Early Home Video Access for the 1% Crowd — Without the Industry Angst

Flush with cash from Trump’s tax cut, the ultra-wealthy can now access new-release theatrical releases in the home — for $1,500 to $3,000 a title.

Upstart Red Carpet Films has entered the controversial premium video-on-demand market offering consumers willing to pay almost anything to rent (for 36 hours) Shazam! or Godzilla: King of the Monsters day-and-date with their theatrical debut.

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Studios such as Warner Bros., Paramount Pictures, Lionsgate, Disney’s 20thCentury Fox and Fox Searchlight, among others, are on board the concept that requires consumers submit to a background check and purchase a $15,000 set-top box rigged with anti-piracy controls.

Disney (a big proponent of the 90-day theatrical window), Sony Pictures and Universal Pictures are not on board. Exhibitors apparently remain unconcerned about the targeted demo.

Fred Rosen

The brainchild of Fred Rosen, founder of Ticketmaster and Dan Fellman, who retired from Warner Bros. in 2015 after a 40-year career in distribution, Red Carpet Films claims it can deliver studios about $300 million in incremental revenue from as few as 4,000 wealthy customers.

Investment firm Charles Schwab considers anyone in possession of at least $2.4 million in net value wealthy. Nationwide, households earning at least $390,000 annually are considered to be in the 1% of earners. That requisite figure increases significantly in 12 states, including Connecticut, California, New York, and Texas.

“Every product I can think of has a luxury version, which got me thinking … why not movies?” Rosen told The New York Times.

It’s not an original business model. Best Buy in 2013 toyed with a business (CinemaNow) that charged consumers $500 for early home video access, in addition to related equipment charges.

Recently, Screening Room (from Napster founder Sean Parker) promised early in-home access (priced from $30) despite exhibitor pushback. Universal, in 2011, tried offering actioner Tower Heist early in the home – a strategy that was quickly shelved when exhibitors refused to carry the movie.

Of course, Netflix has long pushed in-home access to its original movies concurrent with any theatrical screenings.

While Lionsgate chairman Michael Burns promised studios would embrace premium VOD last year – a movement pushed as well by former Warner Bros. chairman Kevin Tsujihara – the concept now appears DOA.

Dan Fellman

Fellman says Red Carpet has worked with studios instead of placing demands.

“They appreciated that,” he said. “What doesn’t work in Hollywood is going in and wagging a finger and saying, ‘This is how it’s going to be.’”

Report: Warner’s Tsujihara Still Keen on Premium VOD

Warner Bros. Entertainment Chairman and CEO Kevin Tsujihara again pushed the idea of early home access for consumers that want theatrical movies sooner — oft termed premium VOD.

“Clearly we want the theatrical experience to continue and to maintain that incredible social experience,” he told the Los Angeles Times Feb. 27, noting that Crazy Rich Asians “got into the zeitgeist,” which is “very difficult to do on a streaming service.”

But he said that early home access is part of the evolution of content delivery.

“If consumers want to be able to experience it in the home sooner, then they should have that option as well,” he said. “That’s where we’d like to see the movie business go.”

As far as the new direct-to-consumer streaming service coming from parent company AT&T, Tsujihara told the Times that the studio’s content will go to that platform as well as linear, current customers.

“It’s about finding the right platform for the content,” he told the Times. “Some will go to HBO, some will go to Turner, some will go to Netflix, and other streaming platforms, and some will go to the direct-to-consumer platform.”

He also commented on the promise of 5G.

“It actually could have a significant impact on our ability to deliver content,” he told the Times.

He said 5G would “turbocharge” the ability to deliver VR and AR experiences.

Will Premium VOD Plans Get Lased in 2018?

NEWS ANALYSIS — Hollywood’s long-running attempt to stream theatrical releases early into consumer homes at a premium price may be dead on the vine following Disney’s $52.3 billion acquisition of 20th Century Fox Film and other 21st Century Fox assets.

Fox Film CEO Stacey Snider, along with Warner Bros. CEO Kevin Tsujihara, has been a vocal proponent of premium video-on-demand. The business model would charge consumers $30 to stream movies in the home 30 to 45 days after their box office debut.

That mindset could change as Disney CEO Bob Iger has made no secret his desire to maintain the current theatrical window. That makes sense as Disney ended 2017 No. 1 at the domestic box office with more than $2.2 billion in ticket sales, according to Box Office Mojo. Warner Bros. and Fox finished second and fourth, respectively.

With Disney planning to launch proprietary over-the-top video services around movie brands such as Star Wars, Marvel and Pixar, it would appear mining short-term incremental revenue during the theatrical window could undermine the media giant’s larger, future digital payday.

Indeed, Adam Aron, CEO of AMC Theatres – the world’s largest theater chain – has said any PVOD deal (i.e. revenue sharing) with studios would have to be fiscally incremental to exhibitors.

Michael Pachter, analyst with Wedbush Securities in Los Angeles, contends studios didn’t learn much following Universal Pictures’ short-lived attempt in 2011 to stream action-comedy Tower Heist early in homes for $59.99. The campaign was scuttled before launch when theaters (totaling more than 3,000 screens) threatened to boycott the movie. Pachter said the PVOD “threat” has even less of chance of materializing without Disney/Fox on board.

“I think PVOD is stupid and a dead issue,” the analyst said in an email.