A proposed service aims to bring movies to homes the same day they hit theaters, a milestone that Hollywood has long anticipated with a mixture of fear and fascination.Ironically the only people who could afford this service would be studio executives, who can write it off as a business expense. Hard as it is to believe, people believe this is a workable business model.
But there's a catch: At the prices currently being discussed by Prima Cinema Inc., the start-up that is touting the service, those movies will reach only world's the best-appointed living rooms.
Prima plans to charge customers a one-time fee of about $20,000 for a digital-delivery system and an additional $500 per film. The Los Angeles-based company has around $5 million in backing from the venture arm of Best Buy Co. and General Electric Co.'s Universal Pictures, and hopes to start delivering movies to customers as soon as a year from now.
The steep price has been met with mixed reactions in Hollywood. Some executives question whether it will be possible to build a market beyond a few thousand users. (Prima says it plans to install its systems in 250,000 homes within five years.) Others say the high price would create an exclusive, super-premium niche market without cutting into existing sources of revenue.A big white space! I see an increase in home-invasion incidents from people who can't get into a sold-out theatre but CAN break a few windows. And on their way out, they'll steal bread to feed their starving children.
"While this is a niche market, there is a chance for significant upside," says Adam Fogelson, chairman of Universal Pictures, which holds a minority stake in Prima. "And precisely because it is a niche market, that upside should come without harming any of our existing partners or revenue streams."
...The president of the National Association of Theatre Owners John Fithian, who was briefed on Prima, says the exhibitors reaction to Prima's model would "be decided on an individual company basis." Still, he says, most exhibitors aren't in favor of systems that impinge on movie-going.
The Prima model "makes very little sense as it risks millions to make pennies" by exposing movies to the possibility of piracy early on, Mr. Fithian says. "There is no such thing as a secure distribution to the home," he adds, noting, "This proposal will give pirates a pristine digital copy early, resulting in millions of lost revenue to piracy, while at the same time selling a very limited number of units. Only billionaires can afford $500 per movie."
..."It's clear that there is a big white space between the theatrical and DVD releases of movies that content companies can fill without cannibalizing folks on either side of the spectrum," Sony Corp. of America Chief Financial Officer Robert Wiesenthal said at a media-business conference in New York Tuesday. "There's a real consumer desire for an early, premium offering in the home."