MCN Blogs
David Poland

By David Poland poland@moviecitynews.com

One Last Time: How Sony F***ed Up The Business Of “The Interview”

I’ve written this 20 ways, but in honor of another series of bizarre articles about how GREAT Sony has done with The Interview, I feel compelled.

1. $30 million is a record for digital delivered product from Sony. But it’s not the record for the delivery system. That was set 3 years ago with Bridesmaids. $40 million and some. Now… it is possible that eventually, Sony will hit that number, perhaps even pass it. But not by much.

And let’s keep in mind… the President of the United States of America helped market this movie. It was leading the news for nearly a week. No movie has had this kind of press attention before an opening since Gone With The Wind… and that was before TV or the internet (obviously).

Also… the film did $15 million in business from a very limited, not well-traveled digital road in its first week. In its second week, it had every possible digital VOD platform known to mankind. That is the equivalent of going from 300 screens to 2500 in theatrical… and even with all the hype and the benefit of people home for the holidays, the gross for Week Two was the same as for Week One.

It seems they blew the possibility of a Netflix deal, which would have been an event-driven one-off worth, in my estimation based on Netflix’s history, $8m – $12 million. But it’s not happening. And it will not ever happen unless, someday, Netflix does a Sony theatrical streaming deal again… which is unlikely in this decade.

For bookkeeping purposes, let’s go crazy and say they get to $50 million in digital dollars. That’s about $30 million back to the studio.

And let’s say that the digital sales on The Interview had the studio waited for a wide theatrical run would be $15 million. About $10 million back to the studio.

Sony is now up $20 million! Huzzah!

the-intreview-gif-14

2. Theatrical for The Interview is now $5.2 million domestic. It will never get to $7 million.

And it is unclear at this time whether this film will ever have a proper theatrical release in the rest of the world.

So how do we figure out how much this film would have made in domestic theatrical had Sony offered its partners in exhibition the opportunity to release The Interview without day-‘n’-date VOD a week or two after Christmas? Well, the film was tracking to open to around $20m – $25m. Let’s take away the holiday weekday advantage. And let’s average out the 6 comedies Seth Rogen has starred in starting with Pineapple Express. So yeah, he gets the benefit of Neighbors, but the low ebb of The Guilt Trip (starring an older lady who seemed to keep Rogen’s core constituency away). The average is $72 million. I think this is a low projection, based on Rogen’s last two films both doing over $100m domestic, but I am giving Sony all the rope I can.

That’s $40 million back to Sony.

Same average of six films for international brings that number to a low $20 million or $10m back to Sony.

Now keep in mind… this is all being very, very conservative about theatrical, given the enormous media hype around the film.

Still… Sony down $47 million in a very conservative theatrical guesstimate.

Sony is now down $27 million from the minimum it stood to make had it skipped window-less VOD.

$33 million back to Sony projected from theatrical and digital. $60 million back with a theatrical window and normal VOD.

3. The next financial question is how quickly Sony can get The Interview out of DVD/Blu-ray. And when it does land (February?), will it sell a single added disc from coming out earlier than the normal window?

Given that Neighbors has, according to the limited source I have for this, sold just under 1.5 million units on DVD/Blu-ray, generating about $25 million or about $18 million back to the studio.

Even with all the notoriety, I don’t see The Interview doing more than 2/3 that amount of business. $12m back to Sony, either way.

$45m under the current circumstances (best case scenario). $72 million back waiting for proper theatrical (worst case scenario).

4. Sony’s deal with STARZ prices films within an overall structure based on theatrical performance. I have no idea whether The Interview is somehow exempt from this deal because of the variations away from the norm in this situation. The fact that there was ever any discussion about putting The Interview on Netflix presume that there was some flexibility there. Perhaps STARZ was open to selling off the rights for a price. I have no way of knowing.

However… one has to figure that on paper, The Interview will now accrue about $1 million from STARZ for its pay-TV run and that it would have been about $15 million if it had a proper theatrical release.

$46 million vs $87 million.

5. Conclusion. There are other income streams, including free cable and international TV. There can be a lot of dollars there. But with the value on the product reduced by the nonexistent theatrical and the controversy, there is no real way of valuing The Interview for this purpose. It may well be that the Netflix conversation was for its international territories only.

