Ben Stiller and Eddie Murphy Star In "Tower Heist"
Well that didn’t take long. Facing stiff opposition from exhibitors Universal Pictures has decided to scrap its plan of releasing “Tower Heist” on premium-video-on-demand three weeks after its November 4th release. The move comes a week after the studio originally announced its intentions to run a PVOD test in Atlanta and Portland which would make the film available to about 500,000 cable subscribers for USD$59.99.
No doubt the number of exhibitors willing to boycott the film outright had a great deal to do with the decision. Previously Cinemark, Emagine Theatres, Galaxy Theatres, Regency Theatres and an additional 50 screens owned by independent operators all publicly stated they would not be booking the film if Universal went ahead with the premium-VOD test. Then today National Amusements joined the list of exhibitors opting not to show “Tower Heist”. With 950 screens worldwide, National Amusements is one of the largest chains in the United. States. Bloomberg reported that of the 39,000 screens in the U.S., 12% were participating in the boycott.
If that figure directly corresponds to the drop in box office Universal could expect for “Tower Heist” then that’s significant. Given that it is predicted the film will make upwards of a USD $100 million or more, that could mean foregoing USD $12 million in receipts. It’s unlikely that Universal’s PVOD test would have brought in as much, even if the studio decided to roll it out nationwide. Try explaining that to talent whose contracts are tied to theatrical box office gross.
So earlier today Universal released a prepared statement reversing their decision to test PVOD with “Tower Heist”:
“Universal Pictures today announced that in response to a request from theater owners, it has decided to delay its planned premium home video on demand (PVOD) experiment. Universal continues to believe that the theater experience and a PVOD window are business models that can coincide and thrive and we look forward to working with our partners in exhibition to find a way to experiment in this area in the future.”
Before Universal’s original plan was made public, they reached out to key theater owners to inform them of their desire to release “Tower Heist” on PVOD. I’m not sure what came of these conversations or whether they were more of a warning to exhibitors rather than a request or negotiation. Jon Fithian, head of the National Association of Theatre Owners, who had been mum on Universal’s plans until today, referenced this ongoing dialogue in his response to the studios about-face:
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In what the Los Angeles Times called “an audacious move” earlier this week, Universal Pictures announced earlier this week that it would allow the Eddie Murphy action comedy “Tower Heist” to be shown via premium-video-on-demand three weeks after its November 4th release date. Naturally, if Universal finds premium-VOD to be profitable without gutting their theatrical box office receipts, you can bet every other studio will follow their lead.
Of course, exhibitors aren’t big fans of premium-VOD or shortening the theatrical window from its current 90-day average in any form. Their big fear is that patrons will be accustomed to simply wait for a movie to be available at home rather than head to the theater not only lowering attendance but also permanently damaging concession sales.
The biggest downside of Universal’s plan, besides ticking off exhibitors, is the whopping USD $59.99 cost of screening “Tower Heist” in the comfort of your own home. During a time when news reports have the world headed toward another recession that kind of price might cripple sales. After all, USD $60 is roughly the price of six tickets on average at a movie theater.
However, it is tough economic times in the first place that is causing the movie industry to experiment with premium-VOD as they try to replace sagging DVD sales. But you probably already know that. In fact, you probably also know that theater owners will be just a angry about Universal’s current plans as they were this spring when the studio, along with three others, struck a deal with satellite television provider DirecTV to make a handful of titles available for premium-VOD 60 days after theatrical release for USD $29.99.
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Chris McGurk
Okay, I admit that the headline of this post is pure click bait. But did you really want to read another story headlined “Chris McGurk Named Cinedigm CEO”? Truth is I wasn’t in Cinedigm’s board room when they offered Chris McGurk their Chairman and CEO positions, and thus I have no “inside” information. However, from the moment Cinedigm announced McGurk as their new CEO earlier this week my inbox has been flooded with emails from those asking about my own thoughts on the news.
Rather than take the usual Internet approach of writing up an analytical post before the ink was dry on Cinedigm’s press release, I chose gather my thoughts about the news for a couple of days. While it may seem at first that McGurk is an odd choice to head a digital cinema deployment entity, upon reflection one can see the benefits Cinedigm gains with the hire.
