Would You Pay $20K for Just-Released Movies?

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A proposed service is aiming 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, The Wall Street Journal reported Wednesday.

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.

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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.

"While this is a niche market, there is a chance for significant upside," said Adam Fogelson, chairman of Universal Pictures, which holds a minority stake in Prima. "And precisely because it is a niche market, that upside should come without harming any of our existing partners or revenue streams."

The proposed system represents a twist in an ongoing debate over the future of "release windows," the practice of staggering the distribution of movies through different channels to maximize profits in each. Traditionally, that has meant a movie hits theaters first, followed several months later by DVDs, video-on-demand, subscription-cable channels, and so on.

The windowing system has already come under pressure amid plummeting DVD sales and rising digital piracy. And consumers have grown accustomed to receiving entertainment content more readily than they used to.

One hot-button issue in that debate has been an early, "premium" video-on-demand window, in which cable subscribers could pay $30 or so to watch a movie a month or two after its debut in theaters.

Studios no longer make as much from DVDs. US consumer spending on DVDs is down about 20 percent in 2010 from 2009, to $7.8 billion, according to media-tracking firm IHS Screen Digest. DVD spending is down 43 percent from its 2006 peak of $13.7 billion.

Read more: http://online.wsj.com/article/SB10001424052748704250704576005801366116290.html