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Ready For Premium VOD 2.0?

9 Mar, 2016 By: Erik Gruenwedel

It’s been said too many times that the definition of insanity is doing the same thing over and over and expecting a different result.

But crazy-making is the best way to describe media reports some studios are actually considering a concept from Napster founder Sean Parker to offer new-release theatrical movies to consumers in the the home for a premium price.

“The Screening Room” service would involve a proprietary $150 set-top box capable of streaming major theatrical movies in HD in the home for $50 over a 48-hour window, according to Variety, which cited sources involved in the project — including former Sony Pictures Entertainment vice chairman Jeff Blake as a consultant.

With “The Screening Room” described as being in the “idea stage,” anyone with a recent memory should remember the fallout five years ago when Premium VOD launched on DirecTV with Sony Pictures’ Adam Sandler comedy Just Go With It for $29.99. Other PVOD distributors experimenting with the window included Comcast, Time Warner Cable and Starz Media.

PVOD mostly angered theater operators instead of generating coveted higher-margin incremental revenue. Meanwhile, the traditional home entertainment window — which typically gets theatrical releases less than three months after launch date — saw little or no negative effect from PVOD.

“If anything, it impacted exhibitors more,” said Michael Pachter with Wedbush Securities in Los Angeles.

The concept seemed to die in late 2011 when Universal Studios announced it would offer ensemble comedy Tower Heist on PVOD just 21 days after its theatrical launch for $60.

Heist was the highest-profile title earmarked for PVOD. Theaters operators threatened to boycott the movie during its 3,367-screen nationwide opening weekend. They also pledged to remove theater signage of any other film destined for PVOD.

Universal dropped PVOD plans for Heist a week later — a prudent decision, according B. Riley & Co. analyst Eric Wold.

“It would be tough to get premium VOD moving again as consumers are unlikely to pay a high price for early access, and exhibitors would likely boycott the movie either entirely or push for a share of the downstream revenue to compensate for lost box office,” Wold said at the time.

Parker’s “Screening Room” would give theater operators a cut of the revenue stream, including offering additional theater tickets to generate concession sales. The concept apparently ignores the backlash last year when Netflix began debuting original theatrical releases day-and-date with global streaming, including critically-acclaimed Beasts of No Nation and later — coincidentally — with another Sandler movie.

Patrick Corcoran, chief communications officer with the National Association of Theater Owners, said theater owners opposition to screening Netflix’s original movies had more to do with economics than opposition.

“Frankly, 40 million Netflix subs have already paid for the movie. So when you’re looking to book a movie in your theater, and you’re looking to maximize the number of people to come see it. You’re going to look at things like that,” Corcoran said.

Indeed, AMC Theatres reportedly is considering The Screening Room, while Regal Cinemas CEO Amy Miles last October said her company’s decision not to participate in Paramount Pictures’ shortened release window strategy for Paranormal Activity: The Ghost Dimension had more to do economics than box office tradition.

“We made it clear we didn’t want to participate because we didn’t think the economics of the test made sense,” she said. At the same time, Miles said Regal would be open to any other window experiments that she felt had the potential to grow “the overall [fiscal] pot.”

Indeed, Variety ran a Twitter poll asking how many people would pay $50 to watch the upcoming Batman vs. Superman movie in the home the same day it is released theatrically. Seventy-four percent of 4,831 respondents said they would not pay that much. It also means 1,256 respondents said they would pay 480% above the $8.61 current average movie ticket price.

Regardless, Wedbush Securities’ Pachter doesn’t think "The Screening Room" has legs.

“Way too expensive. If it’s the same price as two movie tickets, maybe it could work, but that suggests $20-to-30 per ticket, not $50. The set-top box is pretty lame as well. Service could be done over the Internet.” 


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