Another international problem is that the high drama that occurred may have actually inspired a higher level of piracy than normal. Curiosity combined with unavailability = trouble.

I could be wrong, but I think the most optimistic take on the total revenues for The Interview at this point is about $55 million all in.

And i think the least optimistic possible assumption on a slightly delayed, but wide theatrically driven release is $105 million all in.

There is a very real chance that the spread would be more like $45 million (loss of $20 million) vs $130 million (profit of $50 million, considering added marketing costs).

But with a production cost of $45 million and $20 million of committed marketing, Sony will likely take at least a $10 million loss on The Interview as they handled it. Versus a minimum $40 million profit.

And here is the part where the “it’s the future” lie is derailed.

Say you are one of the other majors… or Sony for that matter. Something terrible happened here, but the upside was endless, pro-product media hype and worldwide discussion about a movie that was likely to be a hit, but was never going to get past $200 million worldwide… not a phenom. And with all of that hype, plus $20 million in marketing, the VOD numbers still won’t likely crack $40 million.

It puts VOD back at the start. If this movie can’t smash records, what movie ever will?

The answer is always, “Harry Potter 7B.” And yes. If you opened the Potter finale on VOD, day-‘n’-date with theatrical, I would think you could get no fewer than 10 million households in the US to rent the film on opening weekend at a price point between $10 and $20. Figure you lose 20% of your theatrical opening, but you still get a $136 million opening at 55%, but you get $200 million at 70% in the same weekend. $94 million vs $225 million back to the studio in one weekend.

Then the questions… do you end up losing $100 million in gross/$45 million in returns, making it a $200 million domestic grosser, because you have reduced demand so dramatically?

So what? You’re still up $85 million. But have you damaged Home Entertainment demand going forward?

And the biggest issue… if you reduce theatrical by 20%, what percentage of movie theater screens will be shuttered? I would guess no less than 40% of screens would be gone within two years of mainstreaming day-‘n’-date.

But yeah… there might well be some serious upside and simplifying if you are pushing out a Harry Potter sequel day-‘n’-date. But what about the other dozen films you are releasing that year? How do they stand out when you are trying to get people to pay more than a movie ticket price to watch the movie on their TV screen?

The only reason day-‘n’-date isn’t here yet for wide release movies – and you know the studios have been jonesing for it for 20 years (including in the heat of sell-thru DVD) already – is because it just doesn’t work financially. The impulse to look at how much marketing a studio can save in marketing the first Home Entertainment window at the same time as theatrical ($20m or so) is tempting, especially as DVD drops, VOD treads water, and the sooner you get through that first window, the sooner you can get to pay-TV and/or streamers like Netflix.

But when you get serious about the numbers, the idea of flattening the first window is not attractive at all… especially as DVD drops and VOD treads water. The theatrical revenue, though it is not as dominant a piece of the pie as it once was, is still extremely significant. And keep in mind that the streaming window is still very small for most product from most studios, even with Netflix doing well and Amazon and Hulu chasing.

Who is streaming Hobbit 3? HBO. Who is streaming The Hunger Games? Netflix for a very short period, c/o the now underpriced, non-exclusive EPIX deal. Where can you watch Marvel movies stream as part of a subscription deal? Nowhere. (That last one will change when Disney lands at Netflix in 2016.)

Once you have a deal, as Disney does, with Netflix, there may be elevators in the deal for performance. But the difference between a movie like Avengers making $800 million worldwide and $1.4 million worldwide will not be felt profoundly in that window. But the $300m+ in box office revenue will continue to be a huge differentiator.

The magical thinking that you can be in the big movie business and generate hundreds of millions of dollars with each of your films while eliminating all and any risky steps is insane. And the fact that you are over 30 and would really like to be able to watch whatever you want whenever you want at a reasonable price? One of the most minor considerations of all.

Added note: Time Magazine, please publish people on this subject who know that the gross revenue doesn’t all get returned to the studio in any window.

Be Sociable, Share!

17 Responses to “One Last Time: How Sony F***ed Up The Business Of “The Interview””

  1. McRaj says:

    You really shouldn’t include that GIF in your post

  2. TheHey says:

    As I stated before. I still think The Interview would have done the same business as Walk Hard if it went wide with no VOD in the long run will end up with about the same revenue.

