Are You Willing To Pay $20,000 To Watch First Run Films At Home?

“While this is a niche market, there is a chance for significant upside. And precisely because it is a niche market, that upside should come without harming any of our existing partners or revenue streams.”

“We’re not here to replace anything. We are trying to create new revenue streams for studios and new viewing opportunities for moviegoers.”

The windows that films are released to the public to maximize profits continues to be an issue of debate. Traditionally the release schedule is as follows.  A movie hits theaters first, followed several months later by DVDs, video-on-demand, subscription-cable channels, and so on.

This system has been catching a lot of flack lately because of DVD sales which continue to decline. Consumers have grown accustom to films being released sooner and we are int he digital age with increased piracy concerns

Another area of interest is in the creation of “premium” video-on-demand window that would offer consumers the chance to watch a movie a month or two after it arrives in theaters for about $30.

According to media-tracking firm IHS Screen Digest, DVD sales are about 20% in 2010 from 2009, to $7.8 billion. DVD spending is also down 43% from its 2006 peak of $13.7 billion.  While DVDs are down, video-on-demand services have increased 17% since 2009, to $1.4 billion, according to IHS.

Prima has met with all six major studios as well as several of the smaller, independent ones about licensing their films. Prima anticipates that several of them will sign on when the company launches its service in late 2011.

As can be expected, theater owners are not happy about anything else eating into their profits.  The president of the National Association of Theatre Owners John Fithian said that the service offered by Prima “makes very little sense as it risks millions to make pennies.”

by exposing movies to the possibility of piracy early on, Mr. Fithian says. “There is no such thing as a secure distribution to the home,” he adds, noting, “This proposal will give pirates a pristine digital copy early, resulting in millions of lost revenue to piracy, while at the same time selling a very limited number of units. Only billionaires can afford $500 per movie.”

Time Warner Inc., is planning to test an early-release program next year with a new film.  The program will cost roughly $20 to $30 to watch digital copies of movies within a month or two of their release in theaters.

Sony Pictures did a similar program for owners of the Bravia TV.   They offered its 2008 Will Smith filmHancock and its animated 2009 Cloudy with a Chance of Meatballs before the films were out on DVD.

Not all studios are supportive of a program like this. Viacom Inc. Chief Executive Philippe Dauman said Monday that his company isn’t one of the conglomerates considering a new premium video-on-demand service. “We want to satisfy our theater distributors,” said Mr. Dauman on Monday, also at the UBS investor conference. Viacom owns Paramount Pictures, but is controlled by Sumner Redstone’s closely held National Amusements Inc., which also owns a movie-theater business.

What are your thoughts of a premium video-on demand service.   The price tag of $20,000 is out of my price range and I don’t think I would pay even $30 to watch stuff at home.  I am fine with instant Netflix and I especially love seeing movies on the big screen.

Source: Wall Street Journal