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Theater Owners Attack Windows

16 Jun, 2010 By: Erik Gruenwedel

A trade group representing movie theater operators June 16 ran a full-page trade ad decrying the eroding theatrical release window and imploring studios not to adopt premium-priced video-on-demand (VOD) distribution.

Studios and cable operators have signaled a willingness to offer new movies two months after the theatrical release as a higher-margin (reportedly priced from $25) transactional VOD  — and eight weeks before the DVD/Blu-ray Disc retail release.

The National Association of Theater Operators (NATO) said premium VOD would undercut the qualified value of the typical movie ticket when faced with the prospect of multiple consumers flocking to one home (and one VOD transaction) to watch a movie.

“Collapsing windows muddies the value proposition for the consumer, blurs distinctions between theatrical and ‘straight-to-video’ and undercuts one of the important selling points for theatrical exhibition — the timeliness of the exclusive event,” NATO wrote.

The statement comes the day after Paramount Home Entertainment’s decision to continue offering new-release titles to $1-per-day kiosk vendor Redbox.

Analyst Richard Greenfield with BTIG Research in New York said Paramount’s decision likely rendered the 28-day kiosk window a failure.

“We simply do not believe marketing campaigns around a Redbox (or Netflix) window can be effective, if only half the blockbuster movies desired by consumers are windowed,” Greenfield wrote in a blog post. “Consumer behavior toward kiosks will not change unless they are constantly disappointed by what they can find inside [them].”

Indeed, NATO questioned why studios would attempt to introduce the same kind of “profit-cannibalizing self-competition” as discount kiosks to the theatrical window.

“A premium VOD window will neither solve the DVD slump nor end the problem of film theft,” NATO wrote, adding that a new distribution channels financial investments by theater owners upgrading to digital and 3D screens.

The group seeks greater input with studios regarding release dates, including an end to last-minute shortened windows after theaters have booked movies. It said so-called “trial balloons” in the media to gauge public sentiment toward altered windows and prices harm the industry.

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