Commentary
Movie Studios May Overestimate What Users Will Pay For Home Entertainment
- by Wayne Friedman , Staff Writer, August 24, 2017
Movie studios keep forgetting the key issue of premium TV/ movie content glut: It’s price, not time.
Executives keep thinking consumers are willing to pay a premium to see movies in their homes. Often, it is just a couple of weeks after a film’s theatrical release.
Such beliefs may not be sustainable in a world flooded with too much content: TV, movies and lesser premium digital media. The more than 400 scripted TV shows is only one issue; there is a glut of theatrical films released with few viewers to ensure financial survival.
What does that mean for Comcast and Amazon joining Apple to develop a delivery system for premium VOD titles? It would be available for home viewing 30 days to 45 days after debuting in theaters.
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That lag time isn’t an issue; it’s all about price. There is ample content that consumers haven’t even screened yet.
That said, theatrical film consumers might pay $30 to see a movie at home on the first day of its theatrical release — now four weeks after the fact. We all know where the business wrinkles are: movie exhibitors looking to protect their long-term interests.
Half of all theatrical revenues for theatrical movies occur in the first two weeks, and 80% in the first 10 weeks. Movie theater owners depend heavily on their revenues in the first weeks of a film’s release.
For more than a decade, there have been multiple iterations of digital movie efforts trying to find the right formula for selling home exhibition. Virtually all have resulted in lukewarm success.
Recently, MoviePass, a monthly service, lowered its price tag from $50.00 a month to $9.95 a month. A consumer can see up to one movie per day for 30 days. Consumers know when they see a bargain, rushing to the MoviePass site in reaction to the news.
All this suggests consumers know a keener score. And that is the amount of money they can spend per movie or for unlimited TV-movie content. The time factor? Everyone has moments when they are late to the content.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
As I recall, the movie companies were under the delusion that consumers would fork over $75-95 per tape to get access to films like "Raiders Of The Lost Ark", when VCRs were the rage many years ago. Boy, were they wrong.
Yeah, a few desperately bored people will run every day to see a move, but that action will loose the shine, too. It will bounce to about 2-3 movies per month which is more than they were going. Watch for future canibalization, too.
Reminds me of early "pay cable--HBO Showtime" situation. When you first subscribed you binge viewed...which = good subscriber ROI...but after a while, without consistent stream of stuff you or family like to view, the monthly ROI might head south. The devil is in the relationship between subscriber perceptions of ROI (content) and churn. Original content helps but that too is subject to a subscriber's mental ROI calculations.