April 18, 2013
In an effort to regain revenue lost from shrinking DVD sales, Universal Pictures chairman Adam Fogelson suggested that studios should consider partnering with theaters to test out the idea of premium video on demand. Fogelson made his remarks during a panel discussion at the Cinema-Con convention in Las Vegas this week. Typically, movies are made available on-demand at home about three months following theatrical distribution. Premium VOD would shrink that window.
“When people talk about the love of movies they talk about the experience of going to the theaters,” said Fogelson. “I think if exhibitors believe that as strongly as I do then there will be room… at least for experimentation.”
Also on the panel was S. David Passman, chief exec of Carmike Cinemas, who said he was open to the idea of premium VOD, but remains concerned regarding the potential impact on ticket purchases. After the panel, Passman was asked if he would be more willing to experiment if studios offered a percentage of premium VOD revenue.
“I would hope the answer isn’t a sharing of revenues while we have empty theaters,” he responded.
“In a separate interview on Wednesday, Gerry Lopez, chief executive of the nation’s second-largest exhibitor, AMC Theaters, said he too was open to premium VOD experiments,” reports the Wall Street Journal. “But if theaters gave way on ‘windows’ — the phrase used for the staggered movie release in theaters, pay TV and broadcast TV — he believed studios should offer concessions such as a more generous split of box-office revenue, which they haven’t offered in the past.”
Theater owners have long believed that consumers will be less likely to purchase cinema tickets if they realize new films will be available in their homes sooner than three months following a release. The model was tried briefly in 2011, although theater owners objected.
Fogelson explained during an interview that “he believed it would better for all in the industry to participate in limited premium video-on-demand tests, rather than waiting for a major studio to defy exhibitors by offering a ‘must-see’ movie via premium VOD nationwide,” explains WSJ.