Hancock on BIVL May 2008 DRAFT. 1 Executive Summary SPT has been asked to participate in an early...
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Transcript of Hancock on BIVL May 2008 DRAFT. 1 Executive Summary SPT has been asked to participate in an early...
Hancock on BIVL
May 2008
DRAFT
2
DRAFTExecutive 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: $19.99
– 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 85% of the deemed price or actual retail price
– Blu-ray: Promote availability of Hancock on Blu-ray at end of video stream
– Backend: Prefer approach is to use Sony infrastructure; however, if outside services are required, name of 3rd party provider should not be publicized
3
DRAFTPricing
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 recommend a price point of $19.99 for the Hancock early window test
Oliver Wyman Day-and-Date Analysis (1)
Offer Price
Incr
emen
tal R
even
ue
($M
M)
Buy Rates
Off
er P
rice
(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 $8.49
4
DRAFTWholesale
Pricing Format Model Split$ 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 High DefBravia / BIVL Early Window
(1 month early)85/15 $3.00
= Proposed pricing and split, no deals currently in place
• SEL would pay SPE on the same terms as MSOs and DBS partners
• 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 ($3.00 at $19.99 price point)
5
DRAFT
Recommendation
• SEL would offer a $25 Sony Style gift card with purchase of a new BIVL and a $25 e-mail code for existing BIVL owners
Benefits
• Creates compelling offer for BIVL customers
• Addresses infrastructure challenges (e.g., does not require PC or credit cards)
• Sets acceptable precedent for subsequent partner tests
SPE Constraints
• Gift card can be used to purchase any Sony hardware / software or Hancock stream
• Gift card concept must not interfere with Starz contract
• For future tests, MSOs and other partners
– Must pay SPE greater of 85% deemed or actual retail price
– Are entitled to offer a premium to customers (e.g., one free month of HBO w/ purchase of early window stream)
Gift Card Approach
6
DRAFTOverall Recommendations for Early VOD Window
Parameter Recommendation Rationale
Deemed Price $19.99 At premium to day-and-date; within “Home Theater” pricing range
DiscountingSPT to have approval rights over coupons / promotions (recommend no coupon on first offers)
A completely “free” offering (via a coupon or other promotion) would conflict with Starz deal
Value-added offers by distributor generally acceptable if SPT is made whole
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 85% 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 an early VOD window
• Terms must not trigger existing Starz or other deals
7
DRAFTHancock 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
8
DRAFTOther Issues
Exclusivity
• Our ability to offer this exclusively on BIVL is based on our ability to position as a test and our partners’ inability to match our security requirements (i.e., they are unable to block their analog outputs)
Messaging
• Press release needs to clearly identify Hancock / BIVL as a test
• SPT will contact its cable / MSO / DBS partners one week in advance of the 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 for standard distribution partners (announcement currently planned for no earlier than June 25th)
• Release should not mention the name of any 3rd party backend provider for hosting /e-commerce (e.g., PayPal)
9
DRAFT
APPENDIX
10
DRAFTTimelines
TheatricalRelease
DVD
1 2 3 4 50
Early Window
Magid Reseach Shows Demand at Prices of:
($14.99 - $34.99)Hancock Test
($19.99)
Day and Date
Oliver Wyman Research Shows Optimal Price of:
($7.99 - $8.49)
Months from Theatrical (approx.)