Twenty-First Century Fox Executive Chairman Lachlan Murdoch said the three-month delay between a film's release in theaters and in the home will change "sooner rather than later," portending a dramatic, if long-awaited, shift in the movie industry's traditional business model.
In Wednesday remarks to investors, Murdoch sharply criticized the current 90-day gap, known in industry-speak as the theatrical window, saying it is inefficient and exposes films to rampant piracy during the time period when movies aren't available either in theaters or on legal streaming services. That's a source of frustration, given how much studios spend to make and market films now.
"First you spend way too much in making the film in the first place, and then you spend tens and tens of millions of dollars marketing that film, you're going to a 45-day theatrical window, and then there's a blackout for another 45 days, where the consumer can't access that content anywhere, no matter what they're willing to pay or do," Murdoch said at the Goldman Sachs Communicopia Conference in New York.
"That's a highly inefficient system, particularly the blackout period, where we're not monetizing the film at all, and where pirates are ... the only way people are able to access that content," Murdoch said. "That system has to change, and I think it will change sooner rather than later."
Major movie studios, including Fox's 20th Century Fox, Comcast Corp.'s Universal Pictures and Time Warner's Warner Bros., have for months held discussions with individual theater chains to shorten the theatrical window. The negotiations have been hobbled by the lack of consensus among studios about the details of such a plan, and longtime resistance by theater owners who don't want to jeopardize attendance, which is already under pressure as evidenced by the recent summer box office doldrums.
Major exhibitors including AMC have said they're open to the idea as long as it's done in a way that doesn't hurt them financially. One idea is to let theater owners take part of the home video revenue.
But studios have also considered ways of putting new movies on iTunes and cable video on-demand services earlier than usual with or without the go-ahead from theater owners, which would be a major escalation of long-term tensions. Studio executives have talked about shortening the video on-demand window to 30 to 45 days and charging $30 to $50 for each movie.
Murdoch's comments echo a statement by his brother, Fox Chief Executive James Murdoch, made about a year ago, in which he called theater owners' restrictions "crazy." That provoked a swift rebuke from John Fithian, CEO of the trade group National Assn. of Theatre Owners.
It's still unclear when the studios' ideas will bear fruit, but 20th Century Fox film chief Stacey Snider last week told investors at a different conference that premium video on-demand could become a reality within 12 months.
Lachlan Murdoch weighed in on other topics during the conference, including his company's bid to take full control over European pay-TV service Sky. Though the deal is facing political head winds in Britain, Murdoch said he expects the transaction to close in mid-2018.