Lionsgate vice chairman Michael Burns has a message for Apple: if you want new home video releases available on iTunes, make your prices more in line with other retailers. Even though he expects that a deal between the major movie studios and Apple is imminent on movie downloads, Burns said he doesn’t expect Lionsgate to offer its new home video releases to Apple (NSDQ: AAPL) any time soon. Burns told attendees at the UBS Global Media & Communications Conference that while the prospects for long-form content downloads look good — particularly for download-to-rent — he is much more bullish on the value of VOD options in general. That said, Lionsgate will continue to offer its older library of films via inTunes.
— Not averse to downloads: Burns noted that Lionsgate currently has several deals for online movie downloads on Amazon’s (NSDQ: AMZN) Unbox, on Movielink, Xbox and CinemaNow, of which it owns 20 percent: “We haven’t had new theatrical titles on Apple, nor have any of the major studios outside of Disney, (NYSE: DIS) because everybody’s in the same position: we’re not going to give [Apple] better pricing than we’re giving, Wal-Mart, (NYSE: WMT) BestBuy and Target.”
— The breakdown: If a DVD is sold to one of the big boxes and Lionsgate collects $18, then Lionsgate’s net profit is $16, Burns said. “Don’t get me wrong, that’s not without catches. We’re the ones taking the inventory risk, it’s basically everything on assignment there. So if we can’t justify a lower price to them, how can we sell it to Apple for $12 for a digital download to own? You can make the case that if the price went up, you could certainly back-out the shipping costs, the inventory risk and duplication of the DVD. I believe that is forthcoming with the major studio. But in that case, I’d much rather be the tail than the dog.”
— Online Renting: He finds the proposition for a $4 dollar online rental more favorable, noting Lionsgate’s 20 percent piece of CinemaNow. That’s going to be a bigger business. It’s still tiny, but it’s gone up 8-fold for us. It’s still less than $10 million per quarter in terms of our business. But it’s going to get bigger. I still say, although rental downloads will be big, VOD’s going to be bigger.
— VOD vs. download: After his presentation, I asked Burns to elaborate on why VOD is a better proposition for companies and consumers. “VOD is available in some many homes, its ease of operation for consumers who can just push one button… I think library product will be at a price point that will turn a lot of people’s heads. And I think there’s great value at $3.99 or $4.99.
— Expanding Break.com Holding?: During his presentation, Burns touted Lionsgate’s investment in online video site Break.com, noting that Lionsgate took a 42 percent stake in the company. The connection began after Lionsgate had been advertising on the site, which he said attracts an average of 18 million monthly uniques. Since the company is doing so well, I asked if Lionsgate is considering increasing its stake: “I guess it depends on how they continue to perform,” he said.
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