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Analyst: Shorten Window to UltraViolet, VOD Access

17 Apr, 2012 By: Erik Gruenwedel

Studios should offer new-release movies to consumers on UltraViolet and premium video-on-demand within four weeks of theatrical launch, BTIG Research analyst Richard Greenfield declared in a blog post.

Greenfield, who is an outspoken critic of the three to four months that studios delay offering theatrical releases into the retail market, said ongoing secular declines among moviegoers are compounded as big screen HDTVs and home theater systems narrow the user experience with the traditional movie theater.

Calling the current blockbuster appeal of The Hunger Games and year-over-year box office an exception (except internationally), the analyst said the number of movies attended per capita actually has declined from 5.1 to 3.9 during the past 10 years. He said theatrical attendance declines continue to be masked through higher ticket pricing, notably with 3D screenings.

“With 3D no longer a growth vehicle, we believe the secular attendance trends will be increasingly troublesome,” Greenfield wrote April 16.

Meanwhile, the average HDTV screen size purchased by home owners reached 44 inches in 2011; broadband penetration continues to surge — underscored by increased demand for subscription video-on-demand services such as Netflix, Amazon Prime, Hulu Plus, Blockbuster@Home and TV Everywhere platforms such as HBO Go, HBO-on-Demand, Comcast’s Xfinity TV, Xbox Live and the pending DirecTV Everywhere.

“The confluence of these technology catalysts has ‘raised the bar’ [whether] consumers … either leave their home and buy a movie ticket or to buy a movie on DVD or digitally,” Greenfield wrote.

The analyst cited as “illogical” studio insistence to re-release theatrically Oscar-winning The Artist, which generated a paltry $12 million at the box office, while Oscar-nominated The Descendants earned an additional $4 million.

“While both Artist and Descendants will generate incremental revenues as they are released into the home entertainment channel, we believe studios are simply not maximizing the profit potential of a film by maintaining an antiquated sequential release pattern, a.k.a. windowing,” the analyst wrote.

Specifically, the analyst questions why studios insist consumers spend upwards of $20 for a movie at retail four months after its theatrical release, instead making it available for $25 four weeks after theatrical launch and $50 for day-and-date access with the theatrical bow. More importantly, Greenfield said studios should offer consumers the option purchase a digital copy or UltraViolet copy for $10 above the VOD rental price.

“We believe you have a much better chance of convincing someone to spend $20 to access a movie four weeks or less after its release than you do four months later,” Greenfield wrote. “Enable consumers to pay for access to content earlier versus ownership.”



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