Theater owners across the nation are reacting negatively to plans by Fox, Sony, Universal and Warner Bros. to shorten the time frame films run in theaters so they can deliver movies directly to consumers through a video-on-demand service known as Home Premium just 60 days after a movie's theatrical debut.
While studios argue otherwise, the National Association of Theater Owners (NATO) believes the move toward a briefer theatrical window will have a negative impact on box office, creates a slippery slope that could lead to no theatrical window at all if it succeeds and will cause theaters across the country to close, according to Variety. Theater owners are now reportedly threatening to cut way back on the showing of theatrical trailers -- a key part of most studios' marketing campaigns.
Regal Entertainment Group theater chain reportedly already has plans to cut 50 percent of all in-theater film trailers from the four studios participating in Home Premiere. The cutback will likely force the studios to increase TV advertising.
The idea for Home Premium started to gain traction several months ago, as studio executives tried to find a way to combat weak box office returns, flailing DVD sales and the ever-increasing cost of marketing by proposing a premium service that would offer higher-priced rentals of films just eight weeks after their theatrical runs. The idea was that the $30 cost of a rental was cost effective for larger families and by releasing a film to VOD so quickly, the service would capitalize on theatrical marketing campaigns while consumers remained familiar with them.
DVD releases typically come 90 days after a film's theatrical run. However, according to Variety, that window has already been shrinking for higher-profile pics. Current VOD services like Netflix have to wait 28 days after a film is made available on DVD to offer them for streaming.
DirecTV exclusively launched the Home Premiere service nationally in late April with the Adam Sandler / Jennifer Aniston comedy 'Just Go With It.' Home Premium films are made available for 48 hours after they are rented. 'The Adjustment Bureau' starring Matt Damon and Emily Blunt and 'Hall Pass' with Jason Sudeikis and Owen Wilson will make their debuts shortly.
Making films available for in-home viewing just 60 days after their theatrical runs will have little effect on box office, studios say, because most titles bring in 97 percent of their gross in their first three months of release. The Daily Beast reports that a Warner Bros. executive familiar with research on the Home Premium service told them studios expect the Home Premium service will have no more than a 5 percent impact on theater attendance.
For theater owners, however, even a 5 percent decrease could have a major effect because over three-fourths of their income comes from concessions and marketing. "A 10 percent drop in ticket sales, and the attendant decline in concessions income and advertising income, will close over two-thirds of the American movie theaters," a former studio executive told The Daily Beast. "And they will never re-open."
Earlier this year at CinemaCon, NATO argued that Home Premium "fundamentally alters the economic relationship between exhibitors, filmmakers and producers" and opened the door to "driving out films that need time to develop -- like many of the recent Academy Award–nominated pictures. They risk exacerbating the scourge of movie theft by delivering a pristine, high-definition, digital copy to pirates months earlier than they had previously been available."