Studios to movie fans: How'd you like to pay $30 for a 60-day-old movie?

In the NFL, the 2011 season could be wiped out by a nasty labor battle between the owners and the players union. The NBA could end up having its own titanic labor showdown this year as well. But in Hollywood, all is quiet on the labor front. The real war is between the studios and the movie theater owners.

In recent weeks, theater owners have been fuming as word has leaked about plans by at least four studios — Sony, 20th Century Fox, Warner Bros. and Universal — to make a deal that would enable consumers to watch some of the industry's biggest hits on DirecTV just two months after their release in theaters. The new service, which could start this spring, would charge $30 for video on demand (VOD) rentals of films before they become available for sale on DVD or for rent through Netflix or Redbox.

When my colleagues Ben Fritz and Richard Verrier first reported on the existence of an initial version of the plan, they got an earful from theater owners. Gerry Lopez, chief executive of AMC Entertainment, the nation's second-largest theater chain, said, “We do not intend to screen movies released under such circumstances.”

This kind of nuclear option from exhibitors would be bad news for the four participating studios, which, according to early reports, are considering releasing such titles as Adam Sandler's “Just Go With It,” the Farrelly Brothers' “Hall Pass” and the Matt Damon-starring “The Adjustment Bureau,” though Sony is now reconsidering involving the Sandler film in the initial offering.

No one at the participating studios is talking on the record, but privately they argue that the premium VOD service would create a new window for movie consumption. They say studies have shown that only 3% of the theaters' box-office take comes after the first 60 days of a film's theatrical run, so the new service wouldn't significantly cut into any box office proceeds. They also argue that an enormous segment of the potential movie audience rarely frequents theaters at all, so having the ability to see a relatively new film in their living room would be a serious drawing card.

But I have one simple question: When would you ever pay $30 to see an Adam Sandler movie? Or, for that matter, a movie from the Farrelly Brothers, the Coen Brothers or even the Jonas Brothers? As it stands now, you can see a new film in a movie theater for roughly $10. Or you can wait 100 days or so and pay $15 for a DVD or rent the film for $3 or $4. Or wait a little longer, in some cases, to order it from Netflix. But $30? C'mon. I think I speak for many moviegoers when I say that even if you told me I could watch an Adam Sandler movie two months before it was released in theaters, I still wouldn't pay $30.

The same goes for most current Hollywood releases. In fact, that's why the studios seem willing to make such a strange, almost desperate gamble. Faced with all sorts of economic tribulations over the last several years, most moviegoers have been spending less on movies, not more. In fact, you might say that the real enemy here is Netflix, which for $9 a month gives consumers the convenience of movie ownership without having to ever buy a DVD.

The studios seem to be trying to establish an entirely new — and pricey — rental model, since this new premium service will still be a rental operation, with the right to see the movie expiring after a three-day viewing period.

Studio insiders say the $30 price tag is just a starting point, one no doubt fixed by studio lawyers who probably stared at their shrinking DVD balance sheets and said, “OMG! What if there were really a bunch of crazy people who would pay $30 for a three-day window to see ‘Hall Pass'?” But the price tag raises the question — just who do the studios expect to pay that kind of money to see a film that will be available 40 days later for $3.99?

One obvious target would be the 18- to 25-year-olds who have grown up consuming content (legally or not) through their computers and smartphones. Alas, they are the group least likely to pay $30 to see a movie, not having that kind of disposable income.

Others have argued that the DirecTV premium service would be a great deal for families with young kids who already pay $30 to schlep three kids to a theater. But as the parent of a 12-year-old, I can assure you that if all of his friends are seeing a hot new film on opening weekend, it will be small consolation to him for me to say, ‘Hey, don't worry, we'll be able to see it in 60 days on the living room couch.'” For kids, 60 days might as well be 60 years.

The biggest potential audience for this kind of service is older-than-40 moviegoers who don't like to brave the crowds, pay for parking or listen to the knucklehead in the row behind them chat on his smartphone with his buddies about where to eat later. If they've spent a fortune on a home entertainment system, why not shell out $30 more to see a movie at home?

It might be a nice little payday for the studios, but at what cost? After all, even if DirecTV doesn't announce what titles are debuting on its service until after they're already playing in theaters, exhibitors can still retaliate by pulling the movies after their fourth or fifth week of release, a move that would hardly be noticed by most moviegoers but would force studios to leave millions in potential theatrical revenue on the table.

Trying to get consumers to pay more to see a film 60 days out isn't a new window of opportunity. It's just a bad idea. With theater attendance down 20% this year, the last thing studios should be doing is creating more indecision in the minds of their customers.

It's never good for business when you encourage your core customers to start wondering — should I wait 60 days and pay more? Or wait 100 days and pay a lot less? The more time people spend thinking about the price of the product, the more time they have to realize that the product isn't worth that much in the first place.

