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.

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