Hollywood Studios Could Launch $30 Movie Rental Service Early Next Year
Comcast and Amazon join Apple in developing a delivery system for premium VOD titles that would be available for home viewing 30-45 days after debuting in theaters.
If Hollywood studios get their wish, a new premium video-on-demand service could finally be introduced in the first two months of 2018. One likely scenario: Consumers would pay $30 to rent a movie only 30 to 45 days after the film has opened in theaters.
That’s less aggressive than some studios might want — there have been suggestions of making a movie available for $50 after 17 days — but the more modest $30 price point could help to soothe the frayed nerves of theater owners, as well as lure more consumers to hit the “buy” button.
Insiders say Comcast, Apple and Amazon are actively developing the delivery system for PVOD titles, including figuring out antipiracy measures. A number of platforms, including the other major cable providers and digital players, will ultimately be a part of PVOD as well, since the goal is to saturate the marketplace. (DirecTV isn't yet part of the conversation because of the pending AT&T/Warner Bros. merger.)
Now, Amazon, Apple and Comcast — parent company of Universal — must strike deals with individual studios, since antitrust laws prevent the studios from discussing terms among themselves. The goal is to have one price point, so as to avoid consumer confusion. That means everyone would have to agree to the $30 plan.
If the premium service does launch in January or February, it means year-end holiday movies would be among the first offerings. (December releases include Universal's Pitch Perfect 3 and Fox's The Greatest Showman.)
For PVOD to happen, sources say at least three studios would need to be involved (Disney, the box-office market leader, isn't part of the equation). “No one will come out of the gate unless the majority of the industry is involved,” says one studio executive. “There is safety in numbers.”
The studios will want protection if they are unable to convince theater owners to go along with their plan. The two sides have been talking in earnest for months, but now, studios appear willing to go ahead and try PVOD even if exhibitors don’t come on board.
If theaters decide to boycott every PVOD title, it could get tricky, especially at a time when exhibition stocks are getting battered on Wall Street because of a miserable summer at the box office, with revenue down more than 13 percent over summer 2016.
"It's a very risky proposition to do this without some kind of agreement with theaters," says Wall Street analyst Eric Handler of MKM Partners. "It could be mutually assured destruction."
A major sticking point: Exhibitors want the studios to agree to keep the PVOD window the same for five or 10 years, as well as the traditional 90-day window. For years, theater owners have decried early home viewing as the death knell of moviegoing.
“Everyone wants to work the theaters, but in the end, most of the studios will move ahead with PVOD,” says one source. Adds another insider, “I’ve never seen anything so complicated in terms of getting this boulder up the mountain.”
A version of this story first appeared in the Aug. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.