Movie theater owners’ talks with Hollywood to create a premium video on demand window for new releases have been “fruitful,” National Association of Theater Owners’ Patrick Corcoran told an investor group this morning — quickly noting that the trade group isn’t involved for antitrust reasons.
“We have consistently said this should not be negotiated in public,” he added in an address to the Gabelli and Company Movie & Entertainment Conference
But speaking in broad terms, he told the gathering that the effort to create a VOD window for new movies in the period when theater owners typically have them exclusively is being driven by “problems studios are facing in the home” with declining DVD sales.
Home entertainment sales have been “shrinking consistently” from $24.9 billion in 2004 to $12.5 billion last year. Over the same period, “median household income has been stagnant.”
As companies including Fox and Warner Bros. signaled their interest in offering movies on TV during the theaters’ 90-day window, NATO “reached out to studios, asked them to get together with our members and negotiate one on one,” Corcoran adds.
The main bones of contention involve the start of the premium window and price studios would charge home viewers; how much exhibitors would be paid; and — what he calls the least covered consideration — the length of the lower priced window.
NATO has a mixed view of movies that Amazon and Netflix are starting to produce for their home viewers.
“Amazon’s entry has been very welcome” because “they respect the theatrical release window,” Corcoran says.
He likened Netflix, which introduces its movies online, to TV producers such as HBO that primarily compete with home entertainment. “That’s where Netflix’s biggest effect is,” he says. Movie fans are “thinking about going out and spending money.”
NATO remains upbeat about exhibition, despite weaker than expected Q2 sales. That’s “entirely product driven,” Corcoran says — and 2017 is still up 2.1% vs the same period in 2016.
“There’s a lot of potential and a lot of strength out there” for this year’s box office.
Still, the trade group would like to see “more movies aimed at our domestic audiences in the U.S. and Canada.”
Data Research Manager Phil Contrino told the investor group that theaters are doing well with millennials.
About 55% of frequent movie goers — those seeing four movies over the previous two months — are between 18 and 34, he notes citing comScore research. And a NATO survey showed that “they’re responding to reclining and luxury seating and reserved seating….They want things to be on their terms.”
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