    If Warner went Day and Date with Potter 7B I’m sure Regal, AMC and others would still show it but would reduce the number of screens and showings and that would reduce the theatrical weekend by 50%. Still a big number but not 9 digits.

    Also, BTW, right now Marvel movies (along with other Disney product) stream on STARZ about 7-8 months after theatrical. Winter Soldier premiers on 1/23.

  3. David Poland says:

    The only problem with your theory that The Interview would have grossed under $20 million total domestic, TheHey, is that it was tracking to do more than that on opening weekend AND Seth Rogen is not John C. Reilly. Otherwise, good theory.

    If major exhibitors decided to show a day-n-date movie, why would they cut their own throats by reducing screens and showings? I mean, aside from it being a protest?

  4. Hallick says:

    “If major exhibitors decided to show a day-n-date movie, why would they cut their own throats by reducing screens and showings? I mean, aside from it being a protest?”

    I assume it’s the assumption that day-and-date release on other platforms would reduce the influx of theater-goers to the degree that exhibitors wouldn’t plan to have as many screens set aside for that one movie.

  5. Bulldog68 says:

    “Also, BTW, right now Marvel movies (along with other Disney product) stream on STARZ about 7-8 months after theatrical. Winter Soldier premiers on 1/23.”

    Winter Soldier, heck Spiderman 2 is already on Movie Central.

  6. Chris S. says:

    I don’t think the performance of other Rogen films is a reliable indicator as to the box office potential of The Interview. Political satire rarely earns big bucks, no matter who is starring.

    Also, I don’t think an endorsement from the president carries much weight for the movie-going public, especially for the half that live in the heartland.

  7. brack says:

    The Interview would have been lucky to get to $45m domestically, and who knows internationally. This wasn’t Pineapple Express or This Is The End potentional at the box office, I don’t care what the so-called tracking indicated. American audiences were not going to see this in droves, especially with its release date of Christmas, its R rating (Tarantino and a select others perhaps), and length at nearly 2 hours.

  8. David Poland says:

    Guys – The Interview is not a political satire. I don’t know who started this BS mythology that The Interview wouldn’t have opened or done business… but it’s bizarre and irrational.

    “Droves” suggests a lot more money than I think it would have made. But The Guilt Trip… one of the worst movies ever with a Rogen-blocker in Streisand did $37 million. $75m domestic is a lowball projection.

  9. cadavra says:

    Though in fairness, THE GUILT TRIP could also be described as having a Streisand-blocker in Rogen. I finally ended up seeing it on a plane and it was actually not awful. But it certainly proves anew that under-35s avoid like the plague anything that smells “old.”

  10. Hallick says:

    I haven’t seen it yet, but the reviews kept making “The Interview” seem more like a media satire than a political one.

  11. jesse says:

    Yeah, I think the “no one was going to see The Interview anyway” narrative is just as weird and short-sighted as the snarking about it looking like another terrible unfunny Seth Rogen movie when it first got pulled. Part of the instant-backlash culture the internet tends to nurture, I think. Rogen actually has a pretty amazing track record as a star. His non-hits have done in the $25-50 million range on non-huge budgets, and his hits tend to do $100-150 million, and there are more of the latter than the former. That’s pretty consistent with the likes of Ben Stiller and Will Ferrell, but with a much shorter incubation period (e.g., Stiller being a supporting/indie guy for a lot of years and Ferrell doing seven years on SNL). $75 million for The Interview, as the only non-family-oriented comedy in the room over the holiday period, would have been easy.

    Obviously the question of quality is more subjective, but I’d put Neighbors, Knocked Up, Superbad, Pineapple Express, This is the End, Funny People, Observe and Report, and now The Interview up against pretty much any mainstream comic actor’s track record. I love Ferrell, especially his movies with McKay, but I’d say Rogen might have him beat on overall quality. Stiller has made some great stuff and some terrible stuff, and more terrible stuff since he became a big star. Ditto Sandler.

    I guess the point is that some people think of any big comedy star as kind of automatically suspect or terrible, which is strange.

