Analysts Differ On Whether Disney Is Next To Embrace 28-Day Windows
A reordering of home entertainment release windows seems to be a foregone conclusion for BTIG Research analyst Richard Greenfield.
The analyst has long urged studios to adopt a sequential release window scheme that begins with high-margin disc sales and ends with offering movies via low-margin rental services Netflix and Redbox. The scheme, Greenfield argues, is crucial for studios to maximize profitability amidst DVD sales declines.
To date, studios such as Disney and Paramount haven’t seen the market Greenfield’s way. But in his May 17 blog post (subscription required), Greenfield muses that Disney and Paramount would soon join the ranks of Fox, Universal, and in withholding new-release titles from rental services for 28 days.
Disney, Greenfield notes, has its “Alice in Wonderland” DVD and Blu-ray hitting store shelves June 1, and presumably would want a window of sell-through exclusivity for the top-grossing film. Paramount, meanwhile, has an option to end its current windowless terms with Redbox on June 30.
Other analysts dispute whether Disney is on the verge of joining the pro-window camp – and whether the margin considerations make the adoption of a new distribution order inevitable for all studios.
“I’m not sure why ‘Alice in Wonderland’ would prompt Disney to go from their informal agreement with Redbox or Netflix to one with a window,” Eric Wold of Merriman Curhan Ford tells . “I haven’t heard any rumblings and assume the status quo for now.”
If Disney does grant availability in kiosks and on Netflix for “Alice” day-and-date with the film’s DVD and Blu-ray release, it could serve as a high-profile test of the impact that value-oriented rental services have on disc sales.
Netflix is busy casting itself as an ally to studios in their efforts to restructure their business “We’re trying to help studios create a sell-through and premium rental market window,” Netflix chief Reed Hastings told a JP Morgan investor conference this weekend (via Business Insider). Studios, in return, are granting Netflix streaming rights to more movies and TV shows.
There are early indications that Netflix’s 28-day deals with studios are win-win. Fox sold nearly 20 million DVD and Blu-ray copies of “Avatar” in the first three weeks of the disc’s exclusive sell-through window. Netflix, meanwhile, reports accelerated subscriber growth thanks to its larger streaming library.
But analyst Greenfield views Netflix as a continuing drain on studio profitability, and urges pro-window studios to be more aggressive in marketing the benefits of premium video-on-demand over cable.
The chief benefit to studios and cable operators’ new pay-per-view VOD offering is immediate access to new releases. A new round of TV ads for the “Movies On Demand” service communicates as much with a voiceover line, “No waiting for the mail.”
But as Greenfield points out, the line has been pulled from some of the spots — leaving the analyst to wonder whether studio agreements with Netflix preclude the VOD initiative from being “too mean/harsh in promotional materials.”