No Joke, “Premium” Movie VOD To Run $30

Dave Zatz —  April 1, 2011 — 25 Comments

The studios originally floated the idea of early access video on demand last fall, and I didn’t think much of it at the time — assuming either the theaters would crush it or they’d recognize very few of us are willing to pay for rentals in the double digits. Well, logic hasn’t prevailed

Warner Bros., Sony, Universal and 20th Century Fox are the first studios that have agreed to launch Home Premiere as the official brand under which the industry will offer up movies to rent for $30 two months after their theatrical bows for a viewing period of two to three days, depending on the distributor.

The service kicks off later this month via the likes of DirecTV and Comast. And I just didn’t see it flying, given the cost and delay, as the studios attempt to squeeze more value out of the artificial, inconsistant, and archaic movie release windows. The only way I could imagine this sort of scheme paying off is if the studios and television providers were to make a movie available the same weekend it’s released into theaters and portray the experience as a pay-per-view event. Perhaps that’s the ultimate goal, but at launch, this initiative will fail (to generate revenue). Agree?

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25 responses to No Joke, “Premium” Movie VOD To Run $30

  1. Michael Burstin April 1, 2011 at 8:56 am

    The only potential redeeming idea that I heard about this was that the rental would also include them sending you the BD/DVD when it was released. Certainly the only possible way I could see this flying.

    Still, rather insane.

  2. Well going to the theater to see a movie could run about $30 for two people if you include a drink and popcorn so I don’t think the $30 price tag is that unreasonable if you rationalize it like that (add in one kid and its even more). However I’d still wait 6 months and then rent it for between $1 and $5.

  3. Unfortunately for theatre companies, I do see this paying off. Think of it this way…no gas to pay for to get to the theatre AND at $30 it would cost you more to get 3 people into the theatre. Not to mention the concession costs.

    I do think theatre chains would crush the idea if the could and would definitely do everything in their power to squash the idea of concurrent release to theatre and VOD. There’s no way the studio will provide BD/DVD just for renting the movie at home. The premium charge is just that: for the convenience of staying home and watching first run movies without having to wait 6 months for the DVD release you pay $30.

  4. $30???

    I might consider it as an alternative to the theater if it had the same release day as the theater AND it was $20.

    Even then, though, I’ll just wait a few months and rent it on DVD or Netflix it.

    A bigger thing they could do is to sell DRM-free movies on Amazon and iTunes. Get people out of the ‘buy a DVD and then rip it’-business. Of course, knowing how the movie industry has played this stuff before they’d probably let you do it but at $150/movie.

    I don’t get why all of this stuff is so hard to grasp for them. There are lots of theaters that have closed up around me. The prices keep going up. People are staying home rather than spend a pretty decent amount of money to go to the theater and buy expensive drinks and snacks AND watch commercials before starting time AND watch another 20min of commercials after posted starting time.

    I probably go to the theaters once or twice a year – and then it’s if I’m bored (maybe raining) and I can’t think of anything else to do. It’s not like 30 years ago when you looked forward to the new movies and couldn’t wait to see them at the theater (and movies have gotten worse).

  5. This all seems perfectly sane to me.

    It’s just an add-on revenue stream that doesn’t badly cannibalize any existing revenue streams. And they can scale it as it goes.

    Thirty dollars, two months after the initial release probably isn’t the right price point for most folks. But so what? I’d pay an enormous amount for HD NBA games. Get four folks at home around a TV, and maybe seeing that blockbuster you wanted to see but missed is worth $30.

    High priced narrowcasting has its niche.

    Now, I’d be pissed if I were a theater-owner. This wasn’t what I signed up for. But the theater-owners’ clout must be waning with the studios.

  6. Maybe the $30 isn’t necessarily unreasonable – as folks are pointing out, theater tickets are up there as well. But $30 two months after release isn’t at all compelling to me… when you figure a premium movie channel is half that, for many movies, and a typical HD movie rental run $6. If I made it two months, I’m obviously content to wait it out. But offer me a $30 rental opening weekend to catch something like Captain America and maybe I invite a friend or two over and we make it an event.

    I agree Chucky, it’s not insane and won’t cannibalize much of anything on either end… because their won’t be many takers.

