Sony Corporation (NYSE: SNE) and The Walt Disney Company (NYSE: DIS) are experimenting with a new service in South Korea that will allow audiences to stream movies on-demand in their homes while they still run in theaters. It is the first time that major U.S. studios have attempted something like this, but Disney and Sony are keeping the program quiet to avoid the wrath of movie theater chains.
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Consumers in South Korea will have the option of buying a ticket to see major releases like “Django Unchained,” “Wreck-It Ralph” and “Brave” in theaters or to watch the movies at home through their cable, satellite, or Internet subscription. Sony and Disney are hoping it will help curb the rampant piracy of their movies throughout Asia.
Movie theater chains are traditionally wary of attempts by movie studios to increase home video profits. When Disney attempted to reduce the run time of Tim Burton’s “Alice in Wonderland” from 17 weeks to 12 weeks, Odeon cinemas in the U.K., Ireland and Italy threatened to completely pull the movie. Sony and Disney are testing the service in South Korea, the eighth-largest movie market in the world, to avoid a similar reaction.
Independent films have found success with simultaneously releasing in theaters and online. Shane Carruth’s “Upstream Color” was made available on iTunes, Amazon and the movie’s website just a month after its initial release and remained in theaters for several weeks after.
So although this service will only launch in a relatively small market, you can bet that other studios and theater chains will be watching closely. “Iron Man 3” brought in a whopping $175 million in its opening weekend, proving that theaters still generate a lot of profits for the studios. On the other hand, “Iron Man 3” has also been one of the most-pirated movies of the summer. If the service in South Korea is successful at curbing piracy and still bringing in profit for the studios, it could send a frightening message to movie theater chains.
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