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Directors yell 'Cut!' on studios' premium VOD plans

April 20, 2011 |  9:32 am

Nearly two dozen Hollywood directors and producers criticized plans by the major studios to release movies in the home closer to when they debut in theaters.

In a open letter released Wednesday by the National Assn. of Theatre Owners, some of Hollywood's biggest filmmakers, including James Cameron, Peter Jackson and Gore Verbinski, lashed out at imminent plans by four studios to offer movies via video-on-demand just eight weeks after their theatrical release.

"As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry," according to the letter.

The letter comes in the wake of plans by DirecTV, the El Segundo-based satellite television provider to launch premium video on demand Thursday with the Adam Sandler comedy "Just Go With It," 69 days after the film debuted in theaters. Consumers will pay about $30 to rent the Sony Pictures movie for 48 hours. Similar premium-priced VOD releases also are planned for Warner Bros.' comedy "Hall Pass," Universal Pictures' thriller "The Adjustment Bureau" and Fox Searchlight's quirky comedy "Cedar Rapids."

Currently, movies are available on VOD about the same time they become available on DVD, about 130 days after they debut in theaters.

Premium-priced VOD is foreseen as a new revenue source for studios looking to offset declining DVD sales, as well as a boon for cable companies that have been stymied in their efforts to deliver movies into the home earlier in part because of concerns it could cannibalize home video sales. Studios are looking to experiment with new business models at a time when DVD revenue is down about 40% from the market high and box-office revenue and attendance is off 20% this year.

But theater owners contend that the early release of movies on VOD could hurt their business by encouraging consumers to watch movies at home rather than in the theater.  Regal Entertainment, AMC Entertainment and Cinemark Holdings, the nation's three largest theater chains, have all said they won't play trailers for movies that are offered on premium VOD and may take other retaliatory economic measures.

In their letter, 23 directors and producers -- also including Michael Bay, Kathryn Bigelow and Robert Zemeckis -- raised a variety of concerns about the plans, saying they would negatively affect consumer buying habits, exacerbate film piracy and severely limit the ability of specialty films to remain in theaters long enough to build audience awareness.

"If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue," the letter stated.

In a separate statement, Cameron added: "The cinema experience is the wellspring of our entire business, regardless of what platforms we trickle down. If the exhibitors are worried, I'm worried. We should be listening to them."

-- Richard Verrier

RELATED:

DirecTV to launch premium video on demand Thursday with "Just Go With It"

DirecTV poised to launch premium video on demand as theater executives voice outrage

 

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