Universal drops early video-on-demand plan for ‘Tower Heist’

Facing threats of a boycott from theater owners, Universal Pictures has abandoned its controversial plan to make “Tower Heist” available to consumers via video on demand just three weeks after the movie opens in theaters.

Universal Pictures said in a statement Wednesday that it would delay its experiment in premium home video on demand “in response to a request from theater owners” but added it would continue to seek ways to deliver movies to the home more quickly. “We look forward to working with our partners in exhibition to find a way to experiment in this area in the future,” the studio said.

The move is an embarrassing reversal for Universal, which did not say when it would attempt another similar release. It is the latest development in a growing feud between studios and theater owners over the thorny issue of how soon movies should be made available to consumers at home after the films open in theaters.

Universal had planned to make “Tower Heist,” a Ben Stiller-Eddie Murphy comedy that premieres Nov. 4, available to about 500,000 cable subscribers of Universal’s corporate parent, Comcast Corp. The trial would have been limited to two markets, Atlanta and Portland, Ore., at the steep price of $59.99.

Like other major studios, Universal views such experiments as a way to generate additional revenue to help offset falling DVD sales that have been a cornerstone of the film business for the last several years. Theater owners, however, contend that showing movies in the home less than 90 days after they are released in theaters would hurt their business by discouraging consumers from trekking to the multiplex.

Seeking to defuse tensions, Universal took pains to telegraph its plans to exhibitors ahead of time and emphasized that the “Tower Heist” release was only an experiment.

Even so, a number of exhibitors balked at the test. Opponents including giant Texas-based Cinemark USA, which operates 3,850 screens in 39 states, and National Amusements Inc. of Massachusetts, which has 950 screens in the U.S. and other markets, vowed not to play the movie. Smaller chains such as Regency Theatres of Calabasas and Galaxy Theatres of Sherman Oaks also planned a boycott. The nation’s largest theater chain, Regal Entertainment, privately expressed its disapproval to Universal executives.

Still, the reaction from exhibitors was more muted than it was earlier this year, when the nation’s largest theater chains bitterly complained that they were kept in the dark about plans by four studios to release certain movies through video on demand 60 days after the theatrical debut for $29.99. Those films were offered to subscribers of satellite TV provider DirecTV.

The National Assn. of Theatre Owners had mounted a campaign to oppose such moves and enlisted the support of prominent filmmakers, including “Tower Heist” director Brett Ratner, who was among 23 directors and producers to sign an open letter in April that criticized the early home release of movies.

On Wednesday, however, the trade group offered a far more conciliatory response, even thanking Universal for listening to theater owners’ concerns.

“NATO recognizes that studios need to find new models and opportunities in the home market, and looks forward to distributors and exhibitors working together for their mutual benefit,” NATO President and Chief Executive John Fithian said.

Similarly, Regal Chief Executive Amy Miles said she appreciated efforts by Universal executives to seek Regal’s input. “We understand and respect Universal’s interest in finding a successful model for ancillary markets and we remain willing to assist Universal, and our other studio partners, in developing a strategy that is acceptable and productive for both parties,” Miles said in statement.

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