Universal’s ‘Tower Heist’ VOD fiasco: What went wrong?

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Universal Pictures has ended up with egg on its face after the embarrassing collapse of its experiment to make the upcoming Ben Stiller and Eddie Murphy comedy ‘Tower Heist’ available on VOD three weeks after its Nov. 4 theatrical release. The plan was to test market the Brett Ratner-directed film in two cities to see how many people would pay $60 to watch the movie at home in the comfort of their living room.

The plan backfired. A host of exhibitors, including Cinemark and National Amusements, announced that they wouldn’t play the film at all, arguing that the experiment would surely somehow cut into their ticket sales. Of course, the VOD plan was limited to two mid-market cities (Portland, Ore., and Atlanta), but by using the nuclear option, exhibitors wanted to make it very clear to Universal’s competitors that they would suffer equally dire consequences for any similar experiment.

I will have more to say about this in a forthcoming column, but here’s a few things to chew on that have made industry insiders question whether Universal botched the experiment from the start.

First off, ‘Tower Heist’ was probably the wrong movie to pick in an experiment where cooperation of exhibitors was needed. Even though it has two name-brand stars in leading roles, it arrives in a month -- November -- that is already loaded with commercial films. In fact, there is already another comedy, ‘A Very Harold & Kumar 3D Christmas’ on the same date, with another big comedy arriving a week later in the form of Adam Sandler’s ‘Jack and Jill.’

So if you’re a theater owner, you would hardly be in danger of missing your numbers by refusing to play ‘Tower Heist.’ That gave a lot of leverage to exhibitors willing to punish Universal. Even worse, from a leverage point of view, Universal is currently the weak sister of the Big Six studios. It has no major releases on its calendar for Thanksgiving or Christmas, and for that matter, no big event movie hitting theaters before ‘Battleship’ next May. So if exhibitors wanted to punish a studio, Universal is the easiest one to pick a fight with.

But here’s the real issue that created trouble for Universal. The studio’s new corporate bosses at Comcast were clearly driving this experiment because if VOD works, it will be a great way to take advantage of Comcast’s huge cable TV assets, giving them even more quality programming to offer their customers. That may help Comcast’s bottom line, but it creates all sorts of headaches for Universal with its talent relations. After all, it was the top executives at Universal, not Comcast, who had to field angry phone calls from exhibitors. And it was Universal that was under siege by talent reps for Stiller, Murphy and Ratner, all hysterical about seeing their new movie being used as a guinea pig in an experiment that could lead to substantially reduced box-office grosses.

It just goes to show: In the new vertically integrated entertainment universe, what works for one end of the business doesn’t necessarily work for the other. You’d think that Universal would have figured out what a potential mess this could be early on. But it clearly went ahead anyway. What’s the lesson here? Theater owners may be dinosaurs when it comes to embracing new technology, but here’s the thing about dinosaurs -- when they stamp their feet, it can really knock you for a loop.

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-- Patrick Goldstein