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AMC Issues Premium VOD Warning

9 Apr, 2011 By: Erik Gruenwedel

Theater chain says premium VOD threatens entertainment community

AMC Entertainment, which operates 361 theaters and 5,203 screens nationwide, joined the growing fracas condemning a planned studio rollout of premium video-on-demand movies on DirecTV and other platforms later this month.

Premium VOD would make available select movies in the home 60 days – instead of the typical 120 days – after the theatrical launch for $29.99 per title. Theater operators say the new window would undermine their business. Regal Cinemas and Cinemark Entertainment both say they would drop trailers and theater signage for movies earmarked for premium VOD.

In a statement, AMC said the theatrical experience was key to myriad participants in the entertainment food chain, including 200 million people it said visit its screens each year. AMC said that in addition to further rollout of 3D screens, it is introducing a new loyalty program, enhanced food and beverage selections, and in-theater dining at select locations.

“The [premium VOD] world as currently defined threatens that health,” AMC said. “As such, we have notified studios of our expectations regarding economic arrangements on movies that go p-VoD. It is not wise to discuss details in the press, and company policy precludes it, but as these windows shrink and threaten our industry's future, it is only logical to expect AMC to adapt its economic model.”

Analyst Richard Greenfield with BTIG Research in New York believes theaters represent but one window (in addition to disc, retail, rental, pay-TV, etc.) studios must exploit to generate requisite return-on-investments for movies.

Greenfield said tweaking the theatrical window is no different than offering digital access to movies on retail street date or embargoing titles from kiosks and subscription VOD services such as Netflix.

With theatrical attendance and revenue down 20% year-over-year, Greenfield said theatrical operators are making a big mistake killing trailers – a promotional vehicle he said drives attendance.

“We believe studios should not even bother negotiating with exhibitors on these new policies related to trailers,” Greenfield wrote in an April 7 post. “Studios need to find more ways to make money in a film business that is suffering from falling home entertainment profits.”