Although the prices and release speeds of theatre-to-DVD movies seem to change mildly every year, as consumers, we've gotten pretty comfortable with the new millennium mechanism of delivering movies to consumers.
First, you have your movie theatres, where the blockbusters and more successful indies come to live for a few months (at $8 to $12 a ticket), before being passed off to the cut-rate theatres (at $2 or $3 a pop), then on to Netflix, iTunes, On Demand and DirectTV ($4.99 for 24 hours). Eventually, the movies pass to Starz or HBO or some other premium channel, and then on to network and basic cable for free.
But DirectTV is looking to shake up our cushy movie delivery world and change our expectations -- and maybe how we watch movies, too. With Adam Sandler's new movie, Just Go With It, DirectTV will offer its viewers the chance to watch it starting today -- just two months and 10 days after its release and while it's still in first-run theatres -- for $30.For that price, you get the movie for 48 hours of at-home debauchery, free of the shackles of unhealthy movie popcorn and ultra-pricey Milk Duds, for as many friends and family as you can fit in your "home movie theater."
In an interview with National Public Radio, Kim Masters of the Hollywood Reporter says, "There are some directors definitely who are concerned about, A, the theater-going experience, and B, what this will do to the theater business if, in fact, consumers start to, you know, rely on those fancy home theaters they've put in their houses."
The idea, according to Masters, is that studios are working to overcome the lost revenue from slipping DVD sales. With movies easier and easier to get from a variety of direct-to-a-box sources, we're less likely to go out and buy a "hard copy" of a film, especially if we haven't seen it yet. The theory studios seem to be operating under is that we all have these huge plasma screens and sound systems, so surely when we estimate the cost of a night at the movies (tickets, popcorn, sodas, gas, maybe a baby sitter, the uncountable price of sticky floors and overcompensating air conditioning), we'll realize that simply inviting a few friends over will make $30 seem like a bargain.
It's true: $30 is probably less than most families, even most couples, spend for a night out at the movies. That's why it might be easy to click "buy" on the remote control menu and go for it. Just three people, after all, at prevailing first-release ticket prices is all it takes to break even.
But it's a bad deal in my opinion. Most families only go to movie theatres four or five times a year (the number of tickets sold per person in the U.S. and Canada last year was just 4.1), and ticket sales are down 20% in 2011 so far. Most of my friends with young kids admit it's rare to go to the movies more than once a year, so much of the studios' target market may actually only be spending $40 or $50 annually on this sort of consumption.
But for a lot of people, pressing a button on a remote is so easy -- and the actual pain of paying is delayed by as much as 45 days as you wait for your cable bill and then a few more weeks before it's due -- that you could end up making your decision based on all the wrong factors. "Oh, honey, we would have gone out to see this, right?" you'll say to your significant other, knowing deep down that your babysitter is buried in finals and you probably would have stayed home to watch the episodes of Glee you TIVO-ed all month. (I've got your number, haven't I?)
If it catches on with the other cable providers, this could be a tidy source of revenue for studios, and a great way to rationalize spending for consumers, who really could do without much more rationalization.
Introduction to Value Investing
Are you the next Warren Buffett?View Course »