EXCLUSIVE: I’ve learned that Regal Cinemas has come up with a specific plan to fight that newest scheme by Fox, Sony, Warner Bros, and Universal to keep undermining movie theaters. This is all about that colluding quartet’s plan going into effect as early as this month offering some major pics for a “premium” Video on Demand service on DirecTV at a price point of $30 only 8 weeks after the films’ theatrical release. (The norm is 4 months.) When word about this inconveniently leaked out last week at CinemaCon, the recent Las Vegas convention of studios and exhibitors, theater owners publicly expressed “strong disappointment” but privately went completely batshit. Now I’m told Regal Cinemas has decided to take matters into its own hands. My intel is that the theater chain’s marketing people have just begun warning the marketing teams of the colluding quartet of studios that it’s not going to be business as usual from this point on. Specifically, Regal is threatening to drastically reduce the amount of play time for each of the 4 studios’ movie trailers in every Regal cinema. And since this comes right before the all-important summer movie season, when balmy ticket sales usually account for 40% of the film industry’s annual revenue, it’s a counter-attack with some real power behind it. Because cinema owners allow millions of hours of playing time each year to trailers promoting the movies booked on their screens. In turn, that represents hundreds of millions of dollars that the studios get in free theater promotion. Now Regal is the first of these theater owners to calculate just how much that valuable screen time is worth to the chain’s bottom line and to the studios that have collapsed the release window. The same consideration will no doubt be given to the acres of wall and floor space devoted to posters and standees. As the National Association Of Theatre Owners’ Executive Board noted in their open letter last June 16th, the length of a movie’s release window is an important economic consideration for theater owners when it comes to how widely and under what terms they book a film.
I love the way the 4 studios are shocked, shocked, that Regal would dare to challenge them on this. The studios have been looking to find revenue to replace long-plummeting DVD sales (like deals with Netflix to expand windows on the streaming service), but they keep setting up a showdown with the big exhibitor chains who already are fuming about the low box office numbers during the first quarter of this year. Then again, no one is supposed to dare expose obvious issues relating to collusion, price-fixing, and anti-trust among the Big Media companies whose major studios are supposed to be business competitors.
Some of the colluding quartet’s coming movies probably won’t be hurt if they’re installments of well-known franchises like Fast 5 (Universal), or The Hangover, Part 2 (Warner Bros), X Men: First Class (Fox), Rise Of The Apes (Fox), or Harry Potter And The Deathly Hallows, Part 2 (Warner Bros). But new “original” movies could well be impaired by less trailer play like Green Lantern (Warner Bros), Mr. Popper’s Penguins (Fox), Cowboys & Aliens (Universal), Zookeeper (Sony), and The Smurfs (Sony). It will also cost more to market them since more expensive TV ads will have to run.
Who benefits? Certainly Paramount and Disney which didn’t join the quartet because of oft-stated piracy fears about early VoD which delivers a pristine, high definition, digital copy to thieves months earlier than previously available. Paramount and/or Disney have more than half a dozen summer blockbusters which could enjoy more movie trailer playing time by Regal: Transformers 3: Dark Of The Moon, Super 8, Thor, Captain America: The First Avenger, Pirates Of The Caribbean 4: On Stranger Tides, and Cars 2. Not that they need it because all appear to already have built-in audiences.
Here’s my advice to Regal right now: Don’t threaten. Promise!
The National Association of Theater Owners (NATO) already has bitched about how theater operators “were not consulted or informed of the substance, details or timing of this announcement” and how early-to-the-home VoD will import the problems of the home entertainment market into the theatrical market without fixing those problems. “The studios have not managed to maintain a price point in the home market and we expect that they will be unable to do so with early VoD. They risk accelerating the already intense need to maximize revenues on every screen opening weekend and driving out films that need time to develop — like many of the recent Academy Award-nominated pictures. They risk exacerbating the scourge of movie theft by delivering a pristine, high definition, digital copy to pirates months earlier than they had previously been available. Paramount has explicitly cited piracy as a reason they will not pursue early VoD. Further, [other studios] risk damaging theatrical revenues without actually delivering what the home consumer seems to want, which is flexibility, portability and a low price. These plans fundamentally alter the economic relationship between exhibitors, filmmakers and producers, and the studios taking part in this misguided venture…. In the end, the entire motion picture community will have a say in how the industry moves forward. These studios have made their decision in what they no doubt perceive to be their best interests. Theater owners will do the same.”