Why Studios Should Spark A Premium VOD War

Dem’s fighting words in The Los Angeles Times from theater-chain honchos, who are threatening to halt exhibition if DirecTV (NYSE: DTV) follows through on plans to launch premium VOD in June. Conflict is coming, and that may actually be a good thing for the studios.

Executives from Regal Entertainment and AMC Theatres didn’t exactly mince words in reaction to DirecTV CEO Michael White’s suggestion that a 4-6 week window between theatrical release and satellite subscriber living rooms is almost upon us. “We do not intend to screen movies released under such circumstances,” AMC CEO Gerry Lopez told The Times.

Theater owners are rightfully nervous that ticket-buying audiences could dwindle if presented with the option of paying about $30–perhaps way too much, recent research suggested.

Threats of blocking theatrical distribution are either prelude to a clash or just public posturing for some kind of pact that will insulate theater owners should premium VOD take too big a bite out of their wallets.

The prospect of war brings to mind a standoff that occurred one year ago between Disney (NYSE: DIS) and theater chains including Odeon over the studio’s plan to move up the DVD window on Alice In Wonderland.

At some point soon, one studio or another is going to step up and make known what title(s) will be the canaries in this premium-VOD coalmine, and if White’s comments haven’t already lit the fuse, that will.

As badly as the studios want to meddle with the traditional windows that are under becoming more and more challenged to deliver revenues under pressure from digital platforms, they can’t alienate the theater owners. The box office provides that first-window exposure crucial to driving momentum in every other stop on the distribution chain.

If these kind of conflicts emerge regarding title after title, the ensuing media coverage may end up being a publicity bonanza–exactly what they are going to need to make sure the word gets out about a radical new distribution scheme that some consumers may find difficult to comprehend.

The usual industry marketing materials aren’t going to suffice here; some free press that comes in the media-friendly format of conflict between two parties? That will get attention.