James R | On 21, Apr 2015

How much would you pay to see a film on VOD while it’s still in the cinemas?

It’s a question that is at the heart of the balance between digital and theatrical distribution: If viewing at home means a smaller screen, does that mean the price tag should be smaller too? If so, does that mean smaller profits for the studios? Or do they charge a premium for early and convenient access, which means fewer viewers willing to pay in the first place?

Back in 2011, Universal prepared to dip its toes in the streaming waters by releasing Tower Heist three weeks after its initial theatrical release. The fee they would have charged? $60 to rent the film, which starred Ben Stiller and Eddie Murphy. Due to pressure from exhibitors, though, the proposal collapsed. Now, research (published by Variety) reveals that the majority of people would not have stumped up the cash for such a price anyway.

A survey from RBC Capital Markets found that 87 per cent of consumers would pay no more than $10 to see a film on VOD on the same day it hits cinemas. Only 7 per cent were willing to pay between $11 and $15 for day-and-date access, while 4 per cent were willing to pay between $16 and $20. Only 3 per cent were willing to pay over $20.

Negotiating release windows with exhibitors has always been a challenge for distributors, who are scared that the download-at-home option would deter customers. Sony’s decision to release The Interview online last Christmas resulted in the boycotting of several major chains, leaving the movie to enjoy a limited theatrical release before generated record digital revenue. Netflix, meanwhile, is increasingly stepping into the day-and-date sector, with a Crouching Tiger, Hidden Dragon sequel (pictured above) set for simultaneous release on the SVOD site and cinemas in August. With big chains giving Netflix the cold shoulder, the streaming company has made a deal with IMAX cinemas instead.

Cinemas should harbour a slight concern, suggests the RBC study: asked whether they would see a film in cinemas if it were released on VOD within 90 days, 59 per cent of respondents said it would have no impact on their decision. 24 per cent, though, said that they would be “somewhat less likely” to see the film in cinemas, while 17 per cent said they were “significantly less likely” to pick the big screen.

The appeal of the big screen has increasingly relied upon tentpole movies to drive audiences, something that cinemas have partly embraced by stepping up the cost and size of food and drink available, as well as increasing the comfiness and size of the seats and teaming up with theatres and sports to create limited events.

More than 40 per cent of respondents told RBC that they would be more interested in going to the cinema if full meals were served, while 1 in 3 said they would visit if alcohol were served. (Indeed, a number of UK cinema chains serve alcohol on the premises, with some independent theatres allowing customers to take beverages into the screen.)

60 per cent of respondents said they had visited a cinema with premium seats, with 38 per cent saying premium seats made them want to go to the movies more. 39 per cent, meanwhile, said they were interested in live sporting events on the big screen.

Meanwhile, in the home entertainment world, the pricing for VOD has settled on a rough standard, with rentals costing approximately £2.49 to £3.49 and purchases costing around £9.99 to £13.99. Prices for premium VOD releases are often higher at £5.99 for a rental. Curzon Home Cinema, which regularly releases movies day-and-date from both its own label and from distributors such as Soda Pictures, usually charges £10 to rent its own releases – equivalent to a cinema ticket in Curzon’s theatres – and £6 for other distributors’ titles. As titles become older on all VOD platforms, prices tend to decrease.

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