Sony's Secret New Plan To Shake Up The Movie Business


It is early days yet, but recent developments appear to indicate Sony may be developing its own platform for film distribution — to TVs, not movie theatres or DVD retailers.

The latest: Reports emerged today that Sony would launch 3D TVs next year in a bid to boost flat TV sales.

The 3D TVs would make a nice addition to Sony’s electronics offerings, but the company could also be positioning itself and its proposed new distribution platform to participate in a growing trend in Hollywood: Producing movies in 3D.  Many theatres are equipping their screens with 3D-capable technology just as 3D movies gross impressive box office receipts in theatres — driven by viewers’ appetite for premium 3D tickets.  3D movies like Monsters vs. Aliens, Ice Age, and Up are among the highest grossing movies in 2009.

Earlier, BusinessWeek reported that Sony was making the rounds with the major Hollywood studios to discuss releasing their movies over the Internet to its Internet-connected Bravia TVs after they are released in theatres, but before they are released on DVD. 

One proposed plan is to charge viewers $40 for 24-hour rental access to its movies. While the price seems high at first, consider that this is about the same cost for a family of four to see a movie in the theatre (concessions not included). In addition, BusinessWeek’s sources says the price tag for now is focused on those viewers who aren’t willing to wait for the DVD in order to view movies in their homes — and are willing to pay a premium over DVD prices for that luxury. 

This, of course, would cannibalise DVD sales, which have come under pressure the past few years as other forms of in-home entertainment have caught on. (Another reason to keep pricing high.) But, it could also impact movie theatres, since it’s unclear how long after a movie is released in theatres that the movies would be streamed to Sony TVs. Currently DVDs are released an average four months after a theatre release, so Sony’s proposed releases could conceivably occur at any point within that window — from a week to a couple months.

Let’s also not forget Sony’s Playstation 3 game console, which currently offers video content and could represent another distribution platform for movies. The company has sold over 20 million consoles worldwide since it launched in 2006.

To be sure, there has been talk for years about theatres being threatened by an in-home viewing experience that is getting bigger and better it seems each year — all while gross box office receipts have increased six of the past eight years and reached an all-time high in 2008. DVDs sales, on the other hand, have not held up well — industry sales are expected to fall to $13.3 billion from $16 billion in 2006.

Given that Sony’s proposed distribution model to TVs would occur before DVDs are released but after theatre releases, it appears DVD sales are most at risk.  In addition, theatres make the studios a ton of money as well as being powerful marketing engines for DVDs, pay-per-view, and merchandise sales – which occur after theatre releases. So the studios are likely hesitant to step on their toes.

Still, depending on how the studios — and, more importantly, consumers — react to any new distribution service, this could turn out to be anything from just another incremental challenge to a major competitor for eyeballs.

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