First-Run Movies at Home for the Ultra-Rich at Just $2,500 a Pop
(Bloomberg) -- Meet Red Carpet Entertainment LLC, the opposite of Netflix in the fast-changing home-video world.
Unlike the famous streaming service, which serves up thousands of films and TV shows to millions of subscribers for about $13 a month, this startup by two entertainment-industry veterans is seeking just 3,000 rich Americans who’ll put up $15,000 and pay $2,500 per movie to watch the latest theatrical releases in their homes.
Since launching in October, Red Carpet has attracted just a sliver of the customers it hopes to sign up in the U.S. in the next two years, founders Fredric Rosen and Dan Fellman say. And they know they aren’t the first to market a high-end, first-run film service to the ultra-rich. But the two say their knowledge of the entertainment industry gives them a fighting chance.
“Everyone is looking for a new, ancillary business,” said Fellman, who spent 37 years at Warner Bros., retiring as president of domestic distribution. “So we thought: How do we start a small, ancillary business, but that’s not disruptive?”
He and Rosen, the former president of Ticketmaster, won’t disclose how their subscriber revenue gets divvied up, but say the studios get the majority. Red Carpet has deals with 10 distributors, including Paramount Pictures, 20th Century Fox, Warner Bros. and Lions Gate Entertainment Corp. With box-office sales slumping and projected to fall again next year, moviemakers are happy to have new customers.
The entrepreneurs, who came up with their plan on the golf course, aren’t alone in targeting super-rich people who don’t want to fight crowds at the theater. Bel Air Cinema has been providing such a service since 2015, mostly outside the U.S.
A few years ago, Imax Corp. invested in a similar project called Prima Cinema, but it never took off. And Sean Parker, the co-founder of Napster and an early Facebook Inc. backer, started Screening Room in 2016. It charged $150 for a set-top box to store movies and $50 to see a film the same time it plays in theaters. The business never gained traction.
Know the Customer
Rosen said Screening Room failed to understand the clientele. The ultra-affluent can afford a perfectly functional $150 leather purse, but wait in line to buy $25,000 Hermes Birkin bags. They want the experience of hosting a dinner party and whisking their friends to their private home cinema after dessert to surprise them with a film that’s otherwise only available in theaters, he said.
“You can buy ‘Two-Buck Chuck’ or an expensive bottle of wine,” Rosen said. “People consume the way they can afford.”
Rosen and Fellman estimate there are 500 to 1,000 households that fit their criteria in both New York and Los Angeles, and then another 50 to 100 in each of the next 30 largest U.S. cities. Their small team at Red Carpet vets potential customers by assessing their credit and interviewing two references.
The pair say they have almost 100 customers, and they’ve made inroads in places that surprised them, like West Virginia and North Carolina. The company is backed by Los Angeles-based OCV Management LLC.
Their most popular movie today is “Ford v Ferrari,” starring Christian Bale and Matt Damon. Red Carpet won’t be able to screen the new “Star Wars” movie that opens Dec. 20 because it doesn’t have a deal with Walt Disney Co. No movie will be priced below $500, and customers get to see a picture twice in a 36-hour period, according to the company website.
So far the only gripe is that the service can’t be used on yachts or in private planes -- for now the company only has domestic rights.
However, Rosen and Fellman are happy to install the technology in summer homes in the Hamptons or ski chalets in Aspen. If the idea catches on, they’ll also launch internationally, to answer calls from potential customers in Europe and the Middle East.
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