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Movie chains rattled by approach of premium video on demand service

Gary Dinges
gdinges@statesman.com

A high-stakes battle between movie studios and theater owners threatens to make it difficult for Central Texans to watch some of this summer's biggest Hollywood blockbusters.

AMC Theatres, Cinemark and Regal Cinemas have reportedly discussed not screening films from studios participating in a soon-to-launch premium video-on-demand service, according to the Los Angeles Times. Combined, the trio operate more than a dozen megaplexes in Central Texas with close to 200 screens.

For $30 per title, premium VOD will offer movie watchers a chance to see films at home 60 days after they hit theaters. Most releases aren't typically out on DVD or made available on pay-per-view — at a cost in the $4 to $6 range — until the four-month mark.

DirecTV will debut the service Thursday with "Just Go With It" and three other offerings. Cable operators aren't far behind.

Many theater owners say the plan could be ruinous.

"We believe the theatrical experience has a bright future, and we are aggressively investing to prepare for it," AMC, which operates the cinema at Barton Creek Square mall, said in a statement. "The p-VOD world as currently defined threatens that health. As such, we have notified studios of our expectations regarding economic arrangements on movies that go p-VOD. ... (A)s these windows shrink and threaten our industry's future, it is only logical to expect AMC to adapt its economic model."

Studios eyeing premium VOD are said to be 20th Century Fox, Sony, Universal and Warner Bros., according to published reports. Together, they're distributing some of summer's most-anticipated films, including "Harry Potter and the Deathly Hallows: Part 2" and "X-Men: First Class."

Disney and Paramount have not yet disclosed their plans.

Tim League, founder of Austin-based Alamo Drafthouse, says he has some minor concerns about premium VOD, but he's not as worried as the mega-chains and doesn't plan any sort of boycott. The National Association of Theatre Owners, which represents operators of some 30,000 screens nationwide, has also distanced itself from boycott talks.

"I think this is a bit of a knee-jerk reaction," League said. "Having a two-month window really accounts for almost all the box office traffic. If they do stage a boycott, it's going to make things better for us."

Alamo's unique offerings — Master Pancake Theater, sing-alongs and more — plus food and drinks will, he believes, keep folks coming. Having fewer screens, he says, helps as well.

"We have smaller facilities with a smaller seat count, which means we generally turn over product faster than the bigger theaters that have more screens to worry about," he said.

The expected $30 fee for premium VOD will likely be a turnoff for many, according to Allan Reagan, managing principal for the soon-to-open Flix Brewhouse in Round Rock.

"At the current proposed price of $30 per view available 60 days after the first-run opening, the effect should be negligible," he said. "But if the pricing curve of premium VOD follows the historical downward trajectory of video rentals, where titles are now priced at $1, there will be an impact."

While $30 — roughly the cost of three tickets at most theater chains — may seem steep, it could be an appealing option for families and large groups. That includes Emily Niño , a resident of Kyle with six children ages 7 to 16.

"Going to the movies is just too expensive," she said. "It's sad."

A recent family trip to the theater cost Niño almost $100 for matinee tickets and snacks at the concession stand, something she just can't afford to do on a regular basis. Premium VOD, she says, would be tempting.

"If I could do it that way, it would be great," she said. "We could go get some pizzas and just watch whenever we wanted."

gdinges@statesman.com; 912-5987