New York Times: At a dinner party in Tucson over the weekend, the subject of movies came up. The five friends there were all business travelers, all movie buffs.
One is semiretired but is still a frequent traveler and goes to movie theaters frequently. Yet, he is still unable to see a handful of the very latest and most talked-about movies. As a result of the archaic studio distribution systems, many of the cutting-edge films have not yet come to theaters outside of the major marquee cities like New York and Los Angeles.
Two of the others at the party, including myself, occasionally go to the movie theater but more often catch up on films later on DVD. The other two, very frequent international travelers, never go to theaters, and instead see movies, including current ones, on in-flight entertainment systems offered by many premium international airlines. Some of the systems offer more than 100 on-demand high-definition recent movies on big flat in-seat screens.
None of us, however, said we watched a movie in a hotel room.
That reality underscores challenges facing LodgeNet Interactive, the major supplier of hotel-room movies and television. Challenges also face the hotel industry itself, digging out of a recession, still perplexed about what guests are willing to pay for in in-room on-demand entertainment. The chains are also struggling to weigh the cost-benefit of investing in new hardware like big flat-screen high-definition screens for hundreds, or thousands, of rooms they may operate in any given hotel.
LodgeNet provides interactive video service in about 1.5 million rooms in 9,000 hotels in North America. This week, the company plans to announce a new initiative, VOD 2.0, to broaden its appeal to travelers.
Instead of selling a selection of video on-demand movies at a single price, LodgeNet has revamped its system to offer a wider range of movies at various price levels, including budget prices for older movies. But the main feature is a new-release feature that LodgeNet says will provide the earliest availability, outside of movie theaters, for a select number of movies.
This move comes just weeks after DirecTV, whose satellite TV service is mostly used in homes, introduced DirecTV Cinema, which charges $29.99 for high-definition newer movies like “Just Go With It,” starring Jennifer Aniston and Adam Sandler. It was available about 60 days after opening in theaters, and will become available on usual cable on-demand menus or on DVDs and Blu-ray. LodgeNet says its VOD 2.0 for hotels has a wider selection of these earliest nontheatrical-release movies, at a price of about half what DirecTV charges.
Will people pay this much for a hotel-room movie, especially as the trend rapidly grows in travelers bringing with them more sophisticated personal mobile technologies like iPads? With free cable television choices in rooms, with the Internet and myriad other diversions already available in ever-wider options on personal mobile devices, is there a real growth market for selling hotel-room movies?
In hotels, market research shows that “the consumer profile of the guest improves with more trips made and higher affluence; that this group is huge consumers of entertainment,” said Derek White, the president of LodgeNet’s Interactive division. “In important terms, they also are very important in helping to socialize new movies.”
He is referring to the argument that some airlines also make — that the studios should be working harder to get newer releases in front of business travelers. These travelers, like my friends, are movie buffs who spread their interest via word of mouth.
In general, movie theater owners, who have been big powers in Hollywood since the silent-film era, do not like any suggestion that might keep anyone away from the box office. But as on-demand personal and in-home video grows, battles over movie distribution schedules are intensifying.
Word of mouth recommendations from people with wide social networks, like business travelers, can actually be part of a newer movie’s promotion and “help these movies take hold” in the market, said Mr. White. “It won’t really steal business away from the main theaters, which is the big issue right now with premium VOD that has the theater owners up in arms.”
It’s going to be interesting to watch, so to speak. Right now, only 16 percent of LodgeNet’s hotel-room base has the requisite big-screen, high-definition TV sets. But as the hotel industry gains better economic traction, “the transition to high-def is really back in gear,” said Mr. White, who added: “For those hotel rooms that actually have gone to the flat screens and hi-def, we’re seeing 40 percent more revenue. You’re just more likely to plunk down $15 for a movie if you can enjoy it on a big beautiful screen in your room.”
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