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Study: Home Entertainment Screening Room System Won’t Expand Moviegoing Demand

Study by MarketCast says consumer appetite for Sean Parker and Prem Akkaraju’s new VOD service is among those already going to the movies

Interest in a new service to stream movies at home on the same date they appear in theaters is highest among those already going to the cineplex, according to a new study. The research is likely to add weight to opponents of the system who argue that it will undermine the theatrical exhibition business.

One in four consumers surveyed told the research firm MarketCast that that they would “definitely pay to use” a service that allowed them to watch first-run movies at home on the same date as their release in movie theaters, the concept behind Sean Parker and Prem Akkaraju’s new VOD service. 

But one in three people said that they would “definitely not” pay to use the service, citing the cost and the requirement for added hardware in their homes. More worrisome, interest in the service was concentrated among the highest avidity moviegoer segments and among parents of younger children.

This means there is little to suggest that the service would add to overall demand for first-run movies, as Screening Room proponents suggest.

Global entertainment research firm MarketCast has released the results of a study that gauged consumer interest in Sean Parker and Prem Akkaraju’s proposed Screening Room service, which has caused controversy throughout Hollywood.

MarketCast based the findings on a new study conducted in late March among 1,200 American entertainment consumers ages 18-64 that explored how moviegoing and home entertainment decision-making might be impacted by the availability of a new premium VOD service for streaming first-run movies to the home for $50 per movie via a new set-top box costing $150.

“This issue is not cut and dry, it’s actually fairly complicated,” MarketCast VP Chris Rethore, who co-authored the study, said. “Interest in a new premium VOD service was concentrated among those who are the most active in the category. These consumers — especially parents — are more aware of the fully-loaded costs of moviegoing and have additional incentives to want early access to some films at home. But these consumers are also hugely important to the economics of the current theatrical model, and most see this service as displacing existing moviegoing behavior — not expanding their paid consumption of entertainment content overall.”

Among the key findings of the study are:

Home Day-and-Date Release Service Not Seen as a Stand-In for In-Theater Experience …

  • Half of consumers “strongly agree” that they like the experience of going to the movie theater, and that the new service will not be able to replace that.
  • This finding held whether or not the film in question was a big budget action-genre title (only 21 percent would choose to watch through a premium VOD service) or a less spectacle driven arthouse film (20 percent).

… But Study Indicates That New Service Could Siphon Some Moviegoers from Theaters

  • The study looked at interest in paying to see a variety of actual upcoming titles, whether in a theater, at home in the “regular” home entertainment window, or day-and-date with the theatrical release for $50 using the new premium VOD service.
  • One-quarter of consumers who expressed interest in paying to see each movie in the study (either in a theater or by renting/buying in the traditional home entertainment window) migrated to the $50 Day-and-Date Premium VOD service when that choice was introduced–with the vast majority of demand siphoning from the theatrical audience.
  • The overall pie, however, did not expand, with overall interest for each movie the same or lower upon introduction of the new VOD choice at $50.

Cost Looms as a Big Barrier to Consumer Interest

  • Predictably, interest in the new $50 premium VOD service is strongest (at 53 percent “definite” interest) among consumers who perceive the cost of their average trip to the movies to exceed $50–but fewer than 1 in 4 consumers peg their moviegoing at such a high price.
  • Seven in 10 moviegoers estimate their average trip to the multiplex at $40 or below (inclusive of tickets, concessions, transportation/parking, and/or babysitting), and as a result, fail to embrace the value of a $50 service.
  • On average, interested consumers indicate that they would only spend a maximum of $35 per title to see a new movie at home via this service.

Parents See Far Greater Value in Paying For and Using New Service than do Non-Parents

  • More than 40 percent of parents of kids under age 12 express “definite interest in paying to use” the new service, compared to only 15 percent of non-parents, in part because they estimate their total spend on a single visit to the theater at a much higher level ($49 per visit vs. $28 for non-parents).
  • Half of Parents ‘strongly agree’ that this new service would be a great way to entertain their kids, and 6 in 10 agree that this service would be a great way to stay current on films they might otherwise miss.
  • Other groups who over-index for interest in the service include people with bigger TVs, those with higher household income, early adopters, and technophiles.

Set-Top Hardware Requirement Turns Off Most Consumers

  • Nearly 8 in 10 consumers express negativity toward the idea of needing to have another piece of equipment in their home, and even among those consumers interested in the service, more than one-third say that even if it were free, they would not want to have another set-top device in their home.