Warner and other studios’ efforts to create new release sell-through-only windows may go beyond simply trying to squeeze a few more dollars out of a declining format. Several industry analysts believe that creating a digital window may also weigh heavily in the studios’ actions.
According to Wedbush Morgan analyst Michael Pachter, studios usually retain about 65% of the revenue from the video-on-demand and pay-per-view formats, versus 35% from disc rental. Says Pachter:
“It is clear that the movie studios dislike the [traditional] rental model . . . From a studio perspective, the most desirable distribution channels are those which provide the largest revenue share.”
Kevin Tsujihara, president of Warner Home Entertainment Group, mentioned the anticipated boost to VOD in comments made after yesterday’s Redbox announcement:
“The 28-day window enables us to get the most from the sales potential of our titles and maximize VOD usage,”
Richard Schackart, digital analyst with William Blair & Co., also believes that the new window makes digital delivery the most attractive rental option for new release content. Schackart thinks that the window will also benefit Best Buy when it introduces its VOD digital store and accompanying devices this summer. Said Schackart:
“We believe Best Buy and studios will make content available at attractive prices, potentially including free downloads or streams with purchase of dedicated hardware,”
Insiders, do you think these analysts are right, and this new deal will help usher in the age of digital delivery even more quickly? Give us your take in the comments.
(via Home Media Magazine)