AMC CEO 'Intrigued' by Premium VOD28 Feb, 2017 By: Erik Gruenwedel
The concept of selling early (and more-expensive) digital access in the home to new theatrical movies — also known as premium VOD — continues to gain traction, notably at the nation’s largest theater chain, AMC Entertainment.
Speaking on a Feb. 28 fiscal call, CEO Adam Aron suggested media reports have failed to mention revenue sharing components of PVOD, which he contends makes the concept worth pursuing.
“The reason we’re intrigued by all of this is [because] if this is done right, and this is done intelligently, and our revenue share is significant enough, we believe we have the opportunity to grow and increase AMC revenue as a result of [PVOD],” Aron said.
AMC, which is owned by China’s Wanda Group, claims to have No. 1 or No. 2 market share positions in 22 of the 25 largest metropolitan areas of the United States, including the top three markets (New York, Los Angeles and Chicago). Through its Odeon subsidiary, AMC operates in seven European countries and is the No. 1 theater chain in the United Kingdom, Ireland, Italy, Spain and the Nordics.
Aron said opponents of PVOD believe the risks outweigh incremental revenue gains as increased numbers of moviegoers stay home. Indeed, efforts by DirecTV in 2011 to offer premium VOD fizzled largely due to studio pushback and timid consumer response.
“We think just the opposite,” Aron said. “If we do this right, [PVOD] is the chance to expand the reach of the domestic box office in that first 90-day period.”
The CEO is not alone on the growing PVOD bandwagon. Kevin Tsujihara, CEO of Warner Bros., has been vocal about ramping up PVOD through a business model that would split revenue between exhibitors and studios. The strategy has been employed on a limited basis by Paramount Pictures, which made deals with select exhibitors to offer PVOD access on titles 17 days after distribution dropped below 300 screens.
Twentieth Century Fox Film Corp. CEO Stacey Snider recently questioned a tech confab about the alleged perils of PVOD.
“Who is it helping not to offer a PVOD earlier? And who is it hurting?” she wondered.
Regardless, Aron says rollout of PVOD is predicated on generating industry-wide consensus rather than one studio making a deal with one exhibitor.
“It’s our view that this can be quite additive and productive for AMC. And for movie theaters as a whole across our industry if the proposal resonates with consumers and we’re compensated fairly in the process,” he said.