Premium VOD ignites exhibs' ire (VAR, NYT, WSJ, LAT, ATD, SCR, DH, THR)

By Nancy Tartaglione

Thursday's Variety report that DirecTV would launch $30 early VOD offerings under the Home Premiere banner immediately drew the ire of theater owners who responded by calling it a "misguided venture." Following is a round-up of media reports on the issue.

Per the initial report, Warner Bros., Sony, Universal and 20th Century Fox are on board to make Home Premiere the official brand under which the industry will provide movies to rent for $30 two months after their theatrical bows. DirecTV has nearly 20 million customers who will receive the offer starting this month, while Comcast and others are expected to follow suit.

According to reports, Sony's "Just Go With it," Warners' "Hall Pass" and Universal's "The Adjustment Bureau" and "Paul" could be among the first studio pics set to roll out via the service. (The New York Times says reports of Warner using "Unknown" as its first title were erroneous.)

The Wall Street Journal says that neither DirecTV nor the movie studios confirmed reaching such deals with a DirecTV spokesman saying discussions were taking place about the issue, characterizing the talks as "good."

A statement released by the National Assn. of Theater Owners said in part: "These plans fundamentally alter the economic relationship between exhibitors, filmmakers and producers, and the studios taking part in this misguided venture."

The Los Angeles Times previously reported that DirecTV had emerged in the last few months as the company that would first launch premium VOD. At the time, the brewing conflict with theater owners was seen in some circles as a potentially good thing for the studios.

Per The LAT, Sony, Fox and Warners were always expected to take part, but Universal has changed its position after initially keeping its distance.

Variety notes:

WB, U and Fox have already succeeded in fending off companies like Netflix and Redbox, forcing them to wait 28 days after a film bows on DVD to offer those titles for rent through their online services and kiosks. Those same studios wouldn't mind lengthening that window even longer and have considered pursuing such talks.

On the premium VOD front, the majors say they're missing out on audiences who aren't making the trip to the megaplex because of the size of their families or the expense of babysitters or of food and other concessions.

But, exhibitors worry that, despite the higher price point, allowing audiences to watch family fare at home could keep them out of the theaters altogether.

The studios counter that the scheme won't hurt sales as most films generate most of their box office during their first few weeks. The studios also say they won't release any films via Home Premiere which are still performing strongly at the multiplex.

Meanwhile, The All Things Digital blog for one thinks the higher price point isn't actually all that high.

ATD:

...once you get past the initial sticker shock, this one makes sense. Or at least it might to a certain segment of the population that wanted to see something in theaters but couldn't get there in time. In fact, for some moviegoers, $30 could be a bargain. Average ticket prices hit $7.89 last year, and it's much more in urban centers...And if you need to hire sitters, pay for parking, etc., you'll quickly get past $30.

With regard to NATO's maneuvering power, Screen notes:

While NATO cannot comment on price points or tell exhibitors what to do, president John Fithian and his staff are working furiously behind the scenes to enlist recruits in the fight against premium VoD. Fithian and his staff are well aware that if premium VoD takes off, theatre owners may be minded to review agreements on trailer bookings and in-house marketing.

The group made reference to trailer booking in its statement:

"...cinema owners devote millions of hours of screen time each year to trailers promoting the movies that will play on their screens. With those trailers now arguably promoting movies that will appear shortly in the home market to the detriment of theater admissions, we can expect theater owners to calculate just how much that valuable screen time is worth to their bottom lines and to the studios that have collapsed the release window. The same consideration will no doubt be given to the acres of wall and floor space devoted to posters and standees."

(The entire statement can be found at Deadline.)

Per Screen, there is also the "nuclear option" whereby studios refuse to carry certain films. Potential collusion issues could attract the attention of the Department of Justice.

"It seems that the risks far outweigh the benefits," AMC chief Gerry Lopez told Variety.

Paramount is not participating in the Home Premiere program, reportedly due to piracy concerns while Disney has so far remained silent on the issue.

Director Todd Phillips, at CinemaCon to promote "The Hangover Part II," supported theater owners.

"I'm on your side on the video-on-demand issue. And I think a lot of filmmakers are," Phillips said, prompting loud applause and hoots, according to The Hollywood Reporter.

"If I had wanted to make movies for television, I would have been a TV director," he added.

Top Warners executives Jeff Robinov, Dan Fellman and Veronika Kwan-Rubinek did not mention the controversy in their opening remarks. However, they repeatedly thank exhibitors for their support, says THR.

**This report was compiled using articles from Variety, The New York Times, The Wall Street Journal, The Los Angeles Times, All Things Digital, Screen, Deadline and The Hollywood Reporter. The original stories can be accessed by clicking the hyperlinks in the text above.