That doesn't even include the services already coming into consumers' homes thanks to their cable and Internet providers. Video-on-demand service has grown into a $1.3 billion a year industry for Comcast, Time Warner Cable, Cablevision and other providers, according to NPD Group's VideoWatch VOD tracking service. Internet-based video-on-demand service from Amazon, Apple's iTunes and Wal-Mart's partnership with Vudu kicked in another $204 million, but that's still small change compared with what the studios have in mind.
As recently as November 2010, Time Warner CEO Jeff Bewkes was batting around the idea of debuting first-run movies on demand for $30 to $50 a pop. Independent studios did him one better last year, when distributor Roadside Attractions released the Kevin Spacey financial thriller Margin Call in theaters and VOD simultaneously last October. The film made $11.5 million against a $3.5 million budget, with $5 million of that take coming from on-demand purchases alone. Not only is Margin Call writer and director J.C. Chandon up for an Academy Award for Best Screenplay, but his film nearly doubled its audience just by letting folks watch it from their couches.
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"What a lot of Hollywood directors say about movie theaters being like church is true to a degree, and you want that sometimes, but in a way they're talking to themselves," Farr says. "I don't care. If I could have seen 'The Tree of Life' on a Blu-ray instead of at a movie theater 20 blocks away, that would be an easy decision to me."
And why shouldn't they? Nobody's trying to make them watch TV retreads of The Lion King, Beauty and the Beast, Titanic, Star Wars Episode I: The Phantom Menace and other "new" releases that consumers have been watching comfortably at home for more than a decade. Nobody's talking over the unpausable movie three rows in front of them. Nobody's charging them $6 for popcorn on their couch. Most importantly, nobody's trying to jack up the price of the experience by inflating ticket prices to $18 for a questionable 3-D conversion.
"The reason Hollywood is able to hide how badly they're doing with sales and attendance is because it raises the prices of tickets," Farr says. "The price of one 3-D ticket is $18, and you could buy a Blu-ray for that -- or a few Netflix rentals -- before popcorn, soda, parking and a baby sitter."
Instead, the cost of watching movies at home has gone down. The cost of an LCD television cratered 24% during the recession in 2009 and never recovered, according to NPD Group's TV research arm DisplaySearch. That cost fell another 6% last year and is forecast to fall another 6% this year before dropping 7% to 8% per year through 2015. During the 2011 holiday season, for instance, the average price of 40- and 42-inch LCD televisions fell below $500 for the first time. Even 40- to 47-inch 3-D LCD televisions dropped below $1,000, though enthusiasm for that particular feature got a bit fuzzier after Avatar and amid second-rate product such as Mars Needs Moms.