In a high-profile test of so-called premium video on demand, Universal Pictures plans to make its upcoming PG-13 comedy âTower Heistâ available as a $59.99 video-on-demand rental in two U.S. markets, just three weeks after the filmâs Nov. 4 theatrical debut. Word of the plan has Cinemark, the countryâs third-largest exhibitor chain, to threaten to boycott screening âTower Heistâ at any of its 300 locations if Universal proceeds with the premium VOD test (via the Los Angeles Times and The Wrap).
AMC Entertainment and Regal Entertainment Group, the top two theater chains in the U.S., have not publicly commented on how they might respond to Universalâs plan. Earlier this year, the National Association of Theatre Owners trade group decried studiosâ premium VOD overtures, speculating that such releases would cannibalize movie markets and fuel piracy.
Video-on-demand solutions provider SeaChange International will offer Civolutionâs forensic watermarking technology under a new integration and distribution agreement, as cable operators prepare to launch premium VOD consumer services.
Paul de Bot, general manager of SeaChangeâs back office and monetization division, says that the Civolution partnership âaccelerates time-to-market for cable MSOs that want to launch premium VOD services with early release content from Hollywood studios.â
Civolutionâs NexGuard forensic watermarking is already in use with digital cinema systems, hospitality markets, and direct-to-home satellite operations worldwide, according to Civolution CEO Alex Terpstra. The NexGuard application for cable VOD includes a content pre-processing phase to ensure ease of integration and scalability with content streams in MPEG-2 or H.264. The watermark embedding itself is performed on a per-VOD transaction basis upon streaming the content to the viewer by SeaChange or third party VOD servers.
Civolutionâs automated, Web-based NexGuard Detection Service searches for the watermark in suspected pirate video samples. The company says its VOD watermarks can be automatically detected without the need for original content.
From the thatâs-for-us-to-know-and-for-you-to-find-out dept.: The National Association of Theater Owners is calling on studios to reveal the number of DirecTV subscribers that are ordering movies from the satellite TV providerâs new premium video-on-demand service.
âWhatâs an experiment without data?â asks John Fithian, the exhibitor trade group president, in a press release.
The four studios participating in DirecTV’s “Home Premiere” program, which launched April 21, are staying silent on the service’s preliminary results. So is the satcaster. âItâs way too early,â DirecTVâs Derek Chang told The Hollywood Reporter last week, when asked if he could share audience figures for the first Home Premiere title, Sonyâs âJust Go With It.â
This week, Home Premiere adds a fourth title: Universalâs âThe Adjustment Bureau,â which has earned $61 million after eight weeks in theaters. DirecTV made the announcement on its Twitter page April 29.
Speaking at a Bloomberg-sponsored event at the Tribeca Film Festival, Time Warner chief executive Jeff Bewkes said that the Warner-backed premium video-on-demand push was in response to the âthree-week lifeâ that most films have in theaters. That said, Bewkes noted that studios âhave toâ keep theater ownersâ interests in mind if they are to persevere (via The Hollywood Reporter).
Perseverance will be an issue as well for pay-TV distributors over the next 10 years, Bewkes mused: the marketplace, he said, could consolidate to three to five big companies.
DirecTV has not disclosed sales figures for the first four days of its premium video-on-demand service, Home Premiere, which on April 21 began offering the Sony Pictures film âJust Go With Itâ for a $29.99 rental. The film, whch debuted in theaters Feb. 11, is still screening at 265 locations; it grossed $200,000 during its most recent exhibition week, according to The Wrap.
For DirecTV to surpass that revenue figure, 6,669 subscribers would have to have ordered the film on Home Premiere. That seems unlikely, despite DirecTV making the service available to 6 million of its satellite-television subscribers (via The Wall Street Journal). Factors pointing to a âsoft launchâ for Home Premiere include the absence of marketing and consumers’ unfamiliarity with the service’s value proposition.
The war of words nevertheless continues between studios and exhibitors over premium VODâs potential impact. According to The New York Times, Chris Dodd, the new Motion Pictures Association of America president, plans to reach out to National Association of Theater Owners chief John Fithian on the issue.
On Thursday, DirecTV subscribers will be able to rent the romantic comedy âJust Go With Itâ on demand for $29.99, as the satellite TV network rolls out its Home Premiere service. The Sony Pictures film has been in theaters for nearly 10 weeks. If its debut on Home Premiere is to top last weekâs box office gross of $270,000, The Hollywood Reporter estimates, 9,003 people would need to press play at home. That number, in turn, represents just 0.15% of the 6 million subscribers that will have access to the new DirecTV service (via The Wall Street Journal).
For now, at least, Home Premiere will market one film at a time, in two-week increments; other studios participating in the venture include Fox, Universal, and Warner Bros.
