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Universal says on-demand movie strategy has grown audiences

In 2020, at the height of the pandemic, Universal Pictures and its art-house sibling, Focus Features, sound the alarm in hollywood By ending the long-standing practice of giving theaters a special window of about 90 days to run new films. Instead, his films, which have since included, “jurassic world: dominion,Belfast,cocaine bear” And “m3gan,” will be available for digital rental or purchase—at a higher cost—after at least 17 days.

For a change-fearing industry that still viewed the introduction of armrest cup holders as a major innovation in 1981, the introduction of the service, known as premium video on demand, caused widespread handshakes. inspired. Moviegoers and theater owners worried that ticket buyers would be more reluctant to leave their couches if they could watch the same movies a few weeks later on their TV sets or iPads.

Universal’s competitors mostly stuck to the status quo.

But Universal’s willingness to experiment — to challenge the “this is how we’ve always done it” thinking — seems to have paid off. Universal has generated more than $1 billion in premium VOD revenue in less than three years, while showing little or no drop in ticket sales. In some cases, box-office sales also increased when the films were available in homes, which Universal has determined is a side effect of premium VOD advertising and word of mouth.

Universal, for example, made “Minions: The Rise of GruAvailable for premium VOD in theaters in 2022 after 33 Days. The film stayed in theaters after selling more tickets than the 2015 release “Minions,” according to data from comScore, an analytics company. Data for Universal’s “Jurassic World” and “Fast and Furious” franchises shows a similar effect.

One interesting wrinkle: Donna Langley, president of Universal Filmed Entertainment Group, which includes Focus Features, said the company has seen only a small drop in revenue from traditional VOD, a service that allows viewers to rent or rent movies at a reduced price after 90 days in theaters. Provides for purchase. She said the premium offering was “an additive, significant new revenue source that didn’t exist three years ago.”

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

“It’s had an extremely positive impact on our business,” Ms. Langley said, “without it, Universal would likely have made fewer movies.” Universal and Focus will release 26 films in theaters this year, more than any other Hollywood studio.

Universal charges as much as $25 to rent a movie for 48 hours and as much as $30 to buy it during the Premium VOD sale period. Later, those prices could drop to $6 and $20 in a traditional sales window.

About 80 percent of premium VOD revenue goes to Universal, with sales platforms like iTunes and Google Play accounting for most of the rest. (Theater chains like AMC Entertainment get a small cut – grease them for agreeing to less exclusivity). Ticket sales are usually split 50-50 with the theaters.

Premium VOD revenue is small compared to box-office sales. But it’s definitely better than nothing.

,The Super Mario Bros. MovieUniversal has generated over $75 million in premium VOD revenue since May 16. “Jurassic World: Dominion,” “The Croods: A New Ageand “Sing 2” each grossed over $50 million. Universal said that 14 films, including “news of the world,” a period drama starring Tom Hanks, and “M3gan,” each made over $25 million.

Focus films, including “Belfast” and “mrs harris goes to parisEach earned about $5 million. For some art films, a theatrical release has become valuable as “a marketing tool” for premium VOD rentals and purchases, according to Julia Alexander, director of strategy at Parrot Analytics, a research firm.

Like DVD sales in the 1990s and 2000s, premium VOD has begun to provide a financial safety net of sorts on box-office misses. “Focus titles, especially,” said Peter Levinsohn, chief distribution officer for Universal Filmed Entertainment Group. “Those little movies that catered to the older movie watchers have become, I wouldn’t say dependent on, but they’ve benefited greatly.”

It’s also about flexibility, Mr. Levinsohn said. The studio often decides that 17 days (three weekends) of a theatrical exclusivity is sufficient. Sometimes, depending on ticket sales, it allows more time. “The Super Mario Bros. Movie” ran exclusively in theaters for 41 days.

“We’ve also taken back control over the decision of when to make our content available in the home based on the most optimal time for an individual movie,” said Mr. Levinsohn. NBCUniversal It said in January that revenue from its studios (both film and TV) was projected to rise 23 percent to $11.6 billion in 2022, compared with a year earlier.

Every studio is trying to find creative ways to maximize movie profits in a rapidly changing business. Part of Universal’s challenge is anticipating what kind of impact premium VOD might have on streaming: If movies are sold more widely before they arrive on a streaming service (in Universal’s case, on Peacock and Netflix). Or does that make movies less valuable if they’re rented as tools to encourage people to sign up for streaming services?

“The impact on streaming is not as large as people might have expected, but it is still notable,” Ms Alexander said.

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