http://www.videobusiness.com/article/CA6696995.html
SEPT. 15 | DIGITAL: News Corp. chairman and CEO Rupert Murdoch touted the success of online video site Hulu.com today, saying the company is considering subscription and pay-per-view options for the service. Speaking at the Goldman Sachs Communacopia XVIII Conference today, Murdoch also expressed concern about Redbox's $1 a night rentals.
Murdoch said he's "very proud" of Hulu, the online-video site News Corp. launched with NBC Universal in early 2008, and that the site would consider subscription and pay-per-view services to bring in more sales. Walt Disney Studios also is a partner in Hulu.
Murdoch said video-on-demand is growing in popularity and likely to maintain its prices.
"People sitting in their homes are very happy to pay $3.99 or $4.99" for VOD, Murdoch said. "We don't see that price moving."
Still, VOD growth is not occurring quickly enough to offset DVD sales declines, which are far more substantial for what Murdoch calls "B-level" films than for better-selling titles.
Murdoch also said Redbox kiosks' $1 rentals don't make money for either the studios or the kiosk operator but that the format will continue to grow because of its customer convenience. Redbox only makes money when customers pay $2 to $3 after keeping DVDs for more than one night, Murdoch said.
Redbox has doubled its units to about 18,000 over the past year by reaching agreements with retailers such as Walmart, Walgreens and Kroger, allowing Redbox parent Coinstar to double its second-quarter earnings from a year earlier.
"Do we like Redbox coming in at a dollar? No, we don't," said Murdoch. "But it's not going away. If Walmart were to throw them out, Walmart would put their own box in."
Walt Disney Studios chief financial officer Thomas Staggs appeared to take a more conciliatory tone when speaking about Redbox at the conference later in the day.
"What you're really talking about is intelligent windowing and intelligent pricingit'll evolve over time," Staggs said. "I have a hard time believing it's a bad thing, [but] I'm not anxious to betray the sell-through transaction for a rental transaction."
Like Viacom's Paramount unit, Sony Pictures Home Entertainment and Lionsgate, Disney sells its new release titles to Redbox on street date, albeit without a formal agreement, which the other studios have signed. Disney has an agreement with Redbox, but it regards limiting used DVD sales of the studio's titles. Pali Research analyst Richard Greenfield said last week, however, that could change with the release of Disney's Up, arriving Nov. 10.
News Corp.'s 20th Century Fox Home Entertainment, however, is among studios being sued by Redbox for trying to impose a delayed DVD release window on movie rental kiosks until at least four weeks after the regular street date as part of an effort to prevent kiosk rentals from eating away at DVD sell-through.
Fox, which directed wholesalers to not sell its new titles to any vending operator until 30 days after street date beginning with the Oct. 27 release of its $151 million-grossing Ice Age: Dawn of the Dinosaurs, was sued last month by Redbox. The kiosk operator also has claims against Universal Studios Home Entertainment and Warner Home Video for similar reasons.
News Corp. said last month that its fiscal 2009 operating profit for its filmed entertainment unit dropped 32% after theatrical and DVD releases failed to keep pace with year-earlier titles such as The Simpsons Movie and Live Free or Die Hard.