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Disney, Sony Shrink Retail Window in South Korea

24 Jun, 2013 By: Erik Gruenwedel

Walt Disney Studios and Sony Pictures Entertainment reportedly have begun offering transactional video-on-demand access in South Korea to theatrical releases still playing in movie houses.

Calling it an experiment, Sony Pictures began offering VOD access via cable, satellite or telecommunications provider to Quentin Tarantino’s Django Unchained three weeks after it bowed in Korean theaters in April. Likewise, Disney's animated Wreck-It Ralph and Brave were available on transactional VOD four and five weeks, respectively, after their theatrical debut, according to The Wall Street Journal, which first reported the story.

With the erosion of home entertainment retail disc sales in the United States, transactional VOD has been seen as a high-margin alternative. As a result, studios for some time have offered new releases on VOD rental at the same time as packaged media street dates.

In South Korea, packaged media sales and rentals barely topped $30.5 million in 2012, according to IHS Screen Digest. One of the country’s largest theatrical chains also operates a VOD service, which typically cost about $9 — almost double a transactional VOD release in HD in the United States.

Regardless, 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,” Tsujijara said.

In the United States, studios have attempted to shrink the theatrical window by releasing movies early through a so-called premium VOD window. Titles cost from $30 to $50 via multichannel video program distributor.

Universal in October 2011 was the last major to offer premium VOD ($60) on a major theatrical release, Tower Heist — an attempt (three weeks after the title’s box office bow) that was killed after the nation’s major theatrical chains threatened to boycott showing the movie, in addition to pulling any in-theater signage for other titles earmarked for premium VOD.

Hollywood studios 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.

Chains Regal Entertainment Group and AMC Theaters mandate minimum 90-day windows between theatrical and home entertainment releases. Currently, the average major theatrical release window is 3.5 months ahead of home entertainment.

“A short window or simultaneous release muddies the value proposition being offered to consumers,” Patrick Corcoran, spokesman for the National Association of Theatre Owners trade group, told the Journal.

Meanwhile, Regal is not adverse in tweaking windows as long as it enhances the theatrical experience. The nation’s largest movie theater chain for the first time (June 19) offered early 3D access to Brad Pitt’s World War Z summer tent pole release for $50, which included the digital copy during the retail window (see “Fans Crave Zombies at $50 a Ticket”).

“We don’t think there is an either or with home entertainment,” Ken Thewes, SVP and chief marketing officer with the Knoxville, Tenn.-based Regal, 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” offering for World War Z was to give consumers options at the movie going experience. He said the $50 is not designed to appeal to everybody and remains an ongoing experiment.

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

He said the digital copy is intended for Brad Pitt and zombie movie fans who 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.”

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