Nearly two dozen Hollywood directors and producers have collectively criticized initiatives by the major studios to release movies in the home closer to when they open in theaters.
In an open letter released Wednesday by the National Assn. of Theatre Owners, some of the entertainment industry’s biggest filmmakers — including James Cameron, Peter Jackson and Gore Verbinski — lashed out at imminent plans by four studios to offer movies via video on demand, or VOD, just eight weeks after their theatrical release.
“As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry,” the letter said.
The letter comes as DirecTV, the El Segundo satellite television provider, is preparing to launch its premium VOD service Thursday with the Adam Sandler comedy “Just Go With It” 69 days after the film opened in theaters. Consumers will pay about $30 to rent the Sony Pictures movie for 48 hours. Similar premium-priced VOD releases also are planned for Warner Bros.’ comedy “Hall Pass,” Universal Pictures’ thriller “The Adjustment Bureau” and Fox Searchlight’s quirky comedy “Cedar Rapids.”
Currently, movies are available on VOD around the same time they become available on DVD, about 130 days after they premiere in theaters.
Premium-priced VOD is seen as a new revenue source for studios looking to offset declining DVD sales, as well as a boon for cable companies that have been stymied in their efforts to deliver movies into the home earlier in part because of concerns it could cannibalize home video sales. Studios are looking to experiment with new business models at a time when DVD revenue is down about 40% from its peak and box-office revenue and attendance are off 20% this year.
But theater owners contend that the early release of movies on VOD could hurt their business by encouraging consumers to watch movies at home rather than in the theater. Top theater circuits have said they won’t play trailers or will negotiate for a larger cut of ticket sales for movies released on premium VOD.
In their letter, 23 directors and producers — also including Michael Bay, Kathryn Bigelow and Robert Zemeckis — raised a variety of concerns about the plans, saying they would negatively affect consumer buying habits, exacerbate film piracy and severely limit the ability of specialty films to remain in theaters long enough to build audience awareness.
“If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue,” the letter said.
In a separate statement, Cameron added: “The cinema experience is the wellspring of our entire business, regardless of what platforms we trickle down to. If the exhibitors are worried, I’m worried. We should be listening to them.”
Film producer Bill Mechanic, the former movie chairman at 20th Century Fox, shares the concern. “I’ve yet to see anybody explain this in a way that makes sense,” he said. “To me, it’s a dangerous thing to do with a business that may have some fragility.”