On Demand: Warner Bros.' Sanders Sees EST Revenues Hitting $2B

Studio says encouraging sell-through is a way to combat Netflix effect
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Ron Sanders, Warner Bros.’ president of worldwide home entertainment distribution, said electronic sell-through is more than a beacon of hope for the beleaguered home sector. It is an increasingly robust business.

During a keynote session at Tuesday’s On Demand Summit, he said Warners, which is Hollywood’s largest home entertainment purveyor and a longtime bellwether of studio strategy, projects EST revenue from film and TV titles to reach $2 billion this year, up nearly 30% from 2014. That comes after comparable growth last year, at profit margins far greater than VOD off of a typical retail charge of $15 in standard definition and $20 in HD.

“It’s a way to keep your consumers inside the cable infrastructure instead of letting them stream a movie on Netflix or order a movie on iTunes,” Sanders told moderator Mark Robichaux, editorial director of B&C and Multichannel News. He later added, “The consumer is finally accepting that a digital transaction is a safe transaction.”

Physical disc sales are eroding, but they still account for about 75% of total home entertainment revenue, noted Sanders, who is also chair of the Digital Entertainment Group, an industry consortium. And the early hurdle for MVPDs wanting to compete with the likes of iTunes has been the notion that in many consumers’ minds, buying a movie meant viewing it on an iPad.

“The challenge we’ve had is getting people to their television,” he said. One tool in doing that has been stressing “early EST,” meaning often a multi-week window after theatrical during which a film is not available on any other platform, including VOD rental via the MVPDs. While Netflix is often viewed as a direct competitor to EST purveyors, Sanders pointed out that most studios don’t provide feature films to Netflix until they’ve been out for five to eight years. By comparison, the typical window between theatrical and EST has diminished to 90 days.

During his remarks, Sanders also alluded to a new partnership with Vubiquity (which is run by longtime ex-Warner Bros. exec Darcy Antonellis) for a more advanced cloud-based offering that will feature up to 13,000 film and TV titles.

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