VHS, DVD, VOD and PPV make up movie marketing mix

Cable World, Nov 27, 2000 by Ray Richmond

Let's say you were the only person in the United States who couldn't make it to a theater to see The Sixth Sense during its blockbuster theatrical run. What kind of options would be available to catch this sort of major studio smash away from the local multiplex?

It starts, of course, with the VHS and possibly concurrent DVD video release of the film, moving swiftly into the eve-rexpanding universe of pay-per-view that now includes the first baby steps into VOD (video-on-demand). Concurrent with that, you might even have been able to download the title via the Internet -- though probably not quite legally. If you couldn't do that just yet, wait a week or two for the technology to evolve. Because it will.

After that, the subsequent window in a feature film's availability index is the world of premium cable. In the case of The Sixth Sense, it made its world television premiere on Starz! and Encore. However, most would agree there is something a bit misleading about hyping the first limited cable access to a movie that had already plastered the shelves of Blockbuster and enjoyed widespread PPV availability at $4 a pop in direct broadcast satellite and cable-addressable homes.

With the point-and-click film download possibilities of cyberspace and the pending AOL Time Warner merger looming just around the bend, and given the unavoidable cannibalization effect of a premium movie network environment whose ranks seem to Hale swell by the week, where does this leave the perceived value of studio theatrical film packages for the primary pay webs both today and in the future?

To be sure, the competition among HBO, Showtime and Starz Encore to snare feature package licensing agreements with such major studio players as Fox, Disney, Sony and MGM remains relatively fierce in spite of the clear change of direction in premium cable over the past decade, moving away from the dependence on features that had defined their existence from day one. Original programming has become the great brand-definer, enabling each network to carve out its own individualized identity.

Yet that still isn't the case at Starz Encore, which continues to buck the accelerating trend of making one's own series and movies. Instead, the Colorado-based cable conglomerate has busied itself during its short existence by vigorously going after studio package licensing windows.

It has resulted in Starz Encore making significant enough inroads on HBO and Showtime to see its combined networks swell their subscriber base to 26 million homes. That's second only to the combined 36 million subscribers of HBO/Cinemax.

The company now boasts exclusive deals with Disney and its enormously successful Hollywood, Touchstone and Miramax offshoots, as well as with Universal and New Line. Over this past summer, Starz Encore was also able to snatch the rich October Films stable of titles away from HBO. Moreover, beginning in January 2005, Sony (Columbia) and Sony Classics are scheduled to defect to Starz Encore, which again outbid Sony's present window-holder, HBO. (See accompanying premium cable/movie studio package list.)

What does it mean when a late-arriving such as Encore is able to leap aggressively into the fray and build itself into a contender for premium cable's theatrical title heavyweight?

"It means we have positioned ourselves perfectly within the theatrical category," says Mike Hale, SVP-marketing and business development for Starz Encore. "We have done nothing less than single-handedly rebuild the premium market for feature films. The reason we've followed that strategy is the research that told us new hit movies are what drive people to pay television."

This information is news to HBO, which has discovered that people are driven to premium cable in even greater numbers by original shows called The Sopranos, Sex and the City and Oz.

More importantly, those shows help define and foster brand recognition for HBO in a way big screen releases never could.

"We will never be associated with an individual theatrical title," says Eric Kessler, the network's EVP-marketing, "but we will forever be associated with Larry Sanders, Tracey Ullman, Dennis Miller, The Sopranos and Sex and the City. Those original programs ultimately help us define who it is we are."

What HBO turns out to be is, well, still 70% theatrical product in spite of that program identity.

As Steve Scheffer, HBO's president of film programming, video and enterprises, puts it, "We as a company still spend more on movies than we do any other single thing. Believe it or not, a lot of people still identify us as a movie network exclusively. This is a society that's in love with the movies, so it remains a supremely held value for our customers."

In fact, Schaffer adds, HBO holds the current rights to seven of the 12 theatricals that hauled in $100 million or more at the box office. They include Gladiator, The Perfect Storm, The Patriot and recent $100 million club member Meet the Parents.

"Acquired theatricals will always be a staple on our air," Schaffer says.