Not Coming Sooner to a Home Theater Near You: New Movies
February 14 2018 - 07:29AM
Dow Jones News
By Ben Fritz
Hollywood's push to offer movies at home sooner for a premium
price has become a casualty of Walt Disney Co.'s deal to acquire
most of 21st Century Fox Inc.
The main proponents of so-called premium video on demand,
including Comcast Corp.'s Universal Pictures and Time Warner Inc.'s
Warner Bros., have reluctantly backed off in the past few months,
according to people with knowledge of the fizzled discussions.
That's because the Twentieth Century Fox movie studio was also a
key backer of the move, while Disney is not. Since deal talks
between those two companies became serious this past fall, Fox has
pulled out of PVOD discussions, the people said. Disney in December
agreed to buy key parts of Fox for $52.4 billion.
Currently, movies are available to purchase online no fewer than
75 days after they premiere in theaters, and to rent or buy on disc
two weeks after that. That period has been shrinking in recent
years, but theaters believe a significant "window" of exclusivity
is critical to keep people buying tickets.
Many Hollywood executives, however, believe that practice isn't
in keeping with the emerging world of on-demand digital
entertainment and that the result is increased piracy and a
long-term decline in studios' economic fortunes.
Making movies available sooner to watch at home, even at a high
price, would be more in keeping with current consumer behavior,
executives have argued. PVOD, as the concept is known, would
provide an urgently needed new revenue stream at a time when
profits for the biggest global blockbusters are high but other
types of movies are struggling.
Universal and Warner executives wanted many movies to be
available to rent digitally 17 days after they premiere in
theaters, while Fox was proposing 30 days, the knowledgeable people
said. Proposed prices ranged from $30 to $50, more than five times
the current cost of a video-on-demand rental. The studios offered
to share some of that revenue with theaters to alleviate concerns
about reduced ticket sales.
Because antitrust laws prevent studios from coordinating, each
studio separately discussed their proposals with theatrical
exhibitors. That has made coalescing around a single plan
complicated, people involved in the talks said. Even before Fox
pulled back, it wasn't certain a deal would have been reached.
Several digital and cable companies also have attempted to spur
premium video on demand.. Apple Inc. was pushing a 30-day plan with
studios, one person with knowledge of the discussions said.
Disney has been the only major studio absent from the talks,
because it produces fewer titles than competitors and all have big
budgets. Also, Disney's movies generate more on average at the box
office than rivals' releases.
For much of last year, it seemed likely that studios and
theaters would reach an agreement or that one studio would
unilaterally announce its intention and others would follow.
AMC Entertainment Holding Inc., the largest cinema chain in the
U.S. by number of locations, had been more open to PVOD than its
largest competitor, Regal Entertainment Group, one of the people
said.
However, AMC's chief financial officer said at an investor
conference last month that PVOD discussions had "lost momentum,"
but didn't specify the reasons.
Disney and Fox had a combined 34% box-office market share in
2017, making it difficult for other studios to enact any plan
without them. In addition, Warner Bros. has been reluctant to take
the lead on a controversial issue as the company tries to keep its
head down amid government opposition to AT&T Inc.'s proposed
purchase of Time Warner.
Both AT&T and Comcast could be considered self-interested on
the issue because they own distribution platforms that distribute
movies digitally.
Fox, as a pure content company, was viewed as the only
unconflicted leading proponent of PVOD. Its executive chairman,
Lachlan Murdoch, said at a September investor conference that the
current system of delays between theatrical and home release is
"highly inefficient" and that it "has to change."
21st Century Fox and Wall Street Journal parent News Corp. share
common ownership.
Sony Corp.'s Sony Pictures Entertainment has been promoting its
own plan to move up the current dates at which digital and DVD
sales start by a couple of weeks, in an effort to combat piracy
during the periods when movies have typically finished their
theatrical runs, according to a person with knowledge of the
proposal.
However, that proposal, too, appears to have little momentum at
the moment, according to knowledgeable people.
Most top executives in Hollywood believe still believe it's
inevitable consumers will get earlier access to movies at home but
believe there will be no movement on the issue until the current
wave of merger deals is complete.
(END) Dow Jones Newswires
February 14, 2018 07:14 ET (12:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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