Movie Theaters Make Empty Threat to Not Show Blockbuster Films in Response to Premium VOD [UPDATED]

     April 14, 2011

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Theater owners are none-too-pleased about the decision from Warner Bros., Sony, 20th Century Fox, and Universal to launch a premium VOD service this month.  Exhibitors believe that the service, which will rent movies for thirty dollars 60 days after the film has hit theaters, will significantly cut into theater revenues.  Earlier this month, we learned that Regal Cinemas was making the convincing threat to cut trailers and pull posters for the four studios’ big summer movies.  It was a proportional response designed to let the studios know that the theaters were finally going to fight back–not in anyway that actually benefits the average moviegoer–but in a way that would let the studios know that theaters weren’t going to take this potential revenue cut lying down.

And now that believable threat has been followed by an unbelievable threat: not showing the blockbuster movies of the studios involved in the premium VOD service.  Hit the jump for more. [Updated with a comment from NATO and a denial to the claim that it has instructed theaters not to show movies]

movie-theater-01Speaking to The Guardian, National Association of Theatre Owners (or “NATO” to avoid confusion with any other organization with that acronym) CEO John Fithian said that cinemas “were prepared not to screen blockbusters made by studios involved in the premium VoD plan.”  If NATO actually followed through on this threat (they won’t and I’ll explain why in a moment), here are the movies you wouldn’t see in theaters this summer: Bridesmaids, Priest, The Hangover Part II, X-Men: First Class, Bad Teacher, Green Lantern, Mr. Popper’s Penguins, Larry Crowne, Horrible Bosses, The Zookeeper, Harry Potter and the Deathly Hallows – Part 2, Friends with Benefits, Cowboys & Aliens, Crazy Stupid Love, The Smurfs, The Change-Up, Rise of the Planet of the Apes, 30 Minutes or Less, and Final Destination 5.

I listed all of those movies to make the point that while Disney and Paramount would likely flourish under the arrangement, NATO expects the studios to believe that they’ll blow up the entire building and spell their own doom in order to retaliate against a premium VOD service that is already in place.

So let’s follow out this plan to its logical conclusion: None of these movies are shown in theaters, but they’ll still be shown on premium VOD and probably for the same price.  People who can’t wait to see these movies will pay $30 and those that can will wait a couple months and buy or rent the DVD or Blu-ray.  The studios make huge gobs of direct cash that they don’t have to share with theaters, all the movie theaters go under and premium VOD is legitimized.

But yeah NATO, you go ahead with refusing all of those blockbusters and all the revenue they’ll bring in when people come to the theater and purchase overpriced concessions.  I’m sure the studios will cower, cancel or re-write their premium VOD deal, and everything will go back to the way it was.

Update: NATO has issued a press release stating that The Guardian’s story is false and that NATO will not instruct individual theaters how to respond to premium VOD:

Washington, D.C. (April 14, 2011)—The National Association of Theatre Owners does not and could not encourage its members to engage in any boycotts of any movies distributed by any company. Recent press reports to the contrary are completely false.

In an article published on April 13 in The Guardian, it was suggested that NATO indicated that cinema operators were prepared not to screen movies, and specifically referenced the coming Harry Potter film. No one from The Guardian contacted NATO before the original article was published. At our request, The Guardian did later change the article to remove the erroneous reference to the Harry Potter film.

Then later on April 13, the blog “Business Insider” entitled “Harry Potter 8 Dropped From Theaters?” suggested that NATO “is threatening to drop some of this summer’s biggest blockbusters” and that “screens under NATO are threatening to boycott upcoming studio releases, starting with Warner Bros. sure to be box office-gargantuan Harry Potter and the Deathly Hallows – Part 2.” Again, these stories, and others that have followed, are completely false and no one from the organizations responsible for the stories contacted anyone at NATO.

NATO has often articulated our concerns about the possible release of “premium VOD” movies in an early window. Our association issued statements on June 16, 2010 and again on March 31, 2011 regarding those concerns. But as our 2010 statement made clear, “individual theater companies must and will make decisions about release window changes in their own company’s interest.” NATO cannot and will not make those decisions for them.

John Fithian
President & CEO
NATO

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