How would you like to watch movies on your TV, with the benefit of home-made food and cheap soda, a mere 30 days after they hit the silver screen in the theater? Time Warner may be about to try it, but it’ll shake up the movie industry.
As the Wall Street Journal notes, this idea is definitely in the cards. TWC spoke to Hollywood studios for the first time about the idea last week, outlining their “home theater on demand” system. The key feature of this scheme is to get movies available as pay-per-view events just a month after they get their movie-theater launch. This is much sooner than is currently the case, and it will get a whole horde of movie industry businesses in uproar.
Why? Because such a short timescale could easily eat into the long-tail audience figures for blockbusters, with later customers turning up at theaters after hearing how good a movie is from their friends. It’ll also affect DVD and Blu-ray sales (assuming the on demand system delivers HD video) and it’ll step all over the shoes of DVD-rental and download businesses like Netflix. Well, kinda–this last bit is very complicated. Netflix and rival Redbox have recently done a deal with Warner Brothers to not release movies for rental DVDs for 30 days after they’ve been released, and then Blockbuster’s new distribution deal with the same studio that didn’t include any time restriction. This left Blockbuster with a huge customer-attracting bonus… and one that’d get eroded by the sort of deal Time Warner is proposing.
This doesn’t mean it won’t go ahead though: Some studios approached by TWC (a list which includes heavy-hitters like Warner Bros., Sony Pictures and Disney) have already expressed interest in the plan, and TWC thinks it could get the new business up and running by the end of this year, or the start of 2011. And this is despite complaints from movie theaters, and obstacles like existing content deals between studios and cable TV companies, which sometimes come with exclusivity clauses.
Why is the industry so keen to shake things up, then, and upset so many of its key partners? Because it’s seen the writing on the wall–writing that’s coming from, among others, the hand of Apple. The movie industry has basically been watching what’s happened to the music industry in the aftermath of the arrival of MP3s, and the wild success of Apple’s iPod family … and it doesn’t want its hand to be forced in the same way as the recording industry’s was. Making this switch to the way movies are released could make up for lost revenues from the DVD sales, as well as placing the industry in a controlling position over its content before Apple’s iPad (and other tablet PCs) force it to rejig its business in undesirable ways.
The key is pricing, of course. The studios would be unlikely to let their precious films go for too little cash, and it’s easy to imagine TWC charging a premium for this sort of “early access” to hot movies. But what’s acceptable for a one-time view of a new film? $15? $20$ More? Considering the fuss caused by the supposedly “accidental” pricing of tickets to see Shrek Forever After at $20 this weekend by some AMC movie theaters, pitching the price of “home theater on demand” will be absolutely crucial for TWC.