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Directors slam $30 early rental for new movies

Fear option will harm theater revenue

- Associated Press - Sunday, April 24, 2011

Big-name Hollywood action-flick directors including James Cameron and Michael Bay have come out guns blazing against a plan by studios to allow people to rent new movies at home just two months after they debut in theaters, a move that cuts the wait in half for home film buffs.

The directors fear the option will hurt theater ticket sales and "could lead to the loss of hundreds of millions of dollars in annual revenue," they said in an open letter released last week. "Some theaters will close."

The first movie offered in the early window is Sony Corp.'s Columbia Pictures comedy "Just Go With It," starring Adam Sandler and Jennifer Aniston. Other movies from Time Warner Inc.'s Warner Bros., Comcast Corp.'s Universal and News Corp.'s 20th Century Fox are coming soon.

Starting Thursday, subscribers of DirecTV's satellite video service with a high-definition digital video recorder were able to rent those movies 60 days after they debuted in theaters for $30 and view them as many times as they like over a 48-hour period.

While that costs more than the $6 for a standard new rental or an $8 movie ticket, the offering could be attractive for families with small children or others who can't make it out but still want to see the latest films.

The average film now takes 132 days to make it to the home market, and the lesser wait "could irrevocably harm" the theater business, said the directors, who also included Kathryn Bigelow, Guillermo del Toro and Robert Zemeckis.

It's unclear how many people will jump at the new offer.

Michael Ratty, a 31-year-old public relations officer at a small Boston college, said he relishes going to movies on opening night with a crowd, and the two-month delay and stiff rental price deters him.

"As it stands now — at 60 days and $30 — I couldn't see myself partaking," he said.

Studios are striving to come up with new products to offset a steady decline in DVD sales, which have fallen 30 percent from their peak in 2006. Early releases target the thriving underground market for pirated films, and after a special waiver from the Federal Communications Commission last year, studios are able to temporarily disable output connections on the back of set-top boxes to prevent illegal copying.

They also want to minimize the expense of promoting a movie twice in periods that are four months apart.

DirecTV defended the new service, saying that earlier promotion on home video could even help box office sales.

"Renewed promotion around a movie while it is still in theaters may generate additional gate receipts," said Derek Chang, the satellite TV company's executive vice president of content strategy and development. "We think the fears are overblown."

Theater owners are opposed to the service, even though major movies make almost all their money in theaters in the first two months.

"Just Go With It," for example, already has made nearly $200 million at box offices worldwide since its release on Feb. 11. Last weekend, it took in just $270,000 from U.S. and Canadian audiences.

John Fithian, president of the National Association of Theatre Owners, said cinema operators already are under pressure to spend billions of dollars to upgrade their venues with digital projectors and 3-D capable screens to support a format that kept North American box office revenues from declining last year.

"Absolutely the wrong time to experiment with risky models is when that massive investment is being made," Mr. Fithian said.

Small art-house theaters may especially be at risk, said Stephen Gyllenhaal, an independent film director and the father of Hollywood stars Jake and Maggie Gyllenhaal.

If smaller ticket sales result in theater closures, independent filmmakers will lose an important venue to promote their films, he said.

"I'm interested in protecting those theaters," he said. "They are our direct line to an audience."

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