Time Warner's Jeff Bewkes gets aggressive on video-on-demand, Netflix

With digital technology rapidly disrupting the home entertainment business, Time Warner Inc. Chief Executive Jeff Bewkes is preparing aggressive moves in video-on-demand and against Netflix.

In a conference call with analysts Wednesday to discuss the media company's financial results, Bewkes brought up both issues in a discussion of the "digital transition in film," which he said was "arguably the area of our business going through the most change right now."

The CEO reiterated previous statements that, during the second quarter of this year, Time Warner's Warner Bros. studio will begin offering movies 60 days after they have been released in theaters -- before they are on DVD -- via cable and Internet video-on-demand. He didn't mention a price, but so-called "premium VOD" is expected to cost between $30 and $60.

Premium VOD has been a cause of consternation in the entertainment industry as movie theater chains worry that it could undercut their business. Studios, however, believe it could help them capture revenue during a time when movies aren't otherwise available.

Bewkes also continued his public campaign to make more money from Netflix and Redbox, the fast-growing rental services that have come to dominate that industry. He discussed both extending  the time period that the two companies have to wait for Warner Bros.' releases (currently 28 days) in order to boost DVD and download sales, as well as demanding higher payments from them.

"This year we will determine whether to lengthen the window for Redbox and Netflix and whether to increase how much we charge them for DVDs," Bewkes said.

In response to a question from analysts, Bewkes said "a clear acceleration in consumer usage" for Netflix and Redbox "makes it a good time for us to re-evaluate the terms [of deals.]

"In our view, the current pricing in windows is not really commensurate with the value those kinds of availability of our films are extracting."

Bewkes also said that Warner Bros. will look to pour even more money into future big-budget "event films" along the lines of the "Harry Potter" series, which ends this summer, and June's upcoming superhero adaptation "Green Lantern."

"At Warner Bros. we're stepping up our levels of investment [and] focusing even more of our resources on event films," he said, adding that those types of pictures "tend to be more consistently profitable for us than smaller movies."

For the quarter ended Dec. 31, Time Warner reported $769 million in net income, up 22% from the prior year, on $7.8 billion in revenue, up 8%.

At Warner Bros., revenue increased 10% to $3.6 billion and operating income declined 2% to $427 million. For the year, Warner said it benefited from higher TV licensing fees and a stronger theatrical release slate, but was hurt by declining home video revenues.

-- Ben Fritz

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Hollywood studios grappling with when and where to release their movies on DVD, digital

Photo: Time Warner Inc. CEO Jeff Bewkes. Credit: Brendan Hoffman / Bloomber

Comments

[Frank Zentura]

In case you want to know how this ends, Bewkes loses.

Sorry if I spoiled it for you....

[Mir Rooshanak]

I do not think offering movies on demand for $30 - 60 will be profitable.

Maybe a family of 4+ with a good home theater will opt to wait and order the vod rather than see the movie in theaters, but if they are going to do this, why not wait a bit longer and purchase the blu-ray for less than the VOD?

I think theaters are needlessly concerned about this. It would be different if Time Warner decided to push dvd and bluray sales up.

This move by Time Warner makes absolutely no sense. It only makes sense for Warner's Video releases. For example, they could've offered the VOD version of Batman: Under the Red Hood on VOD for like $30 months before it was released on home video. It stands to reason that some fans would pay to see it right away -- though if Time Warner felt that strongly about it, they probably would have released the movie theatrically.

Instead of pushing Home Video (VOD) release forward, Time Warner should push the HOME (VOD, bluray, dvd, etc.) release dates back. The longer the gap between theatrical and home release, the higher the chance that a person who saw it in theaters would buy it to view it again.

Also, knowing that the home release is in the distant future, an individual may opt to shell out the money to see the movie in theaters rather than wait.