  12. YancySkancy says:

    jesse: There seems to be a tendency in people to be unforgiving if something that’s classified as comedy doesn’t make them laugh. If we see a bad drama, we probably just think, “Eh, that wasn’t very good.” But if we don’t laugh at a comedy, the knives come out. No one says, “I just don’t find (insert comedy star here) to be very funny.” They say, “That asshole is the death of comedy and should be strung up by his balls and horsewhipped, and anyone who disagrees is an idiot.” Strange indeed.

  13. Christian says:

    “Bro, the new Rogen-Franco film about them going to N.Korea to screw with Kim Jong-il looks fucking dope!”

    It should have cost no more than ten million.

  14. cadavra says:

    Considering that Sony was letting Sandler’s budgets run over $90 million, $44 million for INTERVIEW must have seemed like a bargain.

  15. Christian says:

    And let’s be real here: 10 million for the film and 30 plus for unofficial studio skimming.

  16. Chris S. says:

    Admittedly I have not seen it yet, but surely the film takes some satirical jabs at North Korean govt./society? At least on the same level as Team America.

    Merely by suggesting (even jokingly) the assassination of a living head of state the film becomes unavoidably political. And it is about one of the most unknown and incomprehensible nations on Earth as far as Americans are concerned.

    Not really a winning combination at the box office where Neighbors/Knocked Up fans are concerned.

  17. David Poland says:

    No. Chris S.

    The jokes are really all about Kim Jong-Un himself and the recurring gag is that he is like a teenage boy with a bad temper. Quite apolitical, aside from the basic fact of the assassination of a national leader being the conceit.

The Hot Blog

Quote Unquotesee all »

It shows how out of it I was in trying to be in it, acknowledging that I was out of it to myself, and then thinking, “Okay, how do I stop being out of it? Well, I get some legitimate illogical narrative ideas” — some novel, you know?

So I decided on three writers that I might be able to option their material and get some producer, or myself as producer, and then get some writer to do a screenplay on it, and maybe make a movie.

And so the three projects were “Do Androids Dream of Electric Sheep,” “Naked Lunch” and a collection of Bukowski. Which, in 1975, forget it — I mean, that was nuts. Hollywood would not touch any of that, but I was looking for something commercial, and I thought that all of these things were coming.

There would be no Blade Runner if there was no Ray Bradbury. I couldn’t find Philip K. Dick. His agent didn’t even know where he was. And so I gave up.

I was walking down the street and I ran into Bradbury — he directed a play that I was going to do as an actor, so we know each other, but he yelled “hi” — and I’d forgot who he was.

So at my girlfriend Barbara Hershey’s urging — I was with her at that moment — she said, “Talk to him! That guy really wants to talk to you,” and I said “No, fuck him,” and keep walking.

But then I did, and then I realized who it was, and I thought, “Wait, he’s in that realm, maybe he knows Philip K. Dick.” I said, “You know a guy named—” “Yeah, sure — you want his phone number?”

My friend paid my rent for a year while I wrote, because it turned out we couldn’t get a writer. My friends kept on me about, well, if you can’t get a writer, then you write.”
~ Hampton Fancher

“That was the most disappointing thing to me in how this thing was played. Is that I’m on the phone with you now, after all that’s been said, and the fundamental distinction between what James is dealing with in these other cases is not actually brought to the fore. The fundamental difference is that James Franco didn’t seek to use his position to have sex with anyone. There’s not a case of that. He wasn’t using his position or status to try to solicit a sexual favor from anyone. If he had — if that were what the accusation involved — the show would not have gone on. We would have folded up shop and we would have not completed the show. Because then it would have been the same as Harvey Weinstein, or Les Moonves, or any of these cases that are fundamental to this new paradigm. Did you not notice that? Why did you not notice that? Is that not something notable to say, journalistically? Because nobody could find the voice to say it. I’m not just being rhetorical. Why is it that you and the other critics, none of you could find the voice to say, “You know, it’s not this, it’s that”? Because — let me go on and speak further to this. If you go back to the L.A. Times piece, that’s what it lacked. That’s what they were not able to deliver. The one example in the five that involved an issue of a sexual act was between James and a woman he was dating, who he was not working with. There was no professional dynamic in any capacity.

~ David Simon