Movies at Home, for $20,000

A proposed service aims to bring movies to homes the same day they hit theaters, a milestone that Hollywood has long anticipated with a mixture of fear and fascination.

But there's a catch: At the prices currently being discussed by Prima Cinema Inc., the start-up that is touting the service, those movies will reach only world's the best-appointed living rooms.

Prima plans to charge customers a one-time fee of about $20,000 for a digital-delivery system and an additional $500 per film. The Los Angeles-based company has around $5 million in backing from the venture arm of Best Buy Co. and General Electric Co.'s Universal Pictures, and hopes to start delivering movies to customers as soon as a year from now.

The steep price has been met with mixed reactions in Hollywood. Some executives question whether it will be possible to build a market beyond a few thousand users. (Prima says it plans to install its systems in 250,000 homes within five years.) Others say the high price would create an exclusive, super-premium niche market without cutting into existing sources of revenue.

Prima isn't the only company trying to bring movies to homes faster. Time Warner Inc., which owns Warner Bros., has said it expects to test an early-release offering with a new film as soon as next year. Under the program, consumers would pay roughly $20 to $30 to watch digital copies of movies within a month or two of their release in theaters.

For the complete article, please click here.

Time Warner tests "TV Everywhere" plan

Cable network giant, Time Warner has a plan to distribute pay TV programming via web sites like Hulu, Yahoo TV, and YouTube. Whether through a mobile device or a computer, viewers will just have to prove they already subscribe to pay TV (cable, satellite or telco's TV offerings).

The "TV Everywhere" plan enables a cable subscriber (or person from that household) to have online access to the programming included in their current cable TV bundle. Full details are still being worked out although the goal is to prevent households from cancelling their cable TV subscriptions. The number of people per account is undetermined. There might also be a web-only option for non-cable TV subscribers.

Regardless of service provider (DirectTV, Time Warner Cable, Verizon, etc.), one would be able to watch content from networks like HBO or TNT. We will also have to wait to see if other cable networks adopt this plan too. However, Viacom and NBCU are moving forward with free cable distribution online because it helps boost awareness and ratings for their shows. Although, Time Warner argues that the trend of consumers ditching pay TV for free online content is an important and increasing issue.

To read more about this topic, please read the Advertising Age's article "TV Everywhere -- As Long As You Pay for It."

Will online sites take over pay TV?

At CONNECTIONS™, we often have to address questions regarding the direction of different digital living markets, the trends, opportunities, and potential pitfalls. Parks Associates research, conducted throughout the year and surveying tens of thousands of consumers, forms the foundation for these discussions. Our analysts combine their industry and consumer knowledge with our speakers’ market experience to provide attendees with a comprehensive understanding of the new opportunities.

Digital entertainment is one area that will get plenty of attention at CONNECTIONS™ in 2009. The past two years have witnessed tremendous growth in online video viewing, particularly for premium content such as television shows. In a 2008 study, Parks Associates found that more than 26 million U.S. adults with home broadband access watch TV shows on the Internet through services such as Hulu, Joost, Veoh Networks, or network portals.

So, CONNECTIONS™ will tackle the key question – will consumers begin to see their pay TV services as expendable, since so much television content is available online free of charge (and with many fewer advertisements)? Today, the number of “cable cutters” is negligible. TV 2.0: The Consumer Perspective found that 0.6% of U.S. broadband households don't pay for TV service but are watching or downloading TV shows over the Internet. That would be around 400,000 households.

Despite the popularity of Internet video, cable VoD services retain a tremendous advantage in terms of quality-of-service and the quantity of high-definition offerings. In sizing the potential market for both broadband video and pay-TV VoD services for the next five years, we see significant revenues coming to the operators for these transactional services.

These calculations do not take into account revenues from ad-supported free VoD content, though. To succeed in the free VoD space, operators will have to fine-tune their content management systems and advertising relationships in order to capitalize on nonlinear advertising revenues. Cable operators will likely follow a model similar to the Comcast Fancast development by providing a broadband VoD service that can spur advertising sales and ties back to the existing digital cable service through applications such as remote DVR programming and personal online content features. Cable operators that can develop seamless user experiences between the broadband and cable TV worlds will have an edge on their competition.

Finally, Parks Associates’ data indicate that even among active Internet video users, their likelihood of cancelling pay TV services is no higher than for all respondents. Access to live news, sports, and other exclusive programming, as well as more content in on-demand and high-definition formats, will continue to attract consumers to pay TV services. Parks Associates will track these trends throughout the year, both U.S. and worldwide, and CONNECTIONS™ sessions will feature the latest data and expert analysis on these figures and how they might change over time.