Disney, Sony Testing Video On Demand Model for Movies Still in Theaters
June 24, 2013 12:49 PM
The testing is only taking place in South Korea
Don't feel like driving out to the theater to catch the latest flick? You may not have to if a new video on demand (VOD) model proves successful.
Walt Disney Co. and Sony Pictures Entertainment have started testing a new business model in South Korea, where movies still in theaters are also made available via VOD. The model, called "super-premium VOD," allows South Korean citizens to rent the new films at home from a cable, satellite or Internet provider.
Why South Korea? Mainly because U.S. cinema companies like AMC Entertainment Holdings Inc. and Regal Entertainment Group require a 90-day window after a movie is released in theaters before it can go to home entertainment.
The new model by Disney and Sony brings
to the home only 3-4 weeks after they debut in theaters.
South Korea is an ideal location to launch the VOD testing because the country already has many local productions offering similar VOD options.
In addition, DVD sales/rentals in South Korea dwindled to only $30.5 million in 2012, and even shut down DVD sales offices. This means that studios can test VOD models without having to worry about undercutting sales from DVDs or rentals.
and Sony haven't wasted any time. Disney's "Wreck-it Ralph" came out five weeks after it launched in theaters while "Brave" was released after only four weeks.
As far as Sony goes, "Django Unchained" was available just three weeks after debuting in theaters.
The average pricing for super-premium VOD is about $9 USD, compared with about $3.50 for normal rentals in South Korea.
According to Chun Yoon-soo, director of business development for Korea's largest VOD provider HomeChoice, total revenue from the super-premium VOD films in South Korea was 30 percent higher than for "comparable films."
However, those in the movie industry worry that the model's testing results in South Korea may not be relevant to the U.S. since VOD is bigger in South Korea and piracy is widespread.
Other Hollywood studios may launch similar services depending on the success of Disney and Sony's South Korean venture.
The Wall Street Journal
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
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