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| Jon Feltheimer, Lionsgate CEO |
CMG: What is the most pressing issue you are dealing with right now?
JF: Our biggest issue, and what I am discussing at this conference , is the falling revenue from DVD sales but how they are being offset by VOD revenue, which is where we must be moving.
CMG: Explain.
JF: Let's take one our our latest films, Arbitrage staring Richard Gere. It brought in about $6 million in VOD revenue compared with $7 million at the boxoffice. That level of on-demand revenue would have been unimaginable for a specialty film just a few years ago.
CMG: Why is this?
JF: The audience for on-demand movies is different than that of moviegoers. 90% of Arbitrage's theatrical audience didn't know the movie was available on-demand and the majority that purchased the movie on VOD didn't know it was playing in theatres. They are totally different audiences.
CMG: I understand that digital rights also play a huge role in the TV sector, could you comment on this?
JF: Yes. For example digital rights were an important factor in renegotiating the final three seasons of Mad Men (a Lionsgate production with AMC). At nearly $5 million per episode, we needed to find ways to make Mad Men profitable, so syndication deals were struck with Netflix and other web-based streamers.
CMG: You spoke at the conference on the need for the industry to work together and not compete in ways that make it harder for others, can you comment on this?
JF: Narrow agendas can make it hard to work together and look at the big picture. For example, the battle between the satellite networks (Dish Network and DirectTV) and content producers over Dish's AutoHop system (AutoHop allows users to skip over commercials and ads) is bad for the industry. We also need better user interface. You can have premium content, but it's no good if the viewer can't find it.
CMG: What do you mean by - can't find it?
JF: For example, the on-demand release of "What To Expect When You're Expecting" underperformed our expectations simply because the movie starts with a "W". As such it appears near the end of the A-to-Z lineup and viewers don't scroll down all the way.
CMG: Can you quickly speak about EPIX (Lionsgate's video service) ?
JF: EPIX continues to be a focus for us and our partners, Viacom and MGM. We believe that digital distribution deals will drive the content providers in certain directions. EPIX recently struck a deal with Amazon Prime and ended it exclusive distribution arrangement with Netflix. We felt we needed more outlets for our content and this trend will continue.
CMG: Thanks, Jon
Best & Happy Movie Going!
Jim Lavorato
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