Time Warner has reaffirmed its commitment to rolling out a premium VOD service to allow consumers to watch movies at theatrical release in the comfort of their homes, beginning next summer. CEO Jeff Bewkes said during his company's third quarter earnings call that consumers will be charged $30 for the service, which will be available in HD and 3D.
The company isn't acting alone, either: Time Warner CFO John Martin told Goldman Sachs investors in September that Sony Pictures, Warner Bros. and Disney are working out a distribution plan via cable partners. The films would be made available in a partnership with In Demand, which is a joint VOD effort from Cox Communications, Comcast and Time Warner Cable, which will likely be joined by other platforms for Disney streams, including connected devices like the Xbox console and PlayStation 3.
The Warner Bros. studio will start tests later this year and is especially concerned with deciding how soon after a movie is released in theaters that it should be available in the home, Hollywood bible Variety reports. That's of particular concern to movie theater franchises, who don't want their clientele taken away by living room inertia and the recession-friendly $30 price tag, which is cheaper for a family of four than going out--much cheaper once $7 popcorn and the like is taken into account. Of course, if movies are made available too long after they start running in theaters, the $30 tariff becomes much less compelling.
Right now, Time Warner has negotiated a 28-day window after DVD release to release content to Red Box and Netflix for streaming. Bewkes said such windows are under constant scrutiny.
On the digital distribution front, Bewkes also revealed in the earnings call that Time Warner is working with other entertainment and technology companies to create a digital locker mechanism, which is a cloud-based service that would let consumers access movies and television on-demand, from any device. The primary obstacle for the digital locker vision, beyond formatting and compression concerns, lies in the content licensing realm.
Most content companies require a second tariff if the content is accessed over a different network than the original distribution network that was contracted for. Thus, Verizon FiOS customers can access on-demand video via an iPad within the home zone, but subscribers cannot take that content on the go over 3G.
"The idea is that you buy it once and you can use it in multiple places," Bewkes said, but noted that any service would need to balance any impact to Time Warner's bottom line with improving the consumer experience.
Meanwhile TV Everywhere, the multiscreen cable initiative that Bewkes has always backed, is gaining ground. Time Warner's TNT and TBS network programming is available online anywhere for Comcast and Dish Network subscribers. He said that Time Warner is seeing no video cord-cutting.
For the third quarter, Time Warner posted a 2% revenue increase, to $6.4 billion, with advertising revenues up by 9%. Even so, net profits fell 21% to $522 million (including a one-time $295-million debt-redemption loss).