The 'Premium VOD' concept has
been floated for months as
studios explore ways to generate
new revenue to counter declining
sales of DVDs. But the idea is
controversial because of its
price -- and because movie
theater owners say it could hurt
their attendance if people know
they can watch a movie at home
just 60 days after its
theatrical release. Normally,
studios wait at least three
months before offering
theatrical films to home video.
However, rather than seek to
appease theater owners, Chang's
comments will likely heighten
concerns that the studios and
their TV provider partners are
ultimately aiming to bypass the
theater.
Chang told Bloomberg that
theater owners are overreacting
because films rarely perform
well in theaters 60 days after
their initial release. However,
even if that's true, if DIRECTV
decides to show films 30-45 days
after the initial release,
theater owners would have more
reason to worry, particularly if
DIRECTV lowered the $30 price.
Swanni Sez:
Commentary:
Okay, I
said it last week.
The studios' initial plan for
'Premium VOD' is just a teaser,
purposely designed to generate a
low buy rate to diminish
concerns that it will hurt movie
theater attendance. Seriously,
$30 to watch a movie at home?
Who is going to do that? No one
-- and the studios and DIRECTV
know it.
Chang's comments reveal that's
there a more realistic plan in
place behind the scenes. The
studios eventually want to
release box office hits on VOD
on the same day they are
available in the theater. They
have calculated that, in the
long run, this will generate
more revenue than the current
distribution model.
But to get to that point, they
will have to work the program in
slowly, to downplay media
coverage of theater owner
protests. Over the course of
time, it won't seem like a big
deal that a new film is released
to VOD 30 days after its
theatrical release. And then a
bit later, it won't seem like a
big deal when it's released on
the same day of the theatrical
debut.
And it won't seem like a big
deal when the price of the VOD
offering is just a bit higher
than the theater price.
Theater owners, you have a right
to be concerned. The studios are
gunning for you and they are
happy to take their time to get
you.
Washington, D.C. (April 21, 2011) -- DIRECTV today is scheduled to launch a VOD service that will charge $29.95 per viewing of movies made available 60 days after their theatrical release.
And the satcaster is already questioning whether it will work.
Derek Chang, a DIRECTV executive vice president, said yesterday that the satcaster may lower the $30 price -- and offer movies sooner than 60 days after their theatrical release if buy rates are low.
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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.
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