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Golden Ticket

8 Jul, 2013 By: Erik Gruenwedel

'World War Z'

Studios are partnering with theaters offering premium-priced tickets, which include the home entertainment product

“Would you like a digital copy with that popcorn?”

That may be the wave of the moviegoing future if recent studio experiments are any indication.

A détente between theater operators and movie studios regarding encroaching release windows appears to be emerging with the advent of the so-called “super” or “mega” movie ticket.

For $50, studios and select national movie theaters are beginning to offer the ardent moviegoer the opportunity to see a major release early, in addition to taking home the official movie poster, 3D glasses, T-shirt, digital copy rights, and small beverage or popcorn.

Regal Cinemas, the nation’s largest movie theater chain, for the first time on June 19 offered early 3D access to the Brad Pitt summer tentpole release World War Z, which included the aforementioned goodies. Fandango.com, which was the exclusive vendor of the mega ticket, will email ticket holders when Paramount Pictures Home Entertainment releases the title with UltraViolet functionality at retail.

In Canada, Warner Bros., Universal Pictures, Sony Pictures and Paramount have partnered with theatrical chain Cineplex, offering moviegoers a “superticket,” which includes rights to the early release digital copy prior to the retail window, exclusive bonus features and points toward free concessions.

In January, Cineplex became the first theatrical chain and retailer to offer UltraViolet on home entertainment releases. The chain sells and rents movies online, in addition to its theatrical business.

“We believe the best way to experience a movie first is on the theater’s big screen, but when you want to see it again, UltraViolet gives you the added choice and flexibility to watch movies whenever and wherever you want,” CEO Ellis Jacob said in a statement.

Dan Fellman, president of domestic distribution at Warner Bros., said the strategy is aimed at transforming the movie theater into a movie retailer.

“This is an innovative and interesting way to expand the DVD business,” Fellman told the Los Angeles Times.

“You’re reaching a consumer that you know is a moviegoer. It’s like one-stop shopping for the same consumer.”

Megan Colligan, president of domestic distribution and marketing at Paramount, said studios are developing new strategies as they reassess their business models. 

“There’s going to be more experimenting to come,” Colligan told the Associated Press. “You can’t do what you did 10 years ago and have the same results.”

At the same time, a Fox representative said there were no immediate plans to include Digital HD copies with domestic theatrical releases going forward.

Shrinking Windows, Crouching Anger

To take advantage of money spent on theatrical marketing, studios a few years ago wanted to shrink the three- to four-month gap from the time a movie is released theatrically and via home entertainment — much to the chagrin of theater operators.

Studios eyed video-on-demand as a high-margin product, returning more money to the studio more quickly and enabling a segment of moviegoers the ability to watch select releases a few weeks after their theatrical premiere.

A transactional VOD rental is seven times more profitable to Warner than a kiosk or rental subscription; and a sellthrough transaction is 20 to 30 times more profitable than a kiosk or rental subscription, Warner Bros. CEO Kevin Tsujihara told an investor group last year.

“We think we can meet consumer needs while maintaining sound economics by creating the right release window,” Tsujihara said.

The concept was met with outrage from theater operators.

In fact, Universal in October 2011 was the last major studio to attempt to offer premium VOD ($60) on a major theatrical release, Tower Heist — an experimental window (three weeks after the title’s box office bow) that was scuttled after theatrical chains threatened to boycott the movie and pull in-theater signage for other titles earmarked for premium VOD.

Hollywood also experimented releasing select titles 60 days after their box office bow for $30 via DirecTV. That platform no longer exists due in part to low consumer demand.

Lionsgate, Millennium Entertainment and Magnolia Pictures have all experimented with release windows, including offering titles early on digital sellthrough and transactional VOD ahead of or concurrent with theatrical.

Regal Entertainment Group and AMC Theaters now mandate minimum 90-day windows between theatrical and home entertainment releases on all major titles. Currently, the average major theatrical release window is 3.5 months, according to the National Association of Theatre Owners.

“A short window or simultaneous release muddies the value proposition being offered to consumers,” Patrick Corcoran, spokesman for the National Association of Theatre Owners, said in an interview.

Super Ticket, Mega Compromise?

The special ticket promotion for World War Z came together after Paramount approached Regal, and the two parties brainstormed ideas on expanding the moviegoing experience in a way that would boost home entertainment, but not harm the theatrical take, said Ken Thewes, SVP and chief marketing officer with the Knoxville, Tenn.-based Regal.

“We don’t think there is an either/or with home entertainment,” Thewes told Home Media Magazine. “We continue to have concerns about windows and don’t want to see them shrinking.”

Thewes said the idea behind the mega ticket, which was offered at five theaters nationally and included a radio DJ and door prizes, was to give consumers options. He said the $50 ticket is not for everybody and remains a work in progress.

“There’s a customer out there who really wants to see the movie and get limited-edition stuff like the poster, glasses and digital copy,” Thewes said. “We know from our Imax releases, it’s a bit of a draw for some people.”

He said the digital copy is intended for Brad Pitt and zombie movie fans that want to own the title.

“This makes it easier for them to take ownership all at one point,” Thewes said. “Collectively, that really adds value. And we’ll learn from there.”

Theatrical Sellthrough: A Lost Opportunity

Tom Adams, senior principal analyst of U.S. Media at IHS iSuppli, questions whether to call the mega ticket a trend rather than studios and theaters targeting a niche moviegoer. Indeed, Adams says the mega ticket buyer is also likely to frequent theaters serving sit-down meals.

“Everybody understands the value of food,” Adams quipped.

He said the real trend is studios negotiating with theater operators, cable operators, Internet service providers and retailers to maximize incremental revenue opportunities along the distribution pipeline.

Adams said the biggest area of experimentation among studios is the early digital release of select titles weeks ahead of packaged media.

“Studios are doing everything they can to make UltraViolet [the studio-backed scheme allowing consumers to access content they own in the cloud] look good to the consumer,” Adams said. “There are still a lot of people who want to buy movies.”

The analyst said theaters’ insistence on maintaining the existing release windows is shortsighted and denies them a golden opportunity to sell the movie to fans exiting the theater.

“Why not have the DVD available when you exist the theater?” Adams said, adding that theaters could control distribution and would not have to compete with mass-market retailers such as Walmart.

He said theaters offering packaged media and/or digital access would be able to maintain an ongoing relationship with their customers.

“That’s the way consumers are; they have a hard time appreciating the value of something they have to wait for,” Adams said.

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