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Technology: Universal calls off 'Tower Heist' VOD test

October 12, 2011 |  1:58 pm

Tower HeistThat didn't take long. Universal Pictures announced Wednesday that it had withdrawn plans to make "Tower Heist" available to home viewers shortly after its theatrical release in two test markets. The announcement came shortly after a second big theater chain, National Amusements, said it wouldn't show the film because of the video-on-demand experiment.

Universal had planned to test whether consumers would pay significantly more -- $59.99, to be precise -- to watch a movie through their cable operator's video-on-demand service if it became available only three weeks after its debut in theaters. It's now saying that it will work with exhibitors to "find a way to experiment in this area in the future."

My sense is that consumers like the idea of an earlier VOD window but that $60 is the wrong price. The highly unscientific poll  that Opinion L.A. conducted earlier this week supports this view, with more than 80% of the respondents saying $60 is "far too expensive." That's just guesswork, though. The only way to find out whether there is a demand for such a service, what the right price is and what its effect might be on theaters is to try it out. Universal and three other studios had previously offered VOD versions of several movies for $30 two months after their release in theaters. The "Tower Heist" release was a more aggressive iteration of that approach.

These tests of premium VOD should help the industry determine how important it is to theaters to have the exclusive rights to a film for several weeks before it moves on to other outlets. Theoretically, at least, there's a sizable audience of people who like movies but can't or won't go out to see them. That audience already can use the Internet to find free, illegal copies of just about any movie they'd like to see. The question is how to structure a VOD offering to extract more revenue from those folks without sacrificing ticket sales.

Studios and theater chains alike would benefit from knowing the answer to that question. By shutting down the "Tower Heist" tests, the exhibitors seem to be choosing to stay in the dark in the hope of forestalling the seemingly inevitable. 

That's not surprising, given the theater chains' history of opposing any effort to shorten their exclusive window. Consider, for example, their protests when Disney announced that the DVD for "Alice in Wonderland" would be released only three months after the movie appeared in theaters. (That decision, by the way, didn't seem to make a dent in the movie's ticket sales.)

For their part, exhibitors say they're willing to tinker with the business model, but not to the extent Universal was proposing. John Fithian, chief executive of the National Assn. of Theatre Owners, put it this way: "NATO recognizes that studios need to find new models and opportunities in the home market, and looks forward to distributors and exhibitors working together for their mutual benefit." Those will be, umm, interesting discussions.


Technology: The `Tower Heist' tiff

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-- Jon Healey

Credit: David Lee / Universal Pictures

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