Home Entertainment release windows have been a point
of contention since eternity. I was working for 20th Century Fox
during the summer with one of my projects trying to convince the management to
move the pre-set 90 day window for Video-on-Demand (movies available on I-Tunes,
Amazon, Hulu) to a shorter 25-30 day window for select movie genres that don’t have
a big theatrical audience.
They were not up for taking up a fight against the big
theatrical chains for the fear of their movies being boycotted by them. Major
theater chains have been resisting the ongoing shortening of release date
windows, which put new movie releases on VOD platforms or DVD before they even
leave theaters, sometimes on the very same day as their theatrical debuts, as many believe
audiences will skip the multiplexes if they can see many films from the comfort
of the couch.
Well it was just a proposal from my end, which had a bleak future of being accepted…who knew during that very time Paramount would actually surprise everyone with its first move. Being one of the smaller studios amongst the big 6, it really did pull some strings to pull off this initiative especially with the theatrical chains. It partnered with AMC theatres and Cineplex Entertainment in July on the release of Paranormal Activity: The Ghost Dimension and Scouts Guide to the Zombie Apocalypse to digital outlets (home entertainment platforms) 17 days after leaving theatres. Both the movies will be allowed to play in theaters exclusively until the number of screens showing the pictures drops to 300 or less
Well it was just a proposal from my end, which had a bleak future of being accepted…who knew during that very time Paramount would actually surprise everyone with its first move. Being one of the smaller studios amongst the big 6, it really did pull some strings to pull off this initiative especially with the theatrical chains. It partnered with AMC theatres and Cineplex Entertainment in July on the release of Paranormal Activity: The Ghost Dimension and Scouts Guide to the Zombie Apocalypse to digital outlets (home entertainment platforms) 17 days after leaving theatres. Both the movies will be allowed to play in theaters exclusively until the number of screens showing the pictures drops to 300 or less
How did Paramount get this sweet deal ?
“For several years we’ve
been asking for the studios to work with theater owners on developing new
models and ways to grow the whole pie and market in ways that don’t damage a
film’s theatrical run,” said Patrick Corcoran. “We applaud Paramount for
discussing this with theater owners.”
It offered the exhibitors
a certain percentage of the studio’s digital revenue for the period of digital
and cable on-demand availability through the first three months from the
initial U.S. theatrical release which the other studios are not ready to
contend because on digital they earn 70% of the total revenue while 30% goes to
the platforms whereas for theatrical the studios get only 50% and 50% goes to
the cinemas. In a time when chains are struggling to keep up and raising prices
of concessions to make up for the loss of theater-goers due to pirating, this
move is perceived as combative.
Is this going to be a
revolution for movie watching attitude for consumers? Or platforms like Netflix
have taken away that advantage from services like I-Tunes, Amazon Prime Video
and GooglePlay?
Was it an intelligent move for Paramount?
Yes I feel Paramount is
an innovator, a go-getter in this rapidly changing world of digital media. Its
carefully looking at consumer needs, consumer cravings and aligning its
offerings with what today’s consumers who are mostly Millennials want! While
the other studios sleep over it and wait and watch Paramount grabbed the market
at the opportune moment.
I proposed a business model along the following
lines-
•
New Exhibitor Terms - Studios would give a
15-20% cut to iTunes / GooglePlay vs 50/50 with exhibitors
•
Pricing:
Charge $29.99 for a
24hr rental
Approach = 2 ppl x $15 cinema ticket ≈ $29.99
{ Floor: Avg. VOD rental + 50% Scarcity Premium = $5 * (1 + 50%) = $7.50
Ceiling: Top Boxing events = $75 - $100 --> WTP to watch online}
• Select
Movie Genres: Mainstream, R-rated Comedies/Horror & Dramas, indie movies
Low popcorn sales categories/no animation
Targeting older “millennials” and adults
No special / visual FX
But they were too afraid…while after my proposal in 2 weeks’ time
Paramount announced its big kill
Why wouldn’t it work? Its a win-win situation!
- The exhibitors are now onboard- the studios major concern
- It reduces the piracy window - Most films disappear from theaters after six weeks, allowing for a two-month window in which they are not available to audiences via any platform, which tends to encourage piracy in an age when consumers expect immediate fulfillment
- Studios don’t have to do a separate digital marketing spend between the 90 days of release whence consumers forget that a movie got released which they didn’t watch earlier and now need to catch on I-Tunes
- Most important of all they cash in on consumers who don’t go to watch such movies in theatres (stream at home) and get more volumes in digital spend which they weren’t anyways getting from theatres at a 70% margin
Now it’s a wait and watch
game if other studios join Paramount or treat it as an outcast….
Sources-
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