AMC CEO: PVOD Not Happening This Year

7 Aug, 2017 By: Erik Gruenwedel

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Hollywood studios such as Warner Bros. and 20th Century Fox may be bullish on premium VOD, but AMC Entertainment is applying brakes to the concept enabling subscribers to watch select theatrical movies early in the home at a premium price (from $30).

Speaking on the company's Aug. 4 fiscal call, AMC CEO Adam Aron said speculation about studios and exhibitors soon ironing out an agreement that would allow consumers to access movies at home within the traditional 90-day theatrical window is wishful thinking.

“I can tell you categorically that no one is close to resolution of this matter,” Aron said. “There is no industry consensus.”

While national chains such as AMC and Regal Cinemas have expressed a willingness to work with PVOD if the numbers add up, a slow 2017 box office and ongoing threats from Netflix and SVOD have spooked exhibitors’ biggest customer: Wall Street.

In addition, AMC in a recent pre-financials announcement warned second-quarter results would disappoint. And the current third quarter industry-wide reportedly is tracking down more than 10%. The combined news sent shares of Chinese-owned AMC plummeting 25%.

Michael Pachter, media analyst with Wedbush Securities, does not believe a PVOD deal between studios and exhibitors is imminent.

“We think negotiations are still in the early stages,” Pachter wrote in a July 31 note. “Exhibitors have acknowledged that, despite previously boycotting releases that threatened the theatrical window, they are all in discussions with various studios. However, it is also clear that discussions are in the early stages and could end without any changes to the current window structure.”

Meanwhile, Disney, whose movies continue to dominate the box office, understandably has no interest in PVOD. And without Disney, PVOD being test-marketed by other studios on non-blockbuster movies as Paramount has done won’t resonate.

Two years ago, Paramount released Paranormal Activity: The Ghost Dimension and Scouts Guide To The Zombie Apocalypse into digital retail channels 17 days after each film’s distribution dropped below 300 theaters.

“Our hope and intent is that this initiative offers a degree of innovation that benefits all parties,” the late Paramount CEO Brad Grey said at the time.

Regardless, Pachter believes consumer demand for PVOD is largely hype.

“We question whether a significant number of consumers would be willing to pay a premium to watch a second-tier film early at home,” he wrote.

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