Time Warner to test early video on demand in 2011

Time Warner, parent of Warner Bros., will begin experimenting early next year with a way to deliver movies to the home within a month or two of its debut in theaters, accelerating the trend of shortening the wait time between theatrical release and when consumers can first watch a film in their living rooms. 

Chief Financial Officer John Martin said the company plans to begin testing what he called "premium video on demand," charging people $20 or $30 for the ability to watch a film before it's available on DVD or through bargain rental services such as Netflix or Redbox. His remarks came Thursday at an investor conference in New York hosted by Goldman Sachs.

One industry insider said Time Warner will be careful not to step on the toes of exhibitors, who are concerned that allowing a movie to be viewed sooner in the home might erode ticket sales. The studio would have flexibility in how soon it offers films through premium VOD, so a major film such as "Inception," which is still No. 8 in the box office, despite being in theaters for nine weeks, wouldn't be offered in two months.

Warner Bros. has been careful about using a technology in a way that doesn't erode its traditional business. For example, when "Harry Potter and the Half-Blood Prince" was released on DVD, the studio delayed its availability through video on demand  -- prodding people who want to watch the movie to buy it on disc, rather than rent.

All major Hollywood studios have been experimenting with release windows, in an attempt to sustain the film business at a time when DVD sales have been declining. The Walt Disney Co., for example, shortened the wait for the DVD release of Tim Burton's "Alice in Wonderland," making it available in the home three months after its theatrical release, instead of the usual four-month lag.

Warner Bros. similarly imposed a 28-day wait before newly released DVDs are available for rental through Netflix and Redbox, in an effort to safeguard sales.

-- Dawn C. Chmielewski

Comments

[Richard]

Do they really think there is enough of a demand for this?
Sorry, just too pricey for the majority of their potential customers.
You can rent the DVD (blue ray) within a month or two for a small
percentage. Wait a bit longer and you can own it for about the cost
of the rental via the new system.

Fail.

[Sam Cohen]

I think this is a very interesting development. By shortening the wait time between seeing a movie in theaters and seeing it in your living room, certain things will be affected. Some people will not want to go to the theater when they can watch it in their home by waiting a little longer. But the price tag, $20 or $30 bucks, does seem pretty expensive to be able to watch the movie for what I presume to be one time. I have a feeling that this wont be that popular unless they reduce that price tag. Still though, I believe this will have a major effect because there are those people who go to the theater many times to see the same movie, and they will definitely not want to wait longer if they can see the movie while waiting for the DVD release. It will certainly be interesting to see how Time Warner goes about this. What do you guys think? Do you guys think this could be a success? Do you think this will just be an idea that will fail?