Lionsgate Examines Movies On Demand

Digital Revenue for 'Arbitrage' Opens New Ideas About Movie Windows

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DVD sales may be dwindling, but the movie industry has another vehicle to drive revenue -- digital rights.

Lionsgate CEO Jon Feltheimer touted video-on-demand during the CTAM conference taking place in Orlando, Fla., this week, as part of a general talk on the company's current business efforts.

He noted that the Richard Gere movie "Arbitrage" brought in $6 million on the platform in addition to $7 million in theaters. "It's on-demand revenue that would have been unimaginable for a specialty film just a few years ago," Mr. Feltheimer said.

The audience for on-demand movies is different than that of movie goers. Mr. Feltheimer found that 90% of "Arbitrage's" theatrical audience didn't know the movie was available on-demand and the majority that purchased the movie on VOD didn't know it was playing in theaters.

Digital rights were also an important factor in renegotiating the final three seasons of "Mad Men" -- a Lionsgate production -- with AMC, which airs the series. At nearly $5 million per episode, the company needed to find other ways to make "Mad Men" profitable, such as a syndication deal with Netflix.

Mr. Feltheimer stressed the importance of the industry working together and not competing in ways that makes jobs harder, citing obstacles like Dish Network's AutoHop technology, Aereo and recent retransmission battles between AMC and Dish Network and Viacom and DirecTV. "Narrow agendas can make it hard to work together and look at the big picture," he said. Mr. Feltheimer also petitioned for a better user interface. "You can have premium content, but it's no good if the viewer can't find it."

He used the example of the on-demand release of "What To Expect When You're Expecting," which underperformed. Since the movie starts with a "W" it appears near the end of the A-to-Z lineup and viewers don't scroll down all the way, Mr. Feltheimer explained. Epix continues to be a focus for Lionsgate, the video service the company owns in conjunction with Viacom and MGM. Mr. Feltheimer is focusing on digital distribution deals for the channel, which recently struck a deal with Amazon Prime and ended its exclusive partnership with Netflix.

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