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Studios vs. movie theater owners

A feud was sparked when Universal, Warner Bros., and two others announced they would soon screen movies on demand 60 days after their release

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Talk about a party foul. When movie-theater owners and Hollywood studio execs gathered in Vegas last month for the exhibition industry’s annual convention, CinemaCon, no one imagined this much-needed pep rally for the slumping movie business would end in a brawl. But on the last day of the confab, word leaked that four studios — Universal, Warner Bros., 20th Century Fox, and Sony — were finalizing a deal with DirecTV to screen certain movies on demand 60 days after their release. The news sparked a bitter feud between studios and exhibitors, with several theater chains vowing to ban trailers for those studios’ films.

From the exhibitors’ perspective, the plan to offer ”premium VOD” — enabling viewers to watch certain movies at home earlier than usual for $30 — represents a direct assault on their business. ”There’s a basic principle here that threatens moviegoing,” says one theater-industry insider. (Right now, movies are generally available on demand and DVD three to four months after release.) From the studios’ perspective, the threat has been overblown, especially since only underperforming films would be eligible. ”We won’t do anything that would hurt the theater business,” says a studio exec. ”That would be insane.”

It remains to be seen how the battle will unfold, but theater owners have already won at least two powerful allies: Directors James Cameron and Todd Phillips each voiced opposition to the new scheme at CinemaCon. ”I’m on your side with this video-on-demand business,” Phillips said to raucous applause. ”It’s the theater that brings the experience.”