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David Poland

By David Poland

Film Delivevolution 33111: March 30… A Day That Will Live In Infamy… On Demand

Let’s start with the backstabbing part…

After NATO agreed to keep the discussion of VOD behind closed doors at CinemaCon (nee’ ShoWest) this week, welcoming new MPAA chief Christopher Dodd, 4 of MPAA’s 6 active members announced that they would be launching Premium VOD via DirecTV and a few other outlets… in April.

Dodd, who seemed sincere, made a great noise about movie theaters being the best way to see a movie… and just 24 hours later, turned out to be playing games as front man for the studios. And as problematic as short-window VOD is, it is more problematic that The Studios so aggressively misled their partners in exhibition.

I asked Dodd specifically about whether he would counsel his MPAA member studios to wait until they has consensus about VOD before proceeding with any plan. He avoided the answer and John Fithian, citing respect and a handshake agreement, did as well. But the answer was, they had already reached consensus… and pretty much signed a deal with DirecTV to actualize it. I guess this is the studios’ Libya. It’s just to sensitive a topic to be honest about. (No wonder NATO is pissed.)

Interesting, the most aggressive proponent of shortening windows, Disney, is not (currently) participating in this experiment. It may or may not be coincidence, but Disney also had the greatest presence at the event this week. (They may also still be under agreements that were signed last year regarding Alice in Wonderland.)

Also staying out of this mess is Paramount. Their public excuse is concern about piracy. More likely, the boss, Sumner Redstone, is not anxious to be a pariah amongst his brethren in the exhibition world, where he came from with National Amusements. Redstone also failed to turn up for a gathering of all the former presidents and CEOs of NATO… could it be that he didn’t want to have to lie to his colleagues about what was about to go down?

Here’s another theory about why Paramount and Disney are not leaping right now… Thor, Pirates 4, and Kung Fu Panda 2. Paramount is in position to have its best year ever… perhaps getting into a fight with the movie theaters is just a dumb idea when you feel so good about what is about to happen?

That leaves Universal’s Bridesmaids and WB’s The Hangover 2 as potential May targets for exhibitors. WB, Universal and Fox are also in harms way in April with Arthur, Your Highness, Rio, Water For Elephants, and Fast Five.

When will the other shoe drop, as per the exhibitors’ response to this? Will they target smaller films or wait until summer, when they could do some real damage?

But back to the event of this itself…

It seems to be overstating to suggest that this is already sure to be The Future. A bit on the scummy side, the four studios involved cleverly slotted this historic event to titles that have already been played out theatrically. So unlike Disney, which dealt with the response to their plan for Alice directly, taking the chance of being vulnerable to an exhibitor revolt, Sony, Fox, Universal, and WB are launching this experiment with movies that the exhibitors have already played out, already in their 7th or 8th weeks of release. (Universal hasn’t announced a title for the launch.. The Dilemma will be at about 75 days at the launch and The Adjustment Bureau around 50 days… and I don’t think they have the rights to sell streaming for Relativity movies.)

The first movies scheduled are Just Go With It (Sony), Cedar Rapids (Fox Searchlight) and Unknown (WB). Fox told The Hollywood Reporter that Searchlight movies would go to VOD 60 days after the went wide… but Cedar Rapids has never gone as wide as 500 screens. I would joke that Sony has a hard enough time getting anyone to see Adam Sandler movies after 3 weeks, but this is actually one of his leggier films. And Unknown has already dropped to under 700 screens.

Where are Big Mommas: Like Father, Like Son and Hall Pass in the plan?

Next up, if things move forward, would be The Adjustment Bureau (U), Battle: Los Angeles (Sony), Red Riding Hood (WB), Paul (U), and Win Win (Fox Searchlight). That would take the experiment all the way into May. The April movies wouldn’t launch until June.

My take is that NATO should take a mid-range position on all of this, reserving their rights to change things up at will. Simple rule for now… if a title is participating in this 60-day VOD window, exhibitors will book for no more than 30 days and only on 1 or 2 screens of any multiplex booking the film. Period.

Show some muscle. Studios want short windows? Give them short windows… and no option for extension. They want to front-load releases in order to get to the next window faster? Give them theaters to play in, but don’t conspire with them to make over 30 million seats available on opening weekend as a matter of course. See how big these same films open with “just” 10 million available seats on opening weekend. See the value of Weekend 5 multiply instantly… but don’t play any of these movies that week. After all, it will be on Comcast, Time-Warner Cable, and DirecTV soon enough.

(Note: Why did DirecTV get the first deal and not MPAA members Comcast and Time-Warner? Could it be…. The Justice Department? “You know, it’s not about us solidifying our cable businesses… seriously… we let that other company do it before we did… it’s not an oligopoly… really!”)

