Movie Studios Consider Ways to Speed New Films to the Home

Movies studios are again kicking around the idea of releasing new films digitally for at-home viewing only a few weeks after they first appear in theaters—rather than the industry’s traditional months-long wait.

It has been a rough summer for Hollywood, with the season’s box office grosses falling more than 12% short of the same period last year. With in-theater ticket sales slipping in recent years and movie studios also suffering from declining home entertainment revenue (DVDs, Blu-ray, etc.), some entertainment giants are reportedly warming to the idea of shorter theatrical release windows as a means of combating the rise of streaming services like Netflix.

Bloomberg cites anonymous sources in reporting that some of Hollywood’s biggest studios, including Time Warner’s Warner Bros. and Comcast’s Universal Pictures, are having ongoing discussions with potential distributors Apple and Comcast about how to offer earlier digital rentals of new films, even if theater chains refuse to approve the idea. The report claims that the various sides have been negotiating for two months, but they do not yet agree on “a mutually beneficial way” to offer a premium streaming movie service that would cost customers $30 to $50 per film.

Part of the remaining disconnect seems to have to do with the exact timing of home releases, with the earliest online releases (17 days after a film is released in theaters) costing more, while those that are delayed four to six weeks for download falling on the lower end of the price range, Bloomberg notes.

Earlier this year, the Wall Street Journal reported on similar rumors in Hollywood, though at the time the major studios were in talks with movie theater operators about finding a way to release new movies at home in under 45 days without significantly damaging anyone’s business models. Not surprisingly, movie theater chains are wary about the idea of a premium product aimed at replacing (to some extent) the movie-going experience. Theaters are already at odds with the increasingly powerful streaming entertainment players, including Netflix, which famously eschews giving its original feature films any significant theatrical releases.

Theater chain owners have been skeptical that the industry needs to develop a premium video-on-demand in order to catch the rising tide of streaming media while offsetting declining DVD sales. Last year, cinema owners were among those opposed to the idea of a startup by Napster co-founder Sean Parker, called Screening Room, which has not yet debuted—though, it would seem that major players like Apple, Comcast, and Time Warner could have more luck developing a finished product, should they be so inclined.

Meanwhile, movie theater operators recently faced another possible disruption in the form of MoviePass, the startup that now offers monthly subscriptions that allow members to watch one film daily for a monthly fee of only $9.95. AMC Entertainment, the country’s largest movie theater operator, dismissed MoviePass’ model, calling the price level “unsustainable” while accusing the company of trying to “turn lead into gold.”

Citations

1. http://for.tn/2v91Imj Fortune
2. http://on.wsj.com/2mEg2Ur – Wall Street Journal

LNG Tankers Take a Slow Path to Profits in an Uncertain Market

When the tanker Provalys left Louisiana for Chile last month with a full load of U.S. liquefied natural gas (LNG), it sailed around South America instead of taking a shortcut through the expanded Panama Canal. Not only may the route be cheaper without canal transit fees, but advances in technology mean less of the fuel would end up lost at sea during the journey. Gas is frozen into liquid for transport over long distances without pipelines, allowing surplus American reserves to be shipped to high-demand regions like Asia. Trouble is, some LNG evaporates on the voyage. A new generation of ships is reducing such losses, giving traders more flexibility to choose a longer route in search of the highest prices.

Once a regional commodity, natural gas is becoming global. As new LNG export plants come online from the U.S. to Australia, a glut has emerged and ships are becoming more than just transporters. They allow fuel to be stored until demand rises or a scheduled delivery window arrives. Oil markets have operated that way for decades, but it is new for natural gas, which was historically dominated by long-term contracts to specific destinations. “People use vessels more as trading vehicles,” said Paul Wogan, chief executive officer at ship owner GasLog Ltd. “And once you can get the newer ships out, you can use them almost as storage vessels” because improved insulation keeps the LNG in its liquid state for longer, he said. New vessels allow for longer voyages because of their rates of boil-off, or LNG evaporation, are about 0.1%, compared with 0.15% a decade ago, according to Wogan. Ships built from this year on will bring the rate down, even more, he said.

The average distance for cargoes from the U.S., which have traveled as far as Thailand, has reached 7,500 nautical miles, about double the global long-term average, according to Wogan. The average voyage speed from Louisiana’s Sabine Pass terminal—the first to ship U.S. shale gas—has been 14.3 knots, compared with an average of 16 to 17 knots for other tankers over the past few years, he said. Longer routes allow U.S. exporters to nab bigger profits by selling to Asia—where LNG prices in the Northeast part of the region recently rose to the highest since February—and the Middle East, said Eric Bensaude, a managing director at Cheniere Energy Inc.’s marketing unit in London. Since modern ships have less boil-off, most vessels travel at “economical speed,” he said.

The Provalys is due to arrive at Chile’s Mejillones terminal in late August, making the journey via Cape Horn, according to ship-tracking data. An alternative route through the expanded Panama Canal would have seen it arrive about two weeks earlier and would have required paying tolls and securing a slot. “The Panama Canal tolls are very expensive in relation to the current market freight rates, and LNG prices as well as fuel prices,” said Emilie Menard, a spokeswoman at Engie SA, which owns Provalys. “It is sometimes more attractive to travel the longer distance.” The ship was delivered in 2006 and was one of the most efficient of her kind at the time. Short-term LNG shipping rates have been pressured over the past years but may rise this winter, according to GasLog.

Since the start of the year, four ships from Sabine Pass and nine vessels from Qatar, the biggest LNG producer, took longer routes to deliver their cargoes, according to Kpler SAS, a Paris-based ship tracker. Qatari vessels sometimes opt to go via the Cape of Good Hope instead of taking a quicker path through the Suez Canal, and the Symphonic Breeze with a cargo from Trinidad and Tobago is taking a month-long trip around the cape to China.

The Provalys’s longer journey to Chile would increase shipping costs by about 10 cents per million British thermal units, or $350,000, at current freight rates, according to Sofia Kiriukhina, a market analyst at Kpler. But that may not matter to gas buyers like Engie and Royal Dutch Shell Plc, who often consider their long-term vessel charters a sunk cost. Thus, they are less concerned about making a speedy delivery and releasing the vessel from charter, she said.

Because U.S. LNG is not contractually bound for a specific destination—a departure from traditional contracts—ships carrying the nation’s gas can be diverted en route to getting a better deal. Still, most cargoes are sold to a particular buyer before they are loaded, Cheniere’s Bensaude said. Meandering journeys for LNG tankers will probably remain common as the gas market evolves, GasLog’s Wogan noted. “These vessels have been built-in anticipation of the requirement to go at much slower speed,” he said.

Citations

1. https://bloom.bg/2wiv5a7 –Bloomberg
2. http://bit.ly/2uZ0r20 – OilPrice.com