Studios press theaters to shrink release schedules, create ‘premium’ VOD windows

Movie studios have long wanted to charge a premium for viewers to watch newly released films at home, but exhibitors see that as an existential threat.

Apple, Comcast, Walmart and other major players in the transactional VOD business have long pined for a premium release window for theatrical movies—a way to offer consumers who are willing to pay a “premium” price home access to just-released titles that are still in theaters. 

Last week, it was reported that Apple was in talks with the major studios in attempt to secure movie titles earlier than the eight to 12 weeks it usually takes from the date of their theatrical premiere to the time they show up in the iTunes store.

But the real news was made just a week earlier by Kevin Tsujihara, CEO of Time Warner Inc.’s motion-picture studio, Warner Bros. Speaking at a Credit Suisse investor conference, Tsujihara said, “We’re having very constructive conversations with the exhibitors for the first time than we’ve had in a long time,” Tsujihara said.

Along with their lobbying org, the powerful National Association of Theater Owners (NATO), theater owners have staunchly resisted the creation of premium home entertainment window for decades, understandably seeing them as an existential threat. 

Will a family of four drive to the multiplex and pay $100 for tickets, drinks and popcorn, when they can watch a movie like Rogue One: A Star Wars Story in 4K from the comfort of their living room?

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NATO would provide no comment to FierceOnlineVideo. But an individual close to the negotiations confirmed that the talks between studios and exhibitors are indeed ongoing. 

The studios are approaching the creation of a premium window with renewed vigor. Home entertainment operators like Netflix are spending billions of dollars on original content, some of it from creators who specialize in the theatrical medium. Indeed, with consumers now offered a choice of cinematic-like, long form viewing experiences like Netflix’s Stranger Things and HBO’s Westworld, just to name a few online viewing options that look and feel just like theatrical movies, there’s more competition than ever at the multiplex.

Neflix blurred the line between theatrical and home entertainment even more in October, when it signed a deal with luxury theater chain iPic Entertainment to screen movies simultaneously in theaters and on SVOD. 

Further, with movies making the vast bulk of their theatrical revenue in the first few weeks of release, studios want to develop a path to better exploit home entertainment revenue more quickly and, in short, move things along faster. 

As for exhibitors, who have been upping their game with comfy leather chairs and sophisticated video and sound projection upgrades, they recognize the trend, too. 

The negotiation, the source told FierceCable, “is a very complex undertaking and isn’t going to happen—if it happens—overnight.”

For his part, Tsujihara said studios might forge ahead with partners like Apple, regardless of whether they can reach an agreement with exhibitors. 

“We’re going to do it, and we’re very focused on it,” he said.