As the press release trumpeting the hire so diligently pointed out, McGurk has a ton of film industry experience. Every story reporting McGurk’s new role at Cinedigm recounted his lengthy professional history. Still I feel compelled to do it here. I first became aware of McGurk in the early 1990′s while working as an intern at Walt Disney Studios. At the time McGurk was President of the Walt Disney Motion Picture Group and it was hard to find anyone who had a bad word to say about him. Quite the opposite in fact. McGurk’s tenure at Disney from 1988 to 1996 included a stint as Chief Financial Officer on the studio side, among several other roles. He held similar senior titles (President and Chief Operating Officer) during his three year stay at Universal Pictures from 1996 to 1999.
McGurk is probably most associated with his last two companies Metro-Goldwyn-Mayer, where he was Vice Chairman and COO from 1999 to 2005, as well as Overture Films, where he served as founder and Chief Executive Officer from 2006 to 2010. This may have more to do with the current state of those companies than McGurk’s actual achievements, but more on that later.
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The debate over motion picture release windows heated up again last week as two studios spoke openly about their plans for allowing limited home viewing of movies shortly after their theatrical opening. In addition, news came of a pricey new service looking to make films available in living rooms day-and-date with their theatrical launch.
On Tuesday, Sony’s CFO, Rob Wiesenthal, said that his company was not only looking to cable and satellite operators to provide early releases for the studio’s titles, but has high hopes for its new streaming video service, Qriocity. The service was established earlier this year to beam content directly into Sony’s consumer electronics products (televisions, video game consoles, Blu-Ray players, etc.).
Speaking at the UBS Global Media and Communications Conference in New York, Wiesenthal spoke of the “big white space” between theatrical and home video release dates for movies, stating there was “a real consumer desire for a premium offer” for such content. He did not cite any studies or reports to back up the claim that consumers were clamoring for such services.
In fact, it often seems that the only people making such statements publicly are the studios themselves, rather than moviegoers. This is probably because a number of studios are exploring premium video on demand models that will enable them to release movies for home viewing during their theatrical window but with significantly hire prices; around $30 per viewing.
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Sometimes rebound relationships can really pay off. At least that’s what Walt Disney Studios is hoping now that it has agreed to enter a long-term agreement with DreamWorks to distribute upwards of six films a year starting in 2010. The deal was put together very quietly over the last several weeks as DreamWorks simultaneously tried to negotiate an agreement with Universal Pictures which had originally been announced back in October of last year. That deal fell apart late last week when Universal and DreamWorks could not agree on a set of terms and as Universal reportedly discovered DreamWorks was negotiating with Disney. When speaking with The Hollywood Reporter on Saturday the studio’s official line was:
“Universal Pictures has ended discussions with DreamWorks for a distribution agreement. Over the past several weeks DreamWorks has demanded material changes to previously agreed upon terms. It is clear that DreamWorks’ needs and Universal’s business interests are no longer in alignment. We wish them luck in their pursuit of funding and distribution of their future endeavors.????”
What a few of those “material changes” amount to says a lot about theatrical motion picture distribution and just where a studio realizes a profit when releasing a film. The deal that DreamWorks was originally negotiating with Universal was a straight distribution partnership. Such deals will usually see the production company paying for the production of a film while the studio pays for film prints, marketing and advertising in exchange for recouping costs and a share of the box office gross. That share can range anywhere from 8% to 15% of the gross – not the net – receipts. Read More »
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And then there were four. Four studios that is. Or so says the Wall Street Journal which broke a story today reporting that Universal Pictures and Walt Disney Company have reached a virtual print fee deal with Digital Cinema Implementation Partners, the joint venture formed by North American exhibitors Regal Entertainment, Cinemark and AMC Entertainment to finance, install and maintain digital cinema equipment in their theatres. The three chains, which represent a combined screen count of around 15,000, would like to start rolling out digital cinema as soon as the fourth quarter of this year, in time for the flood of 3D movies studios have slated for release next year.
Previously, DCIP had reached a VPF deal with Twentieth Century Fox, though the studio has never confirmed the news. The signing of four studios is a crucial milestone which DCIP must cross in order to secure the USD $1 billion in financing the company has lined up from J.P. Morgan Chase to pay for all the expensive digital cinema equipment required to outfit theatres. The Wall Street Journal had reported that Paramount Pictures had also signed a VPF agreement with DCIP, which had been rumored in the press but never officially announced. Indeed, by the end of the day Variety had taken the air out of the Wall Street Journal’s big scoop by confirming that Paramount Pictures had not yet signed with DCIP. Read More »
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