Media Money with Julia Boorstin

Time Warner: Watch DVDs With VOD On Release Day

The Time Warner building.
Mark Lennihan

Today in Time Warner's post-earnings conference call CEO Jeff Bewkes announced some interesting news about the company's new strategy about distributing home video.

Warner Bros. will offer its DVD film titles on video-on-demand the same day they release the DVDs--what they call a "day and date" release in Hollywood.

Bewkes said on the call this morning that being the first studio to do this will help the studio "capture a disproportionate video on demand market share."

Time Warner tested "day and date" video-on-demand releases with Comcastand Time Warner Cable , and it worked. Of course margins are higher on Video-on-Demand (60 to 70 percent) because there are no physical DVDs to produce or ship to stores (where margins are 20 to 30 percent for physical rentals).

The big conflict up until now was angering retailers who want people coming into their stores, not pressing a button on their computer. Wal-Mart is the movie studios largest customer, and for years they've been very wary about doing anything that would hurt Wal-Mart's sales. But apparently in the trials, offering Video-on-Demand actually helped DVD sales a bit during that trial period.

Now don't think this means you can order next week's new DVD release from the couch. The details are still being worked out, which means it could take a while. And of course when one company makes a move like this, you just know all the other movie studios will follow. The question is, can Wal-Mart and the other big box retailers really be reassured that they won't lose business? Does this indicate that Wal-Mart doesn't have the kind of leverage it used to?

What I'm waiting for is day-and-date theatrical movie and video on demand releases. Some day, you'll be able to buy a movie from the comfort of your couch the very same day it's available in movie theaters. Early experiments haven't worked, but I think the model hasn't been perfected yet.

There are certain movies I'd happily pay three times as much to watch opening night from home and I think some people would pay more to watch from home sooner rather than later. But we'll see.

Questions?  Comments?