Have we reached the moment in time when movie theaters will go extinct? Theater owners are worried about it, and Universal may have caused all of them to quake in their shoes a little bit more yesterday. Comcast, which owns Universal, announced this November, it will test a Video On Demand release of the new Ben Stiller/Eddie Murphy movie, Tower Heist, in Portland and Atlanta.
What's new about this?
Portland and Atlanta Comcast customers will be able to watch the movie On Demand only three weeks after Tower Heist premieres in theaters, and is still playing in the cineplex. And, it will cost $59.99.
Theater owners need to be scared!
Over the past few years, theater owners and movie studios have been haggling over the shrinking window between when a movie plays in theaters and when it comes out on DVD/Video On Demand.
Way back in ancient times, or the 1980's, a movie would not premiere on video or HBO or anywhere else until about a year after it played in theaters. However, as studios rely more and more on the revenue from home release of movies, they have been waiting less and less time to bring those blockbusters to people.
Also, they want to benefit from the massive marketing campaigns they spent millions on to promote the movie in theaters, so bringing it out faster, while the movie is still in the hearts and minds of movie fans, appeals to them.
The shorter time period worries movie theater owners who fear movie fans will be willing to wait a couple months to catch a movie at home instead of rushing out on a Friday night to buy a ticket (and popcorn and soda and all of that stuff movie theaters truly make money on).
However, this is the first major movie release where movie fans can wait a few weeks and catch a movie that is still in theaters. Some smaller films have been premiering via Video On Demand on the same date or even before their theatrical debut, but doing this with Tower Heist is a game changer, and one theaters will be fighting with every ounce of strength they can muster.
What's the big deal?
Releasing a movie via Video On Demand while it plays in movie theaters digs into the movie theaters' revenue in a way that is more damaging than you realize.
Whenever a movie plays in a movie theater, the theater owners and the studio make a deal about how to split the sales of movie tickets.
In the first few weeks, the studio can take anywhere from 60 - 80% of each ticket sold. In some extreme cases, studios have even demanded 90% of the ticket sales in the opening weekend.
However, that third and fourth week is when the theater owner starts to take a larger percentage. And, that's why theater owners will scream about this pilot program.
Comcast/Universal wants to give people a chance to skip the movie theater at the time the movie theater is relying on making some sort of cash off showing the film. Granted, this is only taking place in Portland and Atlanta, and, the $59.99 cost to see the movie when you can catch it at the local cineplex for $10 might be cost prohibitive, but it's another domino falling.
Think about what Comcast can do here. They own Universal (the product). They own a source of distribution (the Comcast cable system). They even own a Universal HD channel on Comcast where they can show movies.
If you are Comcast, don't you see an opportunity to control your product, cut out a partner who takes some of the money, save of all those costs making movie prints and distributing them to thousands of theaters around the country (and the world) and take all of the money for yourself?
Watching movies at home becomes more and more appealing with bigger TV screens, HD screens, greater sound systems, and all of the problems you face when you have to sit in a theater full of morons who love texting and cell phones more than paying attention to George Clooney up on the screen.
How many people would be willing to see a hot blockbuster at home on the same day it plays in theaters if the price is right?
Is this the beginning of the end?
Way back in ancient times, or the 1980's, a movie would not premiere on video or HBO or anywhere else until about a year after it played in theaters. However, as studios rely more and more on the revenue from home release of movies, they have been waiting less and less time to bring those blockbusters to people.
Also, they want to benefit from the massive marketing campaigns they spent millions on to promote the movie in theaters, so bringing it out faster, while the movie is still in the hearts and minds of movie fans, appeals to them.
The shorter time period worries movie theater owners who fear movie fans will be willing to wait a couple months to catch a movie at home instead of rushing out on a Friday night to buy a ticket (and popcorn and soda and all of that stuff movie theaters truly make money on).
However, this is the first major movie release where movie fans can wait a few weeks and catch a movie that is still in theaters. Some smaller films have been premiering via Video On Demand on the same date or even before their theatrical debut, but doing this with Tower Heist is a game changer, and one theaters will be fighting with every ounce of strength they can muster.
What's the big deal?
Releasing a movie via Video On Demand while it plays in movie theaters digs into the movie theaters' revenue in a way that is more damaging than you realize.
Whenever a movie plays in a movie theater, the theater owners and the studio make a deal about how to split the sales of movie tickets.
In the first few weeks, the studio can take anywhere from 60 - 80% of each ticket sold. In some extreme cases, studios have even demanded 90% of the ticket sales in the opening weekend.
However, that third and fourth week is when the theater owner starts to take a larger percentage. And, that's why theater owners will scream about this pilot program.
Comcast/Universal wants to give people a chance to skip the movie theater at the time the movie theater is relying on making some sort of cash off showing the film. Granted, this is only taking place in Portland and Atlanta, and, the $59.99 cost to see the movie when you can catch it at the local cineplex for $10 might be cost prohibitive, but it's another domino falling.
Think about what Comcast can do here. They own Universal (the product). They own a source of distribution (the Comcast cable system). They even own a Universal HD channel on Comcast where they can show movies.
If you are Comcast, don't you see an opportunity to control your product, cut out a partner who takes some of the money, save of all those costs making movie prints and distributing them to thousands of theaters around the country (and the world) and take all of the money for yourself?
Watching movies at home becomes more and more appealing with bigger TV screens, HD screens, greater sound systems, and all of the problems you face when you have to sit in a theater full of morons who love texting and cell phones more than paying attention to George Clooney up on the screen.
How many people would be willing to see a hot blockbuster at home on the same day it plays in theaters if the price is right?
Is this the beginning of the end?
