The Mystery of Hotel Movie Distribution
By Jeff Ulin
The hotel and motel window is just as it sounds: this is the service you see when in a hotel room, and typically have a choice of several first run movies that can be ordered (with payment simply added to your hotel bill). All studios offer their first run movies to the various providers, and the window is typically “triggered” by notifying the provider of a film’s availability. This notification will usually be several weeks prior to availability, as the services need to program available “slots.”
As an interesting, and not unexpected anecdote, this is a distribution window where “adult entertainment” paces the field. Although statistics are not readily available, the buy rate for adult programming is a significant multiple of the average buy rate for a top Hollywood title.
Size of Market and Window
The US market here consists of a few million hotel rooms that are serviced by various providers, although given the relatively small scale a few providers have historically dominated the market (e.g., LodgeNet and On-Command).
As with other distribution windows, the hotel/motel window is jockeying for its exclusive bite of the entertainment pie. Traditionally, this window has been slotted between the theatrical release and the video release. Regarding theatrical, the concern is to capitalize on the exposure in theaters and the awareness generated by the theatrical marketing campaign, while not taking any business away from the theaters. Accordingly, the window generally started in the range of 8–12 weeks from the theatrical release. Very few movies today remain in theaters for this long, however, and to the extent the films are playing out that far the locations and screen counts have diminished to a marginal number. The issue then is what is “marginal,” and would the availability of the film in a hotel detract from potential box office. Most theatrical executives would argue no, and the window from theatrical has been growing shorter over time.
A key factor influencing the timing is also seasonality, as hotels have peaks around holiday times, especially in the summer. Accordingly, July and especially August tend to be peak months. While the rhythm of the market used to be monthly, even the hotel/motel market is impacted by changing technology and the switch to digital media. With the ability to deliver and program digitally (vs. physical tapes), hotels can now switch out programs with ease. Hotels with this capacity are now able to rotate in new programming more frequently, and in the last few years it has become possible for movies to have variable start dates (as opposed to the historical pattern of first of the month rotation tied to physical elements). It would not surprise me to see more diverse availability patterns rather than the rigid beginning and mid-month cycles. In fact, it is likely that a form of pay per view (PPV) will fully cannibalize the hotel window, and this revenue cycle will be absorbed and consolidated into a VOD/pay per view revenue pattern.
Finally, the length of the window is variable, but in cases can run several months. Intuitively, this is longer than one would expect, because it cuts into the video window. To permit a longer window it is therefore fair to posit that the distributor (1) will assume the impact on video will be nominal (reasonable if viewed as an impulse buy, and non-substitutional if assuming you would not rent a video out of town) and/or (2) has a compelling economic justification, such as receiving an advance guarantee (which if high enough needs time to be earned out).
Excerpt from The Business of Media Distribution: Monetizing Film, TV, and Video Content by Jeff Ulin, © 2010 Elsevier Inc. All rights reserved.