There is possible good news coming out of this… the failure of $30 VOD. It may not take any external effort at all to get this result. However, once the door opens, so does the process of studios juggling pricing to get to the end they seek. There is one thing that powerful men hate most… being proven wrong. Failure is not likely enough to kill this bad idea off. There will be excuses about how the movies just weren’t good enough… how education about the service couldn’t be developed quickly enough, etc.

But within a few months, with some pressure from the exhibitors that is felt at the box office, the talent involved with the films could start to push back. The last summer Harry Potter film was grossing almost $1 million a weekend when it would, in this plan, go to premium VOD. Will exhibitors allow WB to squeeze all but the last couple of million out of their theatrical and then go right to Premium VOD? It’s a major issue. The last summer Potter took in over half its box office by the end of the first weekend. Four weeks isn’t that much of a financial threat. But keep it to 6000 actual screens? This would probably cut opening weekend by 20% or more and slow down the revenue stream. (Actual screen count for Potter’s opening weekend would likely be north of 13,000 screens)

No one can argue that wide-release movies are not playing out in 6 weeks. These distributors want to go to the next window right then. What they don’t seem concerned about is whether a 6 week window will damage those 6 weeks in theaters. In all but about a dozen or so movies a year, the logical answer seems to be, “Yes… there will be real damage.” But if it’s 10% or less, bean counters figure they can replace that revenue with a new window. What they don’t seem to get is that this is a conceptual issue for audiences, not something logical that can be rationalized down to the week. Even people who will never pay $30 or even $20 for VOD will thing of theatrical openings differently because it is available with such a short window. They are disincentivizing an audience that is already very expensive to herd for theatrical. Every movie is not a must-see water cooler event.

in any case, I look forward to Fox releasing the VOD of X:Men: First Class against the theatrical of Rise of the Apes.

I can’t wait to see The Hangover 2 hit 60 day VOD opposite WB’s launch of Steve Carrell comedy Crazy, Stupid, Love.

(ADD, 2:40p – Some are reporting that participating studios are now saying they will keep big grossers off this schedule. Well, speaking for NATO, fuck that! This is the most insulting notion of all… that the distributors can undercut theaters when they feel like it, but what works for their smaller films is not good enough for their big hits. Truth is, this makes no sense anyway, as the biggest hits – with rare exceptions – are more front loaded than the mid-range grossers. It’s the big films that stand to have the best shot of getting premium prices at home. But I don’t think that there are real answers yet. As I wrote… we are still looking at an experiment with no evidence to suggest it will work well. And history tells us that when distributors conspire to shorten effective windows, they get shorter. And they keep getting shorter every year.)

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20 Responses to “Film Delivevolution 33111: March 30… A Day That Will Live In Infamy… On Demand”

  1. John Shutt says:

    Excellent article, Christopher!
    I too think this is a shitty idea that will fail miserably. Todd Phillips has shown his support for the exhibitors and I think many filmmakers and movie fans will do the same. If I want to see a movie I insist on seeing it immediatly and on the big screen because thats how I’ve done it and thats how my children are going to do it

  2. David Poland says:

    Who’s Christopher?

  3. LexG says:

    This VOD issue, from someone here who works in post:

    Are the BIG STUDIOS really gonna be that excited about getting their BIG DICK MOVIES ready for, essentially, a TV broadcast? That requires weeks, maybe months, of doing transfers, telecine, captions, etc… Wouldn’t the movies have to be 100% locked like two months earlier to get all those VOD transfers ready? With big movies they’re tinkering with up to a week or so before wide release, not gonna be possible.

  4. The timing and pricing system shows a stunning ignorance of moviegoing habits for general moviegoers. Sure, I MIGHT be willing to pay $30 for a film that my wife and I both wanted to see but couldn’t get around to seeing in theaters, since that would still be less than two tickets plus babysitting. But that’s me. We’re all movie geeks, with a certain disposition to see stuff as soon as possible. But general moviegoers are not like that. The very people who aren’t going to theaters are the very same people who have no problem waiting until that movie comes out on DVD and renting it as cheaply as possible. They certainly are not going to pay $30 to see a movie after 60 days when they can wait 90-120 days and see it for around $1. I can’t imagine this succeeding in its present form and I can only wonder what the blowback is going to be this summer (Madea’s Family Reunion in 4,000 theaters, but Fast Five in 1,100 a week later?).

  5. JKill says:

    So let me get this straight:

    One has to pay more, wait longer and watch a movie with inferior presentation(in most cases)?

    Great idea!

  6. John Shutt says:

    I’m sorry, David! must of mistaken the names! Still a well put article and one the studios should see!

  7. Martin S says:

    I think Solondz sees this for exactly what’s truly planned. It’s a backdoor attempt to create a new distribution window for the disappearing mid-tier film while not calling it D2V, and a way to challenge the cable drama.

    Scott’s right that the gen pop is not going to drop 30 if Kevin James can’t get you to the AMC, why the hell wouldn’t you wait for Redbox? But if the cinefile crowd is hearing about the It Film and you don’t have big city access…hello Premium on a 60-inch. This would also work for a Deadwood series finale or a series of mini-movies as the second season of Rome.

    It’s sort of a mutation of the video theater in Japan, except that is still a kind of theater.

  8. anghus says:

    good article.

    has anyone seen anything on Rise of the Apes?

  9. IOv3 says:

    30 bucks is crazy sauce. Shouldn’t it be 16.99? That’s how much they want for a DVD most of the time. Why not set it there? This entire plan is absolute crazy sauce.

  10. Bitplayer says:

    This will fail because these companies cant get out of their own way with the pricing. Too much greed. If you are going to price yourself out of the market why bother. It’ll take some enterprising kid 10 minutes to hack this and get better quality bootlegs on some streaming site based in China.

  11. LexG says:

    HEY POLAND, UNBAN MY FUCKING ACCOUNT from my other computer. But a BRILLIANT POINT I made hours ago no one saw because it’s AWAITING MODERATION:

    This VOD issue, from someone here who works in post:

    Are the BIG STUDIOS really gonna be that excited about getting their BIG DICK MOVIES ready for, essentially, a TV broadcast? That requires weeks, maybe months, of doing transfers, telecine, captions, etc… Wouldn’t the movies have to be 100% locked like two months earlier to get all those VOD transfers ready? With big movies they’re tinkering with up to a week or so before wide release, not gonna be possible.

  12. Paul MD (Stella's Boy) says:

    My wife and I are big film buffs and used to see a ton of movies in theaters. With a 3 year-old, we hardly ever see anything in theaters and when we do it’s usually a kids movie. That said, there’s no way in hell we’d ever pay $30 to see a 2-month old movie that will be On Demand in 2 months or less. As per usual we’ve been playing catchup and have seen Never Let Me Go, The Kids Are All Right, and The Ghost Writer in recent weeks. With plenty of great movies available there’s no reason to spend $30 to see Unknown in April. Dumb.

  13. torpid bunny says:

    What makes more sense to me is like a pay channel with a monthly fee where you pay $5-10 for each title. So, say $15 a month plus whatever movies you want to see that are 1-4 months old.

  14. Michael says:

    LexG makes an excellent point – that doesn’t involve relative hawtness. Anyone have typical remastering timelines for Bluray/DVD/HDTV/TV/Digital Download/Internet Steaming?

  15. cadavra says:

    Show business is the only industry that thinks it can increase business by RAISING prices.

    “Why pay less?”

  16. Edward Havens says:

    Lex, with more and more movie theatres converting to digital projection (16,000 of 39,000 screens converted to digital as of this month, with 30,000 expected by 2013), I can’t imagine it would take studios any more time to get a VOD file ready while they are in the process of digitizing the movies for digital cinemas. If anything, it would take some serious downgrading, since most digital movie files (audio and video) run 75-200 GBs in size.

  17. Storymark says:

    “30 bucks is crazy sauce. Shouldn’t it be 16.99? That’s how much they want for a DVD most of the time. Why not set it there? This entire plan is absolute crazy sauce.”

    To a fmaily, who might spend $50 or more for a single outing (tickets, snacks, 3D charge if appropo), $30 isn’t a bad deal.

  18. LexG says:

    It takes three-four months to do DVD prep on a movie. You have to master it, do the transfers for various ratios, TRANSLATE IT into multiple zillion languages, closed caption it, subtitle it, encode ALL that shit– it’s a long process.

    As it is, that stuff starts getting done within about a week of opening day, give or take. It’s why, as a post-post sadsack, I complain ALL the time here and Twitter that I’ll be looking forward to a big new movie, only to have, say, APRIL 15TH BLOCKBUSTER A come across my desk at work and I’ll have to go thru it piecemeal for hours and days on end, frame by frame, QC two dozen versions of it…. and basically have the experience of seeing and enjoying it totally destroyed. It is why my life sucks.

    Anyway, to do this stuff, PICTURE HAS TO BE LOCKED. Can’t change any songs at the last minute, can’t tweak any frames, can’t reshoot an ending, or all that DVD work would, obviously, have to be done all over again. With VOD, studios are really gonna want to get this ball rolling– at the very least, having it captioned is MANDATED LAW– *that* long in advance of the release date?

    Is someone really gonna tell Michael Bay or Spielberg they can’t recut their movie or tweak something at the last second before theatrical release, because the TV print for VOD was locked a month earlier? You CAN’T just whip out a TV transfer five days before it airs/movie is released.

  19. IOv3 says:

    Story, I really don’t see this as a family thing because there’s really no justifying the expense. Sure, you are seeing a new movie at home, but you still have to get dinner. You still are spending the same amount of money, or close to it, so does that 30 bucks really save you anything? Gas maybe? Whateverthecase, this VOD shit seems more like a thing for single males then for a family.

    Also, with what Lex stated, they are basically giving him more work to do. The bastards.

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