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Theater chains escalating fight with studios as premium video-on-demand looms

With the launch of a new premium video-on-demand initiative that will get movies from the theater to the TV screen a lot quicker around the corner, the nation's largest theater chains are waging a public war with the Hollywood studios involved.

Representatives from Regal Entertainment and AMC Entertainment have been meeting with movie studios this week to inform them that they will not play or promote any movies that will be part of "premium VOD," through which the movies would be available to rent in homes for $30 eight weeks after they launch. The exhibitors think some people wouldn't go to theaters to see movies that are available to rent so soon and that theaters would end up a marketing vehicle for a business in which they don't participate.

Regal, the nation's No. 1 chain, has taken it a step further. It is reducing the number of trailers it plays from the four studios that are poised to launch premium VOD soon -- 20th Century Fox, Sony Pictures, Universal Pictures and Warner Bros. A person familiar with the matter said that's because Regal has not been informed which movies will go premium VOD.

Regal and AMC want studios to tell them ahead of time which movies will be released on premium VOD so they know which to play and promote and which to ban, according to people close to the situation. The chief executive of Cinemark USA, the third-largest exhibitor, recently expressed a similar sentiment in an interview with the Hollywood Reporter.

Combined, those three companies represent about 16,000 of the nation's roughly 40,000 movie screens.

By cutting back on trailers and banning certain movies, the exhibitors could cost themselves ticket sales in the short run. That's an indication of how big a threat they believe premium VOD is to their businesses and how high-stakes a game they are willing to play.

"It is simply not in Regal's best interest to utilize our resources to provide a marketing platform for the release of premium video-on-demand movies," Amy Miles, chief executive of Regal, said in a statement this week.

Similarly, AMC said in a statement, "As [release] windows shrink and threaten our industry's future, it is only logical to expect AMC to adapt its economic model."

This is far from the first time that theater owners have expressed their fierce opposition to such plans. When the Los Angeles Times reported in March that DirecTV was poised to become the first provided of premium VOD and that its chief executive had floated a time frame of four to six weeks after theatrical launch, Miles and AMC chief Gerry Lopez said they wouldn't play movies under such circumstances.

Tensions have only heightened since then, as news has leaked of specific movies that may launch on premium VOD as soon as late April, such as Sony's Adam Sandler comedy "Just Go With It."

Distribution executives at several studios declined to comment on the matter, citing the sensitivity of ongoing talks.

RELATED:

Hollywood firming up launch plans for premium video on demand

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

-- Ben Fritz

 
Comments () | Archives (2)

What a bunch of whiners. Their business is already dependent on the small screen in the form of the DVD/Blu-Ray markets.

I still think there is value in seeing a movie in the dark, on a big screen, with a fabulous sound system, and in an audience. I don't patronize the big chain movie houses because I don't like the kind of movies they present, not because I don't like going to theaters -- I am a regular patron of the small independent theaters in Pittsburgh, where I live.

Fewer than 30% of movie theaters in the U.S. have digital projection systems. Digital distribution would reduce the enormous waste of resources involved in making thousands of expensive celluloid prints, shipping them around the country, and then destroying most of them once a film's initial run is over. This saving alone might bring down ticket prices and bring the crowds back to the multiplexes.

More importantly, digital distribution would (at least in theory) open the doors of the theatrical market to the thousands of independent films that are being made each year, and allow some of them to find a market. Sundance had more than 10,000 submissions this year for 120 exhibition slots; SXSW more than 5,000 for about 150 slots. By embracing and supporting lower-budget films made in their own communities, movie theaters could save themselves while promoting sustainability and growth in indie filmmaking.

The movie business is going the way of the music business. Unless they adopt a new business model involving digital distribution, Hollywood movie studios will go the way of the major record labels, and major theater chains will be the Tower Records and Virgin Megastores of the 21st century.


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