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Universal Says On-Demand Film Strategy Has Increased Audience

In 2020, in the midst of the pandemic, Universal Pictures and its sister company Focus Features warn Hollywood by scrapping the long-standing practice of giving theaters about 90 days of exclusivity to show new movies. rang. Instead, from then onwards, movies like Jurassic World: Dominion, Belfast, Cocaine Bear and M3gan will be available for digital rental or purchase at a higher price after a minimum of 17 days. I was. .

For a change-averse industry that still views the introduction of armrest cup holders in 1981 as a major innovation, the introduction of this service, known as premium video-on-demand, has caused massive hassle. Filmmakers and theater owners feared ticket buyers would be even more reluctant to leave their couches if the same movies were available on TVs and iPads just a few weeks later.

Most of Universal’s competitors stuck to the status quo.

But Universal’s willingness to experiment, challenging the “this is the way it’s always been done” mentality seems to have paid off. Universal has generated over $1 billion in premium VOD revenue in less than three years, but has seen little drop in ticket sales. In some cases, box office revenues have even increased when movies were made available for home viewing, a side effect of premium VOD advertising and word of mouth, Universal determined.

For example, in 2022, Universal made Minions: Rise of Gru available on premium VOD 33 days after its theatrical release. The film continued to play in theaters, surpassing 2015’s Minions in ticket sales 33 days after its release. According to data from analytics firm Comscore. Data from Universal’s Jurassic World and Fast and Furious series shows a similar effect.

Interesting: Donna Langley, chairman of Universal Filmed Entertainment Group, which includes Focus Features, said the company saw only a small drop in revenue from traditional VOD. The service will allow viewers to rent or buy movies at low prices after 90 days in theaters. He said premium products are an “additional and important new revenue stream that didn’t exist three years ago.”

In other words, Universal believes it has, to some extent, found an entirely new customer.

“It’s had a very positive effect on our business,” said Langley, adding that without it Universal probably would have had to make fewer films. Universal and Focus will release 26 movies in theaters this year, more than any other Hollywood studio.

Universal charges $25 for 48-hour movie rentals and $30 for purchases made during the premium VOD sales period. These prices may drop to $6 or $20 in later traditional sales periods.

Approximately 80 percent of premium VOD revenue goes to Universal, with most of the rest maintained by sales platforms such as iTunes and Google Play. (A small cut goes to theater chains like AMC Entertainment – grease to get them to agree to less exclusivity). Ticket sales are usually split 50/50 with the theater.

Premium VOD revenues are small compared to box office revenues. But it’s certainly not for nothing.

According to Universal, the “Super Mario Bros. Movie” has grossed more than $75 million in premium VOD since May 16. “Jurassic World: Dominion,” “The Croods: The New Age,” and “Thing 2” each raised over $50 million. According to Universal, 14 films, including period dramas “News of the World” starring Tom Hanks and “M3 Gun,” have each grossed more than $25 million.

Focus films such as Belfast and Mrs. Harris Goes to Paris have each generated about $5 million. For some art films, theatrical releases are of value primarily as a “marketing tool” for premium VOD rentals and purchases, said Julia Alexander, director of strategy at research firm Parrot Analytics.

Similar to DVD sales in the 1990s and 2000s, premium VOD is starting to provide a sort of financial safety net in case it misses out on box office. “Especially with the ‘The Focus’ title,” said Peter Levinson, chief distribution officer of Universal Filmed Entertainment Group. “Smaller movies for older moviegoers benefit greatly from it, though I wouldn’t say they depend on it.”

Flexibility is also important, Levinson said. In many cases, the studio decides he’s enough for a 17-day (three weekends) theatrical exclusivity. Longer periods may be permitted depending on ticket sales. “Movie Super Mario Bros.” will be screened exclusively in theaters for 41 days.

“We’ve also gotten to control decisions about when content is made available in homes based on what’s best for each individual film,” Levinson said. NBCUniversal announced in January that revenue from its studios (both film and TV) increased 23% year-over-year to $11.6 billion in 2022.

Every studio has strived to find creative ways to maximize movie profits in a rapidly changing business. Part of Universal’s challenge is guessing what impact premium VOD will have on streaming. If a movie becomes more widely sold or rented before it hits a streaming service (Peacock and Netflix for Universal), will it make the movie less valuable? Encourage people to sign up for the streaming service Do you have the tools?

“The impact on streaming isn’t as big as people expected, but it’s still worth noting,” Alexander said.

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