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A very hot topic in the home entertainment industry recently has been premium VOD. Proponents and opponents of the new service have been very vocal and passionate about their viewpoints, and some of Hollywood’s heaviest hitters have weighed in on the matter.

What exactly is premium VOD? Why is it causing such an uproar? Will it be around for the long haul or is it just a passing thing? Our viewpoints on the subject are after the jump.

What is premium VOD?
Premium video-on-demand (VOD) is Hollywood’s latest attempt to squeeze more money out of its content. With box office receipts on the decline and DVD sales down, studios are desperate to find new revenue streams.

Several studios have joined forces with DirecTV to launch “Home Premiere”, a service that offers titles for rent two months after their theatrical release, but before they are available on DVD, etc. Rentals through the service cost $30.

Hollywood’s hope with the service is that consumers will be so eager to see a film in their homes at the earliest possible moment that they will pay several times the usual cost of a video-on-demand for the privelege.

Why is it controversial?
Movie theater owners, whose margins on movies are already pretty thin, are upset with the concept of premium VOD, which they feel will undermine their business by discouraging theater attendance. A group of powerful directors have chimed in supporting theater owners, writing an open letter to the studios claiming that premium VOD discourages consumers from viewing movies in the “optimum and most profitable” way possible: movie theaters.

What happens now?
There are currently three titles available on Home Premiere: Cedar Rapids, Hall Pass and Just Go With It, with The Adjustment Bureau coming soon. DirecTV has not released official figures on the service’s performance thus far, but preliminary numbers from Just Go With It‘s first weekend on Home Premiere (and ninth weekend in theaters) indicate that premium VOD had little effect on the film’s numbers.

I am of the opinion that theater owners and concerned directors don’t have much to fear from premium VOD, at least not right now. The vast majority of most films’ earnings come in the first month of release—well before they would reach premium VOD under the current setup. None of the films listed above were great performers at the box office, and weren’t likely to be in first-run theaters much longer than 60 days anyway.

Despite the high cost of movie tickets, concessions, etc. consumers still will shell out for “the movie theater experience” if they are excited about a certain film. Spending $30 to watch a film at home, once, does not appeal to a majority of consumers, even if a large group gathers to watch the film and dilutes the per-person cost of viewing.

Between Redbox, Netflix and traditional VOD offerings, consumers at home have too many cheaper options to drop $30 on a video rental just to see a movie a little earlier than they otherwise would be able to.

Now, should the premium VOD window get shorter, the movie selection get better, or the price go down, directors and theater owners may indeed have something to sweat about. You can bet the studios backing Home Premiere are watching the numbers closely and will make adjustments as necessary to make the service viable.

Your turn to weigh in, Insiders. Have you used Home Premiere yet? What do you think its impact, if any, will be on box office performance? How long will it stick around?

6 Responses to “(R)editorial: Thoughts on Premium VOD”

  1. Visitor [Join Now]
    Joh [visitor]

    The only problem with this concept is that movies are so horrible these days I doubt people will spend $30 to see a movie a few months earlier compared to $1 on one already down the street.

  2. Visitor [Join Now]
    Jack [visitor]

    $30 for the 3 junk films currently available is crazy. $30 for a much earlier window (day 1) and a GOOD film – I’d do it without hesitation.

  3. Visitor [Join Now]
    bonnie [visitor]

    It doesn’t bother me to wait a while till the price drops! I enjoy movies, but I haven’t had the desire to walk into a movie theater in years. With big screen TV’s & cheap (i.e. Redbox, Netflix, hulu) movie rentals, why pay for one movie when I can pay the same or less for a whole month?

    Makes no sense to me!!

  4. Visitor [Join Now]
    Awesome [visitor]

    Wow…this site is dead. Even the dopey topics used to get a dozen dum-dum responses. Now it’s down to 2 or 3 or even none…