hancock early window strategy may 2008 draft – spt internal
TRANSCRIPT
Hancock Early Window Strategy
May 2008
DRAFT – SPT INTERNAL
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Executive Summary
• SPT has been asked to participate in an early window VOD test, making Hancock available exclusively on Sony Bravia TVs through the BIVL service
• This test provides SPT with an opportunity to achieve two goals
– Support a Sony United initiative to generate market awareness for Bravia/BIVL
– Establish market terms that support SPT’s efforts to launch an early window VOD offering with cable, MSO, and DBS partners
• We recommend moving forward with the test based on the following terms
– Deemed Price: [$14.99] – [Note we’re still discussing if this is high enough]
– Viewing Period: 24 hour rental (streaming)
– Availability: 4 weeks prior to DVD/Blu-ray street date
– Length of window: 2 weeks
– Split: The greater of [83%] of the deemed price or actual retail price
– Infrastructure: Sony to host and manage e-commerce (as required)
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Pricing
• Early window HD should clearly be at a premium to the HD day-and-date price of $7.99 to $8.49
• Appropriate price for early window HD has been under debate
– Proposed Spider-Man 3 on PS3 was discussed at $29.99
– Initial guidance from SPT to SEL on Hancock was for a lower price of $19.99
– Oliver Wyman analysis suggests $14.99 can be supported for HD early window
Coupon
• A free offer (or a coupon that is effectively a free offer) jeopardizes a multi-million dollar Pay TV license fee from Starz
• Coupon strategy will likely be used by partners in equivalent test; Hancock test will set precedent
• We recommend no coupon as it confuses the message of a premium offering at $14.99
Wholesale
• SEL would pay SPE on the same terms as MSOs and DBS partners
• Greater of 83% of the deemed or actual retail price is consistent with the $ value retained by service providers in the HD day-and-date window ($2.55 at $14.99 price point)
Pricing, Coupons, and Wholesale for Hancock Test DRAFT – SPT INTERNAL
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Marketplace Offerings
Pricing Format Model Split$ to Service
Provider
$3.99 Standard Def Standard VOD 60/40 $1.60
$4.99 High Def Standard VOD 70/30 $1.50
$4.99 Standard Def Day-and-Date VOD 70/30 $1.50
$7.99 -- $8.49 High Def Day-and-Date VOD 70/30 $2.40 -- $2.55
$14.99 High Def Early Window 83/17 * $2.55
= Proposed pricing and split, no deals currently in place
* Implied split based on $14.99 price pointGoal to hold $ value to service provider consistent regardless of price
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Overall Recommendations for Early VOD Window
Parameter Recommendation Rationale
Deemed Price [$14.99] [see previous]
DiscountingSPT to have approval rights over coupons / promotions (recommend no coupon on first offers)
A completely “free” via a coupon or other promotion would conflict with Starz deal
Viewing Period 24 Hours Viewing period longer than 24 hours would conflict with Starz deal
Availability4 weeks, prior to DVD/Blu-ray window
Price and HD format are the primary drivers of consumer interest Timing is less of a driver and 4 weeks early appears to be
sufficient to generate interest and drive demand
Duration 2 Weeks Retain ability to lengthen window Allows for blackout period before DVD/Blu-ray release window
SplitGreater of [83%] of the deemed or actual price
Maintain same $ split for distributor as HD day-and-date window
TimingDistributor to announce availability no earlier than +60 days from theatrical
Earlier announcement could affect box office
• Under existing contracts, cable / MSO / DBS partners have a matching right for an “equivalent” early window test
• Terms for the Bravia / BIVL test will set a market precedent and therefore must support SPT’s long-term interests with respect to a early VOD window
• Terms must not trigger existing Starz or other deals
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Hancock Windows
2008 2009
Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun
Standard Hancock Windows
Theatrical Release 7/2
Hotel 10/1 4/11
Home Ent. 11/11
Residential 12/26 4/11
Starz (through 8/10/2010) 5/11
FX (starts 10/11/2010 – 10/10/2015)
Early Hancock VOD Window
VOD on BIVL (2 wks)10/1410/28
Starz Window 5/11
• Proposed Early VOD to run for 2-week period between Oct 14-28, 2008
– VOD must be dark for the two weeks immediately preceding HE release (11/11/08)
• Early VOD window does not affect Starz as long as it starts later than 9/11/08
– Starz is the early of 6 months from HE release date or 8 months from VOD
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Other Issues
Exclusivity
• Our ability to offer this exclusively on BIVL is partially based on Cable and Satellite providers’ inability to match our security (i.e., they are unable to block their analog outputs)
• This assumption is still being confirmed
Messaging
• Release needs to clearly identify Hancock / BIVL as a test
• SPT needs the opportunity to contact its cable / MSO / DBS partners in advance of release in order to minimize any potential backlash
• At SPE’s discretion, the test may be announced prior to the black-out period that extends 60 days from theatrical release
• Release can not mention the name of any 3rd party backend provider for hosting / e-commerce, if necessary (e.g., Amazon)
Back End
• E-commerce requirements need to be settled based on final payment / coupon strategy
• Need to determine how (or if) no analog out requirement would affect matching right
DRAFT – SPT INTERNAL