VOD rentals have become a huge part of the movie business. Many smaller releases, especially in the horror or indie genre, make their debut on VOD simultaneously with a limited theatrical release, or even purelyVODin some cases. It is a strategy that has been working for smaller movies, but apparently, several major studios are looking to further cash in on living room rentals for their bigger movies as well. Would you like to see the nextStar Warsmovie at home as early as two weeks after it hits theaters? If this deal goes through, you may be able to, but it might cost as much as $50 for the privilege.
Bloomberg is reporting that several major studios, such as Warner Bros. and Universal, have been having ongoing, preliminary conversations withmajor theater chainsto try and negotiate a new on-demand model that would allow big movies to be available to consumers much sooner than they are currently. As it stands, a movie likeSuicide Squadwill be made available to consumers from the comfort of their own home about 90 days after the initial release. It used to be about six months, if not more. Head of Warner Bros.Kevin Tsujiharahad this to say about it.
“We’re working with them to try and create a new window. But regardless of whether it happens or not – whether we are able to reach that agreement with them, we have to offer consumers more choices earlier.”
The report wasn’t able to name any specific sources for the information. They wished to remain unidentified since the talks are still ongoing. The studios are reportedly looking to charge anywhere from $25 to $50 per movie, which may seem steep on paper, but for many could end up saving them money. The averagecost of a movie ticketin the U.S. last year was near $8.50, but in cities like Los Angeles and New York, it is much higher, so $25 wouldn’t be so bad. Even $50 could be justifiable for a family heading to the movies, who would easily pay more than that for a trip to the movies after concessions are factored in, but that is where the problem comes in.
Theater owners are not hot on this idea. They make a lot of their money because of the exclusive right to show movies for a period of time before they are made available on home video.Captain America: Civil WarorFinding Dorymight have made a lot less money this year if families or not so die-hard Marvel fans could simply wait a couple of weeks and watch the movie from their living room. Just last year Regal andCinemarkboycotted several of Paramount’s movies that were released on home video seven weeks after release. Though, Cinemark did admit that they have had talks for some sort of premium on-demand deal, but they didn’t make any further comment on the talks. AnalystBarton Crockettfeels that all of this talk may amount to nothing, at least anytime soon.
“It is a very difficult knot to unravel. Everyone understands consumer tastes are changing and there is pressure to innovate. A lot of talk and very little changing.”
While the majority of revenue for movie studios is still generated by box office, they are still heavily reliant on DVD and rental money. According to Bloomberg, about 44 percent of Warner Bros.' revenue came from theatrical releases in 2016, but 38 percent was generated by DVD sales and rentals. In recent years, that number has stagnated a bit and studios are looking for ways to boost thatrevenue streamand offering the movies at home sooner, but for a premium cost, could be a way to do that. But getting theater owners to agree to that will be tricky. Ultimately this could wind up costing the moviegoer money if theater chains decide to start charging a premium to see blockbuster movies, which is also something that has been talked about recently. Knowing that they have a shorter time to capitalize on a big movie could prompt that change as well.
One final factor the report noted was that the amount of money cable networks and streaming services like Netflix pay for movies is ultimately based on box office. So if the movies are in theaters for shorter periods of time or if more people are staying home to rent them, that could affect the revenue stream generated from cable and streaming on the back end. For right now, it seems like any major change isn’t going to happen right away, but moviegoers should be prepared for a change like this in the future. Just maybe not the very near future.