-- Patrick Goldstein

Photo: Moviegoers gather under the marquee in 2002 to attend a new film at Universal Citywalk Theaters. Credit: George Wilhelm/Los Angeles Times

Comments

[kyarukirai]

The people who the studios are idiots. I hope they all go bankrupt.

[Comment Man]

Seriously, any movie that is worth watching for $30 was already released 25 years ago. It's hard to make an argument for anything after that and I'm including some so called classics.

However if the studios were to charge $10 bucks and shrink the window to 30 days instead of 60, the studios would do well (for awhile). Of course, this would spell disaster for the theaters so the whole thing would become moot as eventually there would be no theaters (they having gone out of business) to see movies and therefore no reason to wait 60 days and charge $30 (or 30 days/$10, my scenario). So what we really have here is the end of the theater going experience and the final domination of home viewing.

No matter what happens, once this has been done (missteps and all) the genie has been let out of the bottle and there will be no going back.

[Scott]

Good article and a horrible idea. I agree with everything Patrick Goldstein said, including not paying 30 dollars to see a movie before it was released in the theater. There's one remedy for Hollywood's woes that's guaranteed to work: Make better movies!

[Jack_Meoph]

The greed of the movie studios never ceases to amaze. I have almost come to a decision to stop going to the movie theater altogether. I found a ticket stub from about 5 years ago, the price of the movie? $5.75 matinee. The price today for a matinee? $9. Ticket price increase of almost 40% in 5 years? forget it. I have so much access to content I don't need to go to movies anymore, and I can buy the thing for less than it would cost the wife and I to go to the theater. It's absurd.

[Germaine]

I'm even thinking of dropping Netflix. The studios haven't put out a film in the last year that I want to watch, and I've watched everything I want to watch twice or three times.

[Alexander Law]

It's useful to consider why the studios have been driven to considering this unwise scenario. Simply put, they have to pull in ever greater amounts of money because movies cost way too much to produce. The people who make them (stars, directors, the craft unions, everyone) make too much money and they are unwilling to let that go. It's hard to blame them, but they are the ones who will have to face the new financial reality sooner or later. They will not embrace this gracefully, of course, as this is an industry that has a history of letting a popular TV series go off the air because it's too expensive to produce and the only reason that happens is that the cast salaries have to go up all the time in as large an amount as possible and union contracts make it impossible to cut other expenses.

[mike]

the target audience i believe is families. a single male obviously wouldnt pay that much for a movie. a single male is more likely to watch the movie in a theater. but if you divide the cost by adding even one other person, it becomes 15 per person for the convenience. now if you have a family of three or four, it becomes a better bargain.

i am inclined to agree partially with your last point, not about the confusion but that it will be a perception problem studios are creating with vod as it adds more doubt as to why a person should head out to the theater. vod 60 days later will start pulling away the status of the theater as the only place to get new movies and the chic place as well.

[Rick Mitchell]

"The biggest potential audience for this kind of service is older-than-40 moviegoers who don't like to brave the crowds, pay for parking or listen to the knucklehead in the row behind them chat on his smartphone with his buddies about where to eat later. If they've spent a fortune on a home entertainment system, why not shell out $30 more to see a movie at home?"

Buried in this comment is the potential problem of making films for mature adults that critics and others keep complaining about. It's the over 30 audience that usually does not go to these films, especially if there's nothing about them that makes them worth experiencing in the environment of a theater when they play just as well, if not better, on the tube. Whether or not people would pay $30 for such films would depend on their quality. As for theaters, maybe if the studios stopped making glorified Youtube videos and returned to films which really benefit from the big screen experience, without further raising admission prices, they might end up with several AVATARS a year, even in 2-D.

Rick Mitchell
Film Editor/Film Historian

[mattheww]

The $30 price point was a strategy (it didn't work) to make the proposition seem like less of a threat to exhibitors than it will ultimately be when it drops to the studios' end-game price point of, say, $10.

However, there is a vast and untapped population of bratty cost-oblivious thirteen year-olds who know their way around a cable box remote. If each of them orders five movies before their parents get that first bill and ground them for two weeks, that could be quite a windfall.

[Walt]

Perhaps studio heads reason that $30 is very little compared to the price of drugs. But for normal people in this economy, it's an outrage. These guys live in a different world and their values just are out of touch with mine. When I've walked into a Blockbuster and look at titles, I've felt my IQ drop by 30 points. Seeing unreal prices, especially for product designed for idiots, I turn instead to the Internet for interesting, better, and cheaper things. And as for theatres, no matter what the pricing, if I wanted to be forced to listen rude teenagers or jerks on cell phones, I'd ride the bus for 90 minutes or stand in line at Starbucks. Popcorn and soda prices? Hahahahaha. Fergeddaboudit.