BTIG Research media analyst Rich Greenfield does not think Hollywood revenues would be harmed if studios released new movies simultaneously in theaters and on demand, if the on-demand product costs $20 to $25. Survey bolsters his views.
In other words, Greenfield believes the 90-day window between theatrical release and on-demand can be compressed to “zero,” with no threat of increased piracy. Few in the content business are likely to be persuaded. And theater owners will hate the idea.
His argument is that consumers do not object to paying for content, but do not want to wait to view it. Aside from satisfying that demand, Greenfield argues content owners will make lots more money charging $20 to $25 for an on-demand viewing, than from a single patron’s theater ticket.
Offering movies in-home, day-and-date with their theatrical release would be neutral to positive for annual spending on movies, with 93 percent of respondents to a recent survey indicating that their spending would be the same, if not higher (28 percent said higher, 65 percent no change).
But there are lots of “moving parts” here. Theatrical exhibition builds “buzz” for the after market. Whether at-home viewing with the same “day and date” release window will provide as much promotional value is not certain.
Some viewers, such as families with young children, might increase viewing at home. Or they might not.
Also, the “decrease in movie spending group” includes reduced spending less on concessions and parking, not the actual movie tickets. Piracy might increase, or not.
Collapsing windows also will depress the market for pirated movies, Greenfield argues. But the survey results aren’t conclusive.
In terms of the impact on piracy, 60 percent of respondents indicated it would have no impact on piracy or decrease it (40 percent no impact, 20 percent decrease). Content owners might be worried about the other 40 percent, though.
“We believe the data in aggregate does not show a major industry risk to collapsing the theatrical-to-home entertainment window,” says Greenfield. “There would be some uplift in consumer spending on movies with a greater share of that spending captured by movie studios versus movie exhibitors, offset in part (at worst) by a rise in piracy.”
Though clearly negative for theater owners, the big question for content owners is whether the move boosts “first run” revenue, and by how much, as well as the impact on pricing power and sales volume in the later release windows.