posted 10-05-2011 08:47 PM                       

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In an audacious move that could shake up the way Hollywood has done business for decades, Universal Pictures plans to make its upcoming Eddie Murphy action comedy film "Tower Heist" available through video-on-demand just three weeks after it debuts in theaters Nov. 4.

But that convenience will come with a hefty asking price -- $59.99 -- that many cash-strapped consumers will balk at in the current economic slump.

The proposed test, which will be offered in Atlanta and Portland, Ore., to approximately 500,000 digital cable subscribers of Universal’s corporate parent, Comcast Corp., marks the first time a major studio movie will be available to watch in-home while still playing in thousands of theaters.

A person with knowledge of the "Tower Heist" release strategy who was not authorized to discuss it publicly confirmed the details for The Times. Spokeswomen for Universal and Comcast declined to comment.

If enough people take advantage of Universal's offer without a significant drop in box-office receipts, other studios could adopt similar strategies in the future. Such a development would end the industry's long tradition of imposing a delay of several months between when a movie is shown in theaters and when it is accessible on television screens.

Studios are looking to such experiments as a way to shift their age-old business models and generate additional revenue that can help compensate for plunging DVD sales that have been undermining movie economics over the last several years.

Universal's move is likely to infuriate theater owners, some of whom were informed of the plan this week after more than a year of discussions on the topic. The cinema industry has reacted angrily to any attempt by studios to shrink the traditional "window" of 90 days between the time a movie debuts in theaters and when it's available for home view.
Executives at the nation’s three largest theater chains -- AMC Entertainment, Regal Entertainment and Cinemark -- were outraged in the spring when four studios including Universal worked with satellite television distributor DirecTV on a test that made certain movies available for video-on-demand 60 days after they premiered in theaters for $29.99.

Spokespeople for the three companies did not return calls or declined to comment.

Many studio executives considered that test a bust because minimal promotion and relatively unpopular films such as "Sucker Punch" and "Paul" created a tepid consumer response and little data to evaluate.

That probably won't be the case with "Tower Heist," which also stars Ben Stiller and Matthew Broderick and is one of the highest profile releases of the fall. With the picture still in theaters it will benefit from word-of-mouth if it's a hit, along with a theatrical marketing campaign still fresh in the public's mind that will be supplemented with advertising in the test cities to promote the VOD test.

While the test probably won't be broadly popular, Universal is betting it will appeal to certain families and groups of friends who are eager to see "Tower Heist" but don't want to drive to a theater and pay for multiple tickets along with popcorn and drinks.

That's precisely what theater operators fear, at a time when attendance is already down. They have argued that so-called "premium video-on-demand" will shift consumer behavior, encouraging people to wait to watch a movie at home rather than seeing it in theaters a few weeks earlier.

Universal is assuring exhibitors that they will be compensated if "Tower Heist" ticket sales are lower than expected during the premium VOD test. Whether studio and exhibition executives can agree on what box office grosses would have been, however, remains to be seen.

If cinema owners are angry enough about the strategy they could threaten to not play "Tower Heist" in the two test markets when they debut on VOD or, potentially, at all. Such a response, if shared by most exhibitors, could even force Universal to alter or cancel its plan.

The studios seem committed to establishing a premium VOD business, however, and will probably launch similar offerings down the line with or without theaters' cooperation.

Universal and Comcast selected Atlanta and Portland for the test because they were seeking midsize markets that have a certain number of digital cable subscribers and moviegoing patterns similar to other cities where premium VOD won't be available. The companies believe that will make it easier to compare the results.

The "Tower Heist" plan would mark the most significant collaboration to date between Universal and its corporate parent since Comcast acquired media conglomerate NBCUniversal early this year. It represents a bold but risky step by Universal Pictures Chairman Adam Fogelson, NBCUniversal Chief Executive Steve Burke and Comcast Chief Executive Brian Roberts as they position their company on the leading edge of one of the most controversial issues in the entertainment business.

To fend off potential complaints that it is favoring its owner, Universal will offer other cable and Internet companies the chance to release "Tower Heist" via video-on-demand at the same time and on the same terms as Comcast.

-- Ben Fritz

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