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Film theaters fight premium video-on-demand

Theater owners feel threatened by the rollout of premium VOD and the possibility that they will be competing with services that deliver first-run movies to customers homes.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read

Theater owners don't want digital distributors breaking into their windows.

The big film studios may begin to pipe movies to consumers' homes via premium video-on-demand services (PVOD) at the same time the films are up on the big screen, thereby crashing the theatrical window. A "window" is the term used to describe the period of time a film distributor--such as a theater, cable company, or traditional TV broadcaster--has access to a particular movie.

The large theater chains are signaling right back that they won't sit still for it, according to a story in today's Los Angeles Times.

The theaters are lobbying the studios, prominent filmmakers, and Wall Street to scrap the plan. Their message is that forcing the theaters to compete with home delivery is only going to damage one of the studios' most lucrative sources of revenue--one of the few they still have that isn't ailing.

Theater owners say Hollywood is casting about for ways to defeat piracy, and make up for plummeting DVD sales and rentals. According to Patrick Corcoran, a spokesman for the National Association of Theater Owners, the studios' PVOD plans aren't going to help solve the problems.

"We understand that the studios have a problem in the home market," Corcoran said. "It's down, like, 13 percent when you look at DVD sales and rentals. We understand they need to fix that, and we're all for them experimenting. What we're not for is their importing those problems into the theatrical window."

Price and piracy
Early reports about the studios' PVOD plans say the price to consumers would be at least $30 per movie, and subscribers would get access about a month after it hit theaters. On average, movie theaters have exclusive access to films for three months, Corcoran said. PVOD would be made available in high definition and would be distributed by cable pay-TV services.

Corcoran says history has proven that the prices the studios charge for home viewing will always tumble. He said they did for VHS and DVD, as well as for cable video-on-demand movies, which began at about $15 but are now in the $5 range.

He also noted that the studios predicted that PVOD would be a safer way to distribute movies and help prevent piracy. He doubts that is the case any longer.

Last spring, the Federal Communications Commission authorized Hollywood studios to block analog video signals from coming out of cable and satellite set-top boxes during the broadcasts of newly released movies. The studios designed this to prevent copying and to secure the release of new movies into homes.

"Technological locks can always be defeated by technological crow bars," Corcoran said. "[The anticopying protection software on HD movies] has already been cracked."

Below: Movie theaters saw a record-breaking $10.6 billion in revenue in 2009, and if they get any help from films opening this Christmas, such as "True Grit," they expect to take in about the same this year.