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Cable Technology Feature Article

March 04, 2011

DirecTV Close to Inking Deal with Hollywood to Offer Early VOD Movies

By Beecher Tuttle, TMCnet Contributor

In an attempt to compensate for the continual decline of DVD sales and rentals, Hollywood has been toying with the idea of offering consumers early video-on-demand movies at a premium price – a move that would certainly enrage theater owners.

Although the concept has been discussed for months now, agreements between Hollywood studios and distributors have yet to be inked. That time may come soon, however, as the Los Angeles Times has reported that DirecTV (News - Alert) is in "advanced talks" with Hollywood studios on a deal that would enable the satellite provider to offer VOD movies only 60 days after they hit theaters.

The "premium" features would cost as much as $30 for a one-night rental, but would allow consumers to view the film at least a month before it comes out on DVD.

People familiar with the matter told the Times that DirecTV would like to launch the offering by the end of June with a number of studies, including 20th Century Fox, Sony Pictures, Warner Bros, and possibly Walt Disney (News - Alert) Pictures.

Just last week, DirecTV CEO Michael White teased the idea by telling a group of analysts that "perhaps we'll try something that's four to six weeks from theatrical release."

While the agreement has yet to be consummated, theater owners have already come out to protest the concept, which would conceivably cut into their own revenues. Regal Entertainment Group, the largest U.S. movie theater chain, said yesterday that they oppose the idea, and told Bloomberg (News - Alert) News that it won't screen movies that studios plan to hand over to TV distributors four to six weeks after their release.

Gerry Lopez, chief executive officer at theater chain AMC Entertainment, told the Los Angeles Times that his theaters will also refrain from screening movies that are released in such a manner.

"We understand the problem that studios are facing when DVD sales are nosediving, but we don’t see premium VOD as any kind of solution," he said.

The Times reported that Comcast (News - Alert) and other cable operators are also having discussions about launching a premium VOD product, but DirecTV is closest to inking a deal.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf