Film-Tech Forum ARCHIVE: On Demand Video While Movie Is Still In Theatres Start Next Month

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Posted by Mitchell Dvoskin (Member # 751) on 04-01-2011, 10:39 AM:

Coming next month to a TV screen near you...

Variety Article

quote: Variety

WB, Sony, U and Fox