  7. Considering what you spend to go to a movie right now, it could end up being a deal I guess. Some movies like blockbusters are better seen on a big screen though. We just wait for the dvd to come out for rental. There hasn’t been something in awhile that’s worth jumping and running to a theatre to see. I’m mad because the concessions cost so much that it has become a very special occasion for me to even bring my grandchildren to a movie nowdays. The last time I took them was last summer and with the cost of tickets and a small bag of popcorn each and a small drink w/o a refill it cost me around 50.00 bucks for myself and two children. No I’ll save my money and wait, but I guess for some it could be cost effective.

  8. “But offer me a $30 rental opening weekend…”

    Hah! Don’t bogart that joint, my friend.

    Two months is obviously the kicker here, as lots of the buzz has worn off of most movies and their promotional campaigns at that point.

    But there are also lots of movie where the buzz hasn’t worn off yet, both generally, and for niche audiences.

    Generally, there would have been takers for something like The King’s Speech two months in because of the Oscar® buzz.

    And something with a niche like Sex and the City 6 will do business under current terms.

    Overall, I’d say this kind of price point works for families with kids, and for “event movies” of one sort or another.

    “I agree Chucky, it’s not insane and won’t cannibalize much of anything on either end… because their won’t be many takers.”

    Well, on one hand, why leave cash on the table?

    On the other hand, think of it as an entering wedge. They can scale it as it goes. Give it a couple of years, and I could imagine an even high-priced tier appearing, two or three weeks after the release…

  9. So the anti-piracy ads keep telling me that I should go to the cinema (theater, American friends :-) ) for the full “experience”. If they’re confident that the experience is so damned compelling, why are they worried that nobody will go any more if we can have the same films at home for more or less the same price as a couple of tickets + snacks?

    Are they not believing their own rhetoric?

    The whole thing is ludicrously ill-judged, with too long a window, and too high a price for a rental product. This also doesn’t even begin to factor in the worldwide market which will no doubt be left hanging yet again. We already have theatrical release windows that are regularly weeks or months after the US release.

  10. If it were $30, and I could be guaranteed an HD stream, and it came out the week after release…maybe.

    Maybe.

    $20 and I’d be all over it for current run movies.

  11. Honestly, with the pricing I think they hit THEIR sweet spot. Let me explain.

    If it was say 20$, or opening weekend for 30$, or $25 for two weeks to four weeks out, then 20$ after a month, or something along those lines, we would ALL just be saying great, many people will bite. These would be the clearly reasonably adopted alternatives.

    All factors to consider are: ridiculous price of cinema tickets (which the cinema don’t actually GET)

    Outlandish pricing on corn and sugar based products. Look, I’m a commodities trading guy and know better than most that the price of corn has gone through the ROOF in the past couple years, but there ain’t more than about .10$ worth of CORN in a 6.50$ MEDIUM bucket of popcorn. And sugar water, come ON, we all know the margins at Coke and Pepsi, and know that the theaters alter the mix of carbonated water to syrup in their favor.

    Travel to and from the cinema IS getting more costly, gas, cities now charging parking fees on friday and saturdays, parking structures only offering 2 hours free with ticket purchase, THEN one pays.

    TIME to travel and hassle, and crowds, etc.
    One REALLY has to want to go out and make a movie an event these days, what with the great level of home theater equipment out there and in our homes. I get that, some movies I DO just want to see in a theater (even if I don’t personally LIKE 3D movies)

    But the studios and the cinemas have to figure out how to continue to make a lot of money AND get additional revenue from people after the release and for those people who watch movies in a delayed fashion.

    I think if any of the above reasonably adopted alternatives were the have been offered they figure that they would ACTUALLY cannibalize opening or early ticket receipts and that is the LAST thing the studios want to start to do.

    There IS an opening day solution, and I think the price point was 20,000$ in hardware (for the secured digital delivery downlink) AND 500$ a MOVIE on opening day. At that price point they aren’t stopping anyone from going to the cinema who would normally go.

    IF they let you stream the movie for 30$ a couple months after release AND they give you the blu-ray for free, I’ll buy it sometimes for sure.

  12. There is a small minority of people on AVS with killed theaters who would gladly pay $30, with theaters that can seat the whole family and a few neighbors and sound systems that exceed the theater.

    Before I sold my old house I was one of them, and for the right flick, I’d be psyched.

    Not enough to make it full viable IMHO though.

  13. I would pay $30. Cheeper then going to the movies, hearing kids screaming and walking on the sticky floors. $30 is cheap.

  14. Jonathan Siegal April 1, 2011 at 2:14 pm

    There are maybe 1 to 2 movies a year that I’m genuinely excited about. If I’m that excited about a movie, I want to see it on a screen a lot larger than the one I have at home, with better speakrs than the ones I have at home.

