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Hollywood Wants Big Movies Online 45 Days After Hitting Theaters

By Brian Gallagher — March 31st, 2017

With the home video market drying up, and streaming services like Netflix, Hulu, Vudu and Amazon Prime becoming more and more popular, Hollywood studios are seeking to cut the window between theatrical and home video releases in half. A new report reveals that the major Hollywood studios and theater owners are discussing a plan that would allow new movies to be available in a format called "premium video on demand," where fans could purchase new releases at a premium price, estimated to be between $30 and $50, less than 45 days after its theatrical release, which is half of the current 90-day window between theatrical and home video releases.

The Wall Street Journal reports that studios and movie theater owners are currently in talks to hammer out plans for premium video on-demand, which the site's sources say could be in place by the end of this year. Most theaters won't play movies that are available either on Blu-ray/DVD or VOD formats at least 90 days after its theatrical release, since theater owners believe that early home video releases will cut too much into ticket sales. Now it seems the studios are willing to compromise, with a new plan that would include the studios sharing a percentage of the premium VOD sales with theater owners, to compensate them for lost revenue in ticket sales. Here's what Doug Belgrad, former president of Sony Pictures Entertainment's motion picture group who now runs an independent production company, had to say about premium VOD.

"Major studios and exhibitors are trying to work out how to respond to consumer desires so they can remain competitive."

One point of contention is how small the window between theatrical and premium VOD should be. This report claims that some studio executives want the window to be as small as 10 days, while others are vying for a 17-day window and others are seeking a window between 30 and 45 days. This issue was expected to be discussed at CinemaCon, which took place in Las Vegas this past week, although it isn't clear if an agreement was reached during the convention. Sources say, though, that if a consensus between all of the studios isn't reached, one studio could launch their own premium VOD service, which would in essence force the other studios to follow suit to stay competitive. We reported in December that preliminary talks were already under way, but now it seems this is coming closer to reality than ever before.

Paramount Pictures tried to launch their own premium VOD service back in 2015, but that was quickly shut down after exhibitors strongly opposed their plans. One of the other sticking points to this new service is whether or not it should apply to all movies. Some believe that this premium VOD service should be based on box office receipts, with movies that flopped in theaters being made available quicker than box office blockbusters. After opposing similar plans for years, theater owners are now much more open to premium VOD, with this current model expected to provide theater owners with anywhere between 10% and 20% of the premium VOD revenue, for movies that are released on the service less than 30 days from the theatrical debut. Another point of contention is how many years these theaters would receive their cut, and that the price for premium VOD can't go too low. Here's what former Paramount vice chairman Rob Moore had to say about what theater owners are seeking.

"Theaters are more likely to want security over time than an extra 5% or 10%."

Two major studios are now owned by cable companies, with Comcast owning Universal Studios, and Warner Bros.' parent company Time Warner recently being bought by AT&T, with these cable companies believed to be pressuring the studios to push for a premium VOD format to strengthen their digital distribution companies. Sources say that the streaming giant Netflix is putting the most pressure on movie studios, releasing some of their big-budget films in theaters and on the streaming service simultaneously, with some movies not even getting theatrical releases. Netflix is also making aggressive moves to pick up big tentpole movies, shelling out a whopping $90 million for Bright, which had Will Smith attached to star and David Ayer directing from a Max Landis script. Netflix is also reportedly spending between $120 million and $130 million for Martin Scorsese's The Irishman, which would reunite Al Pacino and Robert De Niro. Here's what Rob Moore had to say about why premium VOD is the right move to compete with Netflix.

"If studios don't take competitive steps, they're just going to let Netflix seize control of the entertainment business."

Now that CinemaCon has come and gone, there hasn't been any official announcement about premium VOD, but if this report is accurate, this may happen sooner rather than later. A shift to premium VOD also makes sense because most movies are so front-loaded these days, with a majority of their box office take coming in the first month of release, if not the first few weeks, and premium VOD would also help studios recoup losses from box office flops quicker, and at a far greater price point that Blu-ray, DVD and Digital HD. While nothing is set in stone yet, you may be able to buy your favorite new movie just weeks after seeing it in theaters.

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