Meanwhile, Noted directors and producers responded to studios’ premium VOD plans today by issuing an open letter that joins exhibitors’ criticism of the new model.
âMake no mistake: History has shown that price points cannot be maintained in the home video window,â the letter reads. âWhat sells for $30âaâviewing today could be blown out for $9.99 within a few years. If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty, premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue.â
Among those asking for âa seat at the tableâ of premium VOD talks are the likes of Michael Bay, James Cameron, Peter Jackson, and Jon Landau. The National Association of Theater Owners sponsors the campaign.
DirecTV is timing its introduction of the Home Premiere video-on-demand to coincide with the Easter holiday weekend, according to reports. Sonyâs âJust Go With Itâ Warnerâs âThe Rite,â and Fox Searchlightâs âCedar Rapidsâ are expected to be among the movies available as $30 rentals (via Variety and The Wrap).
Theater chains continue to express dismay over the shortening of their exclusive exhibition window for films, fearing the new service will keep moviegoers at home. The romantic comedy âJust Go With Itâ is one of the more contentious choices for the premium video-on-demand service, for it has been an exhibitor moneymaker: released on Feb. 11, the film has cleared $101 million in domestic box office receipts, and was still showing in 597 theaters as of last week (via Box Office Mojo).
Yet the potential impact that premium VOD could have on theater revenues varies greatly by title.Â Some expected Home Premiere offerings are practically at the end of their theatrical run: thriller âThe Riteâ ($33 million in box office to date) opened in 2,985 theaters on Jan. 28, but remained showing in just 72 locations as of April 7. Other films were never marketed as âwideâ theatrical releases: the greatest number of theaters showing âCedar Rapids,â which has earned just $6.6 million since its Feb. 11 premiere, was 462 during the week of March 18.
AMC, the second-largest theater circuit in U.S., has told studios that it expects to implement new âeconomic arrangementsâ for films that studios distribute as âpremium video-on-demandâ rentals.
The exhibitor has not divulged details of its planned response to studiosâ window adjustment. âBut as these windows shrink and threaten our industryâs future,â the company said in a statement last week, âit is only logical to expect AMC to adapt its economic model.â
Other theater chains have said that they may pull trailers and marketing collateral of movies available via premium VOD services, which several major studios plan to launch with cable and satellite providers in April.
The unveiling of four studiosâ plans to rent new films via DirecTV as âhome premieresâ has theater owners reviewing the level of marketing support they give to coming attractions.
âCinema owners devote millions of hours of screen time each year to trailers promoting the movies that will play on their screens,â said the National Association of Theater Owners trade group, in a statement (via Variety). âWith 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.â
The trade group also said its members would likely review the âacres of wall and floor spaceâ they devote to new-release posters and standees.
Four studios â 20th Century Fox, Sony, Universal, and Warner Bros. â will offer $30 âHome Premiereâ rentals to DirecTVâs nearly 20 million customers, in an anticipated launch of the premium VOD service next month.
Variety reports that cable network Comcast also will join the Home Premiere launch by offering the service in certain cities in late April. Studios will add movies to the service two months after their theatrical debuts; the $30 price will get consumers a two- or three-day viewing period, depending on the distributor.
DirecTV could be studiosâ first âpremium VODâ distributor, offering subscribers the opportunity to pay $30 to rent a movie two months after its theatrical debut and at least one month before DVD release, according to the Los Angeles Times.
The Times reports that DirecTV and studios aim to launch the premium VOD service by the end of June. The plans continue to rankle owners of the countryâs largest theater chains, since premium VOD would reduce theatersâ window of exclusivity on films by four weeks or more.
âWe understand the problem that studios are facing when DVD sales are nosediving,â AMC Entertainment chief Gerry Lopez told the newspaper, âbut we donât see premium VOD as any kind of solution.â
Studios are expected to forge ahead nonetheless with satellite, cable and Internet service companies, testing new value propositions with premium VOD packages. Such rentals via DirecTV may include a DVD copy of the film, either as a value-add or for an additional fee, according to the Times story.
Irdeto has received three patents from the U.S. Patent and Trademark Office for its server-based watermarking solution, as the security developer positions the technology for use with studiosâ premium video-on-demand slates.
The company says it has eight additional watermarking patents pending. The technology enables rights holders to trace unauthorized distribution of content to individual users, without requiring integration with a VOD server or set-top box hardware.
âIrdetoâs watermarking technology is unique in that it can be applied to any broadcast receiver or set-top box currently in use as well as work with all legacy and already deployed conditional access systems,â says Andrew Wajs, Irdeto CTO, in a statement.
News Corp.âs filmed entertainment unit reported operating income of $189 million during the companyâs second fiscal quarter (ended Dec. 31), a 42% decline from the year-ago period. The decline, News Corp. said, primarily reflects the difficult comparison to the prior yearâs results, which were led by the worldwide home entertainment success of âIce Age: Dawn of the Dinosaurs.â
Sci-fi flick âPredatorsâ was the home entertainment highlight of Foxâs 2010 holiday season, along with the continued worldwide home entertainment and pay-TV performance of James Cameronâs âAvatar.â
Surveying the studioâs 2011 prospects with analysts on Wednesday, News Corp. COO Chase Carey said that Fox would likely unveil a âpremium VODâ service for new theatrical films during the first half of the year (via Home Media Magazine). Careyâs emphasis of premium VODâs importance â along with his studioâs reluctance to license new-release films to Netflix â echoed views that Time Warner chief executive Jeff Bewkes offered to analysts during his own companyâs earnings call earlier this week.
Warner Bros. could be one of the first major studios to distribute movies still in their theatrical run directly to U.S. consumersâ homes, with the company looking to offer a âpremium video-on-demandâ service by the second quarter of next year.
Time Warner chief executive Jeff Bewkes told analysts yesterday that the studio was ânear agreement with our distributors on the right window and the right price pointâ for premium VOD (earnings call transcript via Seeking Alpha). Previously Warner Bros. had hinted that such screenings may cost between $20 and $30 each. But Variety reports that Warner is now considering a higher price range of between $30 and $50 per film.
The even higher premium may be linked to Warnerâs plan for the new VOD service to eventually offer new 3D releases as well. In any event, the range is in line with current pricing for pay-per-view events on cable and satellite networks â as well as the cost for a family of four to see a film like âHarry Potter and the Deathly Hallowsâ in theaters ($45 for two adults and two children at an AMC theater in Manhattan).
Talk among major studios of premium VODâs potential is not new. But Warnerâs comments nevertheless came to the consternation of major theater chains, which fear the home screenings will undermine their business.
Exhibitors âassume that Warner Bros. would discuss new models with their existing exhibition partners prior to finalizing radical agreements that could damage the entire movie industry,â John Fithian, president of the National Association of Theater Owners, told Variety.
From Warnerâs perspective, premium VOD would build on the studioâs successful implementation of a 28-day sales window for new DVD and Blu-ray releases.
At the Blu-con conference in Beverly Hills, Calif. earlier this week, Warner Home Video president Ron Sanders said the delayed DVD access to Netflix and Redbox has yielded a 10%-15% sales lift for the studio’s top new releases. But Sanders also mused during a panel discussion that 28 days might not be long enough to maximize sell-through.
Bewkes followed up on Sandersâs point in his earnings discussion with analysts. âWeâre not religiousâ about the length of windows, he said. âWeâre just trying to maximize the value of our content as we see these alternatives develop. What we think is that so far the 28-day window has clearly been a success versus no delay.â
The idea of a longer window to protect DVD and Blu-ray sales âis very much under scrutiny,â Bewkes said, adding that if it saw promise in a longer window, âwe can do that next year because thatâs when our deals all come up for a decision by us.â
Sony Pictures, Warner Bros., and Walt Disney are still seeking to offer new theatrical releases for rental on cable systemsâ video-on-demand platforms â with plans to charge a hefty premium for screenings, according to Bloomberg.
The three studios are in talks with In Demand â the VOD partnership between cable operators Comcast, Cox Communications, and Time Warner Cable â to test a so-called âpremiumâ VOD service. True to its name, the service would charge viewers a considerable premium for the privilege to watch new films at home, months before their release on Blu-ray or conventional VOD channels: rentals could cost as much as $30 each, Bloomberg reports.
The studios, some of which openly discussed their plans at a Goldman Sachs conference in New York last week, are evidently undaunted by the recent hacking of the Intel-created content security system that the premium VOD platform would rely on.
Time Warner CFO John Martin reportedly told conference attendees that Warner Bros. expects to begin premium VOD tests later this year, offering films for between $20 and $30 per screening.
Such pricing comports with premium VOD offers that Sony has made in previous years. Last fall, for example, purchasers of Sony Blu-ray players or Bravia TVs could pay $24.95 to stream theÂ studioâsÂ âCloudy with a Chance of Meatballsâ one month before the filmâs release on disc.
Bloomberg also reported that Disney, for itself, is mulling a streaming extension of premium VOD, via Internet-connected devices such as Microsoftâs Xbox 360 and Sonyâs PlayStation 3.
Besides pricing, the other unknown is how soon after their theatrical debut movies would be made available under the new service. But theater owners have vocally opposed any âcollapsingâ of their window of exclusivity on new films.
The proposed premium VOD service, the National Association of Theater Owners asserted in June, âmuddies the value proposition for the consumer, blurs distinctions between theatrical and âstraight-to-videoâ and undercuts one of the important selling points for theatrical exhibition â the timeliness of the exclusive event.â