  15. I have a small theater/media room that seats six people and I imagine I would be interested in something like this. There are probably four or five movies a year I would want to see as soon as possible – short of going to the theater – and having a small dinner & a movie party would be cool.

  16. “…offer me a $30 rental opening weekend to catch something like Captain America and maybe I invite a friend or two over and we make it an event.”

    Agreed, Dave. It would certainly be more appealing if the VOD release was closer (1-2 weeks) to the theater release. However, I can live with the two months. For anyone over a certain age (35?), going to the theater is NOT the experience it used to be. Unless you enjoy crying babies, people checking their messages, people talking on the phone or narrating the movie for you – and then look at you like your crazy if you say something to them – I would rather catch a movie in my home.

  17. If $30 is too much or not depends on a number of factors. I am assuming this is design for too groups of people:

    One is people with a top notch home theater setup. Which most likely means upper income folks – so how long does it take them to make the $30? 20 minutes or even less?

    The other where a larger number of people will be watching be it family or friends.

    Next question is how much does this cost to offer? I am guessing the add on cost over any other VOD is next to nothing. So even if a small number of people pay for it it is all profit.

    Through in the issues that some people have going to theaters and my question is why would we expect this?

  18. $30 and release it once box office numbers fall 50% or more from the opening weekend.

    otherwise i can do midday showings at the Arclight for $11.50 and i have the theater to myself.

  19. The price seems ok with a couple of control points. One it has to be Vudu HDX + DD+ quality or better. I am inclined to say download as well to ensure no streaming issues. If you cut it down to 2-4 weeks instead of 2 months I could see doing this once a month at least for the movies I would have watched in theaters or missed in theaters. If I can’t get the above though I will just wait for Blu-Ray to watch it on my 106″ screen.

  20. “otherwise i can do midday showings at the Arclight for $11.50 and i have the theater to myself.”

    The folks who hate going to the theater all live in the suburbs.

    Easy access to the big screen is one of the real benefits of living within civilization. It’s a true luxury.

  21. I get there within 5 minutes of start time, sometimes I get the baguette (sometimes not), parking is $1, ticket price is $11.50 if you buy online and you get to pre-select your seat. arclight is truly a great experience (no imax though and the 3-d glasses are “bulky”).

    my job in sports tv also affords me the luxury of not working every day (avg 15-20 days a month, mostly all weekends). that said, i’d pay $30 if it were something i wanted to see and I missed it in the theater that first or second week.

  22. “I get there within 5 minutes of start time, sometimes I get the baguette (sometimes not), parking is $1, ticket price is $11.50 if you buy online and you get to pre-select your seat.”

    NYC and LA really do offer some sweet cinema heaven.

    The best cinema experience of my life, however, was when I lived a couple of doors down from an old movie palace in a college town. I was friends with most of the kids who worked there, so I got in for free. And since the trip was so short, I could time my entry to within 60 seconds of when either the trailers or the show was beginning, depending on which I wanted that day. Going from my couch to sitting in a cinema seat with the movie just starting in under two minutes…

  23. When you feel like a company is screwing you, you reach a point where even when the company offers a good deal, you won’t give them any more of your money. Logically this makes no sense but there you are.

    For me Comcast has reached that point. No matter how good an offer Comcast sends my way, I won’t take it.

    So even though this sounds nice to me, I’ll wait till the movie comes out from Netflix.

  24. to everyone saying 30$ is cheaper than the theater — at 2 months after release lots of movies are already in the dollar theater.
    for a concurrent release then yes 30 or even 50 for my family is cheaper but there are VERY FEW movies I would pay that much for and mostly I want to see them on a large movie theater screen or in 3D on large movie theater screen.

    For all the others I can dollar theater it or wait for Netflix to have it. If they withhold it from Netflix then they do not get my business.

  25. Well, I for one still prefer going to the theater for something I really want to see…

    That said, I agree with @Chucky, this is just an opening bid, and an attempt not to leave money on the table. Doesn’t matter if it only appeals to 1% of the population. If they appealed to more, they’d be hurting their theater ticket sales, and they might find theater owners revolting.

    The extra expense for Comcast or Vudu or DirectTV to offer this won’t be that high either. Its the same VOD platform after all. Aside from some additional requirements for watermarking to reduce the consequences of piracy, it would seem the extra cost for this will be pretty minimal.

    Where will this go? Lower prices? Shorter windows? Over time the answers to both questions is clearly YES.

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