Tuesday, April 17, 2012

Movies at Home -- or -- The Continuing Erosion of the Archaic Theater Experience

Yeah, above is my idea of how to watch a movie these days.

We've all heard the complaints. Going to the movies has become less appealing over the years (I won't go into specifics again) while watching movies at home has gotten better. A good sound system doesn't cost that much and the latest 60-inch screens deliver that wow factor. (And really, the theater screen isn't that much bigger considering how much further away you sit from it. In fact, if you're in the back row of one of those plexes with tiny screens it could be worse. And, having to sit in the back row means the place is packed which brings with it other discomforts). Sorry, but the 'big screen' just doesn't compensate for aesthetic compromises that go with the theater experience.

The pictured set up is, admittedly, a bit much but you don't have to go that far to create a nice setting. Take away everything but the screen and sound system (and some chairs or a couch) -- that's all you need -- and you're there. Wanna watch in a few minutes? No problem. Want to catch the rest tomorrow? Easy. Want to pause it to make popcorn? Go ahead. Need to go to the bathroom...?

But, what if you want to watch a movie that just came out? That's the problem. You have to go to the theater to catch most new movies. Some are available on-demand but those usually aren't the hot ones. For the good stuff you still have to go through the movie-theater rigmarole.

But, why? 

Over at the Tribeca Film Festival blog Richard Greenfield and Brandon Ross (of BTIG) have this to say about the state of affairs:
  • In a rapidly evolving media world, where HDTV penetration now exceeds 70% and the average US living room TV sold is 44″, the concept of forcing consumers to attend/pay for a movie in a theater for the first three-four months of a film’s lifespan feels increasingly archaic. The overwhelming majority of multichannel video homes are capable of utilizing video-on-demand, with the exponential growth of IP-enabled TVs (directly or via third-party devices); not to mention the growth of web-enabled iPads that have a sharper screen than any TV set. The stage is set for the “home” to become the new “theater.”
The average TV these days is 44 inches? Really? Here's their nifty chart:

They continue:
  • Why Buy When You Can Rent?
  • Falling DVD sales and consumers’ lack of interest in buying movies digitally (Electronic Sell-Through, EST) has received most of the blame for Hollywood’s financial problems. Hollywood is hoping that expanding the functionality of digital content, meaning a cross-device, cloud-based storage system for movies (Ultraviolet), will invigorate interest in buying movies. Unfortunately, the fundamental issue is that consumers no longer need to own content.
Duh. Totally freaking duh. I've never gotten the logic of the Ultraviolet thing. Who's going to buy a digital copy and store it online? For what purpose? This is indicative of Hollywood's backward thinking and desperation.

Sorry, but for most people the days of owning a library of movies is over. Nobody buys DVDs anymore. We rent. Click, stream, watch, done. How many people out there ever watch a movie a second time? There's no need to own it on disc or store a copy in an online vault.

Continuing from the article:
  • The confluence of these technology catalysts has “raised the bar” for consumers to either leave their home and buy a movie ticket or to buy a movie on DVD or digitally. We expect the bar to move notably higher over the next few years as an increasing percentage of TVs become IP-enabled. Studios need to understand the “new” consumer and technological paradigms and work with them, not against them.
This is the heart of the problem facing Hollywood. Improved consumer level display platforms -- not just large TVs but also laptops, tablets, and smart phones -- make watching movies (even away from home) easier while increasing ticket prices as well as the price of gas and concessions (none of this money, the authors rightfully point out, goes to the studio), and crowds that are more bawdy makes watching movies at the theater less appealing.

BTIG's solution?
  • We believe there would be substantial consumer interest in offering movies in the home four weeks after their theatrical release at $20-$25, and there could be meaningful interest in offering movies day-and-date into the home at prices as high as $50 (not everyone bought a ticket to a Saturday night boxing match or a WWF event, with many choosing Pay-Per-View and subsequently VOD to access the content). Furthermore, releasing movies earlier at home should not simply be rental/VOD, but rather offer consumers the ability to own a digital copy (Ultraviolet or iTunes) for a modest premium (sub $10 above the VOD price).

Can't argue. The cost of going to the theater, especially for a family, can easily approach or exceed $60 dollars. Add to that the logistics of getting everybody in the same place at the same time and a fee of $20-$50 to watch a new movie at home sounds like a fair deal. If you're single or a couple you could invite friends and split the cost -- have a movie party.

This arrangement would also allow studios to take advantage of expensive marketing campaigns that promote movies opening at theaters.

Greenfield and Ross drive the point home:
  • It is worth remembering that movie studios keep only half of each movie ticket, but would keep 80%-plus of VOD/iVOD transactions. 
Right now Hollywood is compensating, to some degree, for the decline in domestic theater attendance with increased foreign business, but that can't last. Sooner or later, people in other countries will turn to other solutions and options in the same way we have and theater attendance will drop there as it has here. Just as the DVD boom ended so will the foreign box office boom.

Studios need to take steps in order to have a viable model in place when the bottom falls out. With gas prices (and the prices of everything else) increasing while the consumer is better able to watch movies when and where they want, theater business will only continue to erode.

It doesn't make sense for Hollywood to continue to make new movies primarily available only at the theater when people clearly would rather stay at home.


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