Universal Caves, Abandons ‘Tower Heist’ VOD Scheme

Studio kills plans to release action comedy in select markets three weeks after its theatrical debut

Universal cried uncle on Wednesday. 

Facing a broad exhibitor boycott, the studio abandoned  its controversial plan to release "Tower Heist" on video-on-demand a mere three weeks after it hits theaters. 

"Universal continues to believe that the theater experience and a PVOD window are business models that can coincide and thrive and we look forward to working with our partners in exhibition to find a way to experiment in this area in the future," the studio said in a statement.

Even though the trial was limited to Comcast subscribers in Portland, Ore. and Atlanta, major exhibitors such as Cinemark and National Amusements said that they would not screen the film if the studio went forward with its plans. Decision came swiftly after National Amusements said it would join the boycott. 

Also read: National Amusements Joins 'Tower Heist' Boycott

Universal planned to charge consumers $60 to rent the movie. Tellingly, Universal only said it would "delay" its premium VOD experiment, not discard it, leaving the door open for further trials and, perhaps, more standoffs with theater chains. 

Studios may tread more carefully on future early VOD releases in the the wake of this aborted scheme.

"Tower Heist" boycotters represented more than 12 percent of the estimated 39,000 screens domestically, according to Bloomberg.

If Universal had gone forward with its trial, the growing theater chain revolt would have shaved millions of dollars off the big-budget film's gross. Studios believe early VOD has enormous promise, and Universal and its parent company Comcast have been among its biggest industry boosters, but the stakes were just too high. 

Also read: NATO to Hollywood: Give Us DirecTV's Premium VOD Numbers

The trade group, the National Assn. of Theater Owners, which has been working behind the scenes throughout the week to hammer out some kind of a deal, hailed Universal's decision. 

“NATO would like to thank Universal for responding to various theater owners' concerns and cancelling the PVOD test it was contemplating," NATO president and CEO John Fithian said in a statement.

Even though Fithian said that Universal had done a good job of engaging with theater owners about their plans for "Tower Heist," he said that they early release date was something exhibitors could not endorse. He did leave the room open for some flexibility in the future.  

"NATO recognizes that studios need to find new models and opportunities in the home market, and looks forward to distributors and exhibitors working together for their mutual benefit," Fithian added. 

Tensions between theater owners and studios boiled over during the "Tower Heist" standoff, but they had been simmering for some time over efforts to move the home entertainment debuts of movies forward.

Studios see VOD as one of the best opportunities to replace the revenue lost from the cratering DVD market and want to add extra incentives, such as offering films while they are still in theaters, in order to increase profits. 

After news broke last spring that four major studios including Universal would debut over a dozen films a mere two months after they hit theaters on DirecTV, theater owners threatened to hit back at studios, but for the most part failed to make good on their ultimatums.

At the time, they claimed that early VOD debuts of movies like “Just Go With It” and “Unknown” would cannibalize ticket sales.

NATO and its members have shown a greater tolerance for quasi early VOD experiments by the likes of Summit and Lionsgate that move the home entertainment debuts of films such as "Source Code" and "Abduction" up, but respect a 90-day window that theater owners say is important to their profits. 

"Tower Heist" stars Ben Stiller and Eddie Murphy and is directed by Brett Ratner, a past critic of  early VOD efforts. It hits theaters on Nov. 4.