Hancock on BIVL June 12, 2008 DRAFT – PRIVILEGED AND CONFIDENTIAL.
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Transcript of Hancock on BIVL June 12, 2008 DRAFT – PRIVILEGED AND CONFIDENTIAL.
Hancock on BIVL
June 12, 2008
DRAFT – PRIVILEGED AND CONFIDENTIAL
2
Executive Summary
• SPE 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 SPE 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
• Prior to announcement, we will address the following issues– SPE to discuss the offering with Starz, Talent, and MSO/DBS partners– SPE agreement on list price ($19.99 or $29.99) and portion paid by viewers
(e.g., $3.99 or $7.99) after any coupons / discounts– Final validation of hosting and payment service partners by SEL
• Once these issues are addressed, we recommend moving forward with the test based on the following terms
– Viewing Period: 24 hour rental (streaming)– Availability: 4 weeks prior to DVD/Blu-ray street date for a two week period– Promote the availability of Hancock and other Blu-ray titles and include a trailer for a SPE
theatrical release at start of stream
3
Recommended Offering and Rationale
Parameter Recommendation Rationale
Deemed Price $19.99 -- $29.99 At premium to day-and-date; within “Home Theater” pricing range
Cash Charge $3.99 -- $7.99
After any discounts or coupons, users must pay at least this amount with a cash equivalent for the offering to be considered PPV/VOD offering
Cash price would be in-line with current PPV offerings or proposed prices for new, day-and-date offerings
Viewing Period 24 Hours Viewing period longer than 24 hours would conflict with Starz deal
Availability 4 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 Allows for blackout period before DVD/Blu-ray release window
Split Greater of 85% of the deemed or actual price
Increased percent split over current offerings is justified by increased revenue retained by distributor
Timing Distributor to announce availability no earlier than +60 days from theatrical
Market practice to not announce VOD before announcing DVD street date
4
Pricing
1.7%
2.0%
3.0%
4.0%
0% 1% 2% 3% 4% 5%
$34.99
$29.99
$19.99
$14.99
Magid Early Window Analysis
$100
$150
$200
$250
$300
$350
$400
$3.99 $10.49 $16.99 $23.49 $29.99
• Optimal day-and-date pricing is $7.99 to $8.49 per Oliver Wyman study
• Early window HD should clearly be at a premium to day & date
• Between $14.99 and $34.99, buy rates for HD early window are comparable to standard VOD at $3.99 (1-4% depending on title/genre)
• At this stage, HD early window test pricing should at least be in the mid-range of early window analysis (e.g., it’s too early to go low)
• We are evaluating $19.99 or $29.99 for the Hancock early window test
Oliver Wyman Day-and-Date Analysis (1)
Offer Price
Incr
emen
tal R
even
ue ($
MM
)
Buy Rates
Offe
r Pric
e
(1) Relative to 2006 actuals, HD day-and-date rental at $8.49 yields net increase of $375MM (10%) in SPE U.S. Studio Revenue
Optimal at $8.49
5
Wholesale
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
$19.99 -- $29.99 High Def Bravia / BIVL Early Window(1 month early) 85/15 $3.00 -- $4.50
= Proposed pricing and split, no deals currently in place
• SEL would pay SPE on the same terms as MSOs and DBS partners, satisfying obligation to participants
• Greater of 85% of the deemed or actual retail price is generally consistent with the $ value retained by service providers in the HD day-and-date window
6
Potential User Experience
Enter Payment Service credentials to pay $3.99 or $7.99
Coupon covers balance up to $19.99 or $29.99
7
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
PPV / VOD (30-45 days post DVD)12/11
or12/26
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 window as long as it starts later than 9/11/08
– Starz is the earlier of 6 months from HE release date, 8 months from VOD, or 12 months from theatrical release
8
Messaging
Process
• SPE to preview the terms of the initiative with Starz, Talent, and MSO/DBS partners in advance of the announcement; conversations may alter recommendations
• SPE to review the June 26 announcement
• Promotion of the offering would commence after the normal black-out period extending 60 days from the theatrical release
Message Elements
• Hancock will be the first blockbuster movie streamed directly to TVs and available in an early window
• Address the quality and timing of this offer relative to the ultimate HD offering (Blu-ray)
• Blu-ray and theatrical trailer to run at the start of the stream
• Press release should clearly identify Hancock / BIVL as a test