consumers with access to the film to affect home-video sales.
"In the vast majority of the homes in the U.S., The Sixth Sense had either a 50-day window or was not available at all," Cohen said.
In Demand's Sonnenberg said he hopes the movie's success bodes well for the future of PPV movies and the potential for shorter PPV windows.
"The real test will come as we move forward and embrace other studio titles, but the positive thing now is that everyone had a good feeling and it makes it easier the next time," he added.
Even though the movie's PPV performance broke records, it's unclear if other studios will follow Buena Vista's lead.
Sonnenberg admitted the movie's success has yet to yield any future 30-day, early-window titles.
One studio executive said last week that there were no plans to offer early-window titles to digital subscribers in the near future.
"While we applaud Disney for its success with The Sixth Sense, we will take each movie on a case-by-case basis," the executive said.
Even Buena Vista's Cohen would not commit to another 30-day window title in the near future, although he did say that the studio had a "good experience" with The Sixth Sense.
The movie's performance was also aided by an aggressive PPV-movie promotional campaign.
In Demand senior vice president of marketing and brand director Gavin Harvey said there was a multimedia marketing plan with a campaign theme of "You Have The Power" to top digital markets in an effort to get the message across to consumers.
The PPV distributor also ran ads in several TV Guide editions that serve digital markets and in Entertainment Weekly during the week of the digital launch, Harvey said.
Affiliates did their part by aggressively running spots for the movie, he added.
"In some markets, the affiliates were able to create a big event atmosphere around the movie, which sent out a positive message to consumers about PPV movies," Harvey said.
The promotion helped establish the movie among digital consumers and helped push PPV back to into the entertainment spotlight.
"We were effective in getting mainstream media to understand that PPV is beginning to take off again," Harvey added.
Yet even with The Sixth Sense's PPV buy-rate and revenue success, Sonnenberg said the numbers were still well below the potential maximum and must increase if cable is to compete for better PPV windows in the future.
"There's a lot of room for improvement and with the continued rollout of digital boxes the buy-rates will increase," he said. "For In Demand, this was more of a coming out party for us to show our commitment to the promotion of movies."
Video Business editor in chief Scott Hettrick and reporter Wendy Wilson contributed to this story.