Theater Operators: Early Home Film Releases by Premium priced VOD will hurt Cinemas

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Cinema

The nation's largest theater chains have been reaching out to investors and analysts on Wall Street, as well as directors, producers and agents, in an effort to build support for preserving so-called theatrical windows: the period of time between when a movie opens in cinemas and when it comes out on DVD or other media.

This is in response by earlier news by Hollywood that wants to offer movies by VOD at a price of $30-$60, one to two months after they are released in theaters.

Issue

Hollywood sees premium-priced VOD as a new revenue stream for studios to combat declining DVD sales. Theater companies say that VOD plans will undercut movie ticket sales, giving consumers less incentive to trek to the theater if they can wait a few extra weeks to watch the movie in the comfort of their home. Right now movies are made available via VOD about the same time they're released on DVD, about 130 days after they debut in theaters.

Symbiotic relationship between Studios and Theaters

As explained by the Direct Marketing Association:

Studios and theaters have a symbiotic relationship stretching back a century that has been mutually beneficial. Theaters get to keep roughly half the revenue from ticket sales, while the studios keep the other half and resell their movies multiple times to consumers: first in theaters, then on DVD, followed by video on demand, then showings on cable channels such as HBO and Showtime.

Reactions

Gerry Lopez, chief executive of AMC Entertainment, said:

"A 30-day window makes absolutely no sense to us whatsoever. We're concerned about the grave consequences this could bring."

John Fithian, the association's president, said:

"We are reaching out to the creative community and the business community because we think some of the studios are moving down a path of a bad business model. They risk losing two dimes to save one nickel."

Jon Landau, producer of James Cameron's blockbuster Avatar, said:

"We don't make movies for the small screen, we make movies for the big screen. Television is a great art form, but it's an oxymoron to say we're giving you a premium experience on TV."

Adam Fogelson, Universal Pictures Chairman, said:

"We are exploring every conceivable additional revenue stream out there. The facts are irrefutable that our business models are under an extraordinary amount of pressure. In order for the studios to remain healthy, we need to find ways to recapture that revenue."

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