Some smart exhibitors are looking to get into the VOD business and extend their reach beyond the first window. It makes sense.

Whenever I ask anyone what caused the decline in DVD sales that is threatening to change the film business, I get a different answer. The consumer finally realised that a DVD was wildly overpriced compared to manufacturing cost, said one. Kids these days don’t need to own films, they want them on their hard drive like iTunes, said another. They take up too much space in the home, said another. They were a quick victim of the new economic reality, and many households stopped buying when times got tough, said yet another. Pirated DVDs are cheaper and quicker, added someone else.
Perhaps the decline came about through a combination of all those theories. Certainly consumers are changing the way they consume, apparently as happy to watch movies on iPad or iPod as on a 40-inch TV screen.
Actually I don’t mean to write musings here about viewing habits. I mean to address the premium VOD spat that has broken out between exhibitors and distributors that is the latest skirmish in the battle over windows.
But they are part of the same problem. The way a new generation of film-lovers consume movies is at the heart of this debate. The studios are only responding to their needs, whereas exhibitors, many who admit are more concerned about damaging concessions sales than the nature of film finance and recoupment, continue to focus rigidly on protecting the first window.
James Cameron, Peter Jackson and Guillermo Del Toro led a protest last week against premium VOD which plans to make films available for home consumption at a premium price 60 days into theatrical release. That’s half way into the traditional four month-plus theatrical window.
To be honest, films from the likes of Cameron and Jackson are unlikely to be affected here. Avatar 2 is hardly likely to go onto VOD before every minute of its potential theatrical life has been maximized. But other movies which have used up most of their theatrical life in two months – ie most movies – could find a healthy pre-DVD revenue stream from premium VOD.
What’s more fascinating is the notion being explored by some forward-thinking exhibitors of creating VOD services themselves. Instead of remaining exclusively and inflexibly in that first window, doesn’t it make sense for exhibition circuits to host more of the life cycle of a movie? Their brands are well-known by consumers and associated with a superb cinematic experience; it makes perfect sense to expand that awareness into premium VOD platforms that could programme the films after the theatrical window.
Sony has already started the premium VOD experiment in the US with its Adam Sandler comedy Just Go With It and other studios are set to follow with middling box-office performers. Exhibitors can either exert their power and attempt to penalize offending distributors, or they can realise that the studios have no other choice than to listen to their audiences and work to be part of the next stage in exhibition.
As a coda, I must stress that nobody is debating the power of the theatrical window. It won’t go away and it will remain pre-eminent. Just that the luxury of keeping a film exclusively on screens for four months will soon be over and the window chain will be accelerated. Ask any teenager, it’s the way it has got to be.