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DirecTV Bows ‘Red Riding Hood’ Premium VOD

16 May, 2011 By: Erik Gruenwedel

Theaters strike back with unlimited snacks and indie distribution

DirecTV has begun offering Warner Home Video’s Red Riding Hood on premium ($29.99) video-on-demand — a month before its packaged media release.

The fantasy horror film from first Twilight director Catherine Hardwicke and starring Amanda Seyfried has grossed $37.5 million domestically ($87.5 million globally) since its March 11 theatrical release.

Meanwhile, major theater operators Regal Entertainment Group, Carmike Cinemas, Cinemark Holdings and AMC Theatres have begun testing programs intended to retain moviegoers and add incremental revenue streams.

Regal and AMC formed a joint venture aimed at releasing independent films with box office-proven actors. Dubbed Open Road Films, the distribution arm recently acquired North American rights to action-thriller Killer Elite, starring Jason Statham, Clive Owen and Robert De Niro, slated for theatrical release this fall.

Eric Wold, director of research with Merriman Capital in San Francisco, said Open Road plans to release two films this year and upwards of eight titles annually during the next several years. Each film will have P&A, or print and advertising, costs of about $25 million.

Wold was unsure as to the home entertainment distribution for the films, but believes the DVD and Blu-ray Disc releases of the two releases this year wouldn’t occur until 2012. AMC and Regal representatives were not immediately available for comment.

“The first benefit for Regal and AMC (along with the other exhibitors that choose to play the film) will be to gain additional content to fill movie slates that sometimes have gaps,” Wold wrote in a note. “The second benefit … will be to share in the profits (or losses) of any of the films distributed. The latter will also partially benefit from the success of other exhibitor’s revenues generated from the movies.”

Separately, Regal, Carmike and Cinemark chains are experimenting with driving concession revenue, which typically generates margins as high as 90% compared to margins from 35% to 40% from hiked ticket prices and 3D.

Indeed, Carmike has begun testing moving ticket booths to the concession area where moviegoers can more easily be upsold on snacks and drinks purchases. Wold reported that at a Regal location in Fresno, Calif., the chain is testing a program called “Pop Up Savings,” whereby $4 is automatically added to each ticket purchase and those ticket holders are granted unlimited popcorn and soda fountain refills.

“Even though customers that would have purchased popcorn and soda anyway would now be saving at least $6.00 under Regal's new plan, the exhibitor would now be concession-monetizing every single patron,” Wold wrote. “Without a doubt, we believe this strategy may cause some patrons to visit other local theaters to avoid paying for concessions they didn't want, but we also believe regular concession purchasers may be drawn to Regal for the lower-cost offering.”

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