The Prescience of John Sie
4:05 PM --
News outlets and bloggers are all weighing in on word from Bloomberg that In Demand LLC , a J.V. owned by Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Cox Communications Inc. , is talking with Sony Pictures Digital Inc. , Walt Disney Co. (NYSE: DIS), and Warner Bros. Entertainment Inc. about selling movies on cable video-on-demand (VoD) in the theater window for as much as $30 per title.
In Demand chief Bob Benya mentioned plans of a "premium" VoD service to the news outlet. Cable already has access to several movie titles in the DVD distribution window but, save for some independent films, hasn't been able to get its hands on more mainstream titles as they hit theaters.
While the move might help cable pump some life into VoD revenues, possibly (OK, very likely) upsetting theater owners, some think it's a horrible idea altogether.
But if one were to bring up this budding scenario to Starz Entertainment LLC founder John Sie, I suspect his response would be something like: "Well, duh!" (Or perhaps something smarter and much more colorful.)
Sie, a cable pioneer and visionary who also helped start up Showtime Networks Inc. and retired from Starz in 2004, all but predicted that big movies would premiere on cable and satellite TV when he addressed the Harvard Business School Media Conference in Boston a little more than six years ago.
And he said it would likely start to happen within the next 10 years, so his forecast stands a good chance of hitting its target. Sie, at the time, believed it just made economic sense to bring the theatrical window to cable.
"Last year (2003), the theatrical screenings of films generated about $5 billion in revenues for the studios, compared with $4 billion from cable and satellite," he said. "Clearly we are rapidly approaching the tipping point where it will make more sense for studios to release their films first on cable and satellite, and later in the theaters."
As the math goes, he suggested that if a major studio could debut a film at $19.95 ($10 less than what's apparently being discussed now) and attract 20 percent of HD homes (just 5 million US homes were HD-capable six years ago), "that would generate $200 million in revenue on the opening day, a blockbuster number in anybody's book."
He also argued that the new theatrical window on cable wouldn't destroy theaters since millions will still want to get out of the house and get the big-screen experience (does that go for Cinemuck, too?).
Of course, this was before the age of Facebook and Twitter, so we're not entirely sure if lots of people truly want to get out of the house anymore and interact in person. And this view was expressed before the latest 3D wave, which has had limited success in juicing box office numbers.
The other element to factor in that didn't appear to get addressed in Sie's earlier prediction is how a theatrical debut window on cable would positively or negatively affect the rest of the windowing value chain (DVD, premium channel distribution, streaming access on Netflix Inc. (Nasdaq: NFLX), network syndication, and so on).
I'd be curious to know if Sie's perspective has changed much since then, so we'll try to track him down and get a fresh view.
— Jeff Baumgartner, Site Editor, Light Reading Cable