Hulu VR Update Could Threaten Theatrical Revenue

What if you could re-create the big screen experience that movie theaters offer at home, with a monthly subscription that costs less than the price of one movie ticket?

Don't like watching movies on your own? No problem, your friends can join you even if they are in their own homes.

For the past six months, the industry has been talking about the potential of VR, and its possible implications for movie theater owners. Unfortunately for them, Hulu LLC has just launched a new update for its VR app that is now very real. Hulu viewers can now access popular movies and TV shows in a virtual movie theater (or in a virtual living room or even a virtual beach if you prefer) via the new Hulu app. It's not the first use of such a feature, but most major TV/video brands have done this more as a stunt, like Fox during the Super Bowl. Hulu is a high-profile OTT provider, coupling the theatrical experience with high-quality content as a part of its ongoing service. (See VR Goes to the Super Bowl.)

The update also allows Gear VR and Oculus users to join friends in the virtual theatre using the Oculus Rooms feature. And it provides support for Avatars and Oculus Touch controllers with the Oculus Rift, allowing viewers to interact with their virtual environment.

The app also offers a small selection of 360-degree videos -- about 30 titles -- from a selection of providers including the National Geographic channel, Discovery Networks, Showtime and some Viacom properties.

Speaking at the Mobile World Congress event in Shanghai last summer, former Hollywood studio executive Teddy Zee warned Hollywood about this very eventuality. (See Hollywood Losing the Digital Plot, Says Former Studio Executive.)

"Yes, you have theaters and cinemas but now you can enjoy a potentially better experience in your own home with VR," he said. "Millennials are lazier, less interested in theaters."

Zee has produced and been involved with films that have brought in more than $2.5 billion in Box Office revenue. They include The Pursuit of Happyness, Hitch, Charlie's Angels, The Cable Guy, Indecent Proposal and Star Trek VI: The Undiscovered Country, among others, and have starred A-listers such as Will Smith, Eva Mendes, Lucy Liu and Angelina Jolie.

And he was skeptical about Hollywood's ability to protect its theatrical release window revenue for much longer.

"I've seen the future", he said. "And if someone my age can see the advantages, imagine what it can do to an 18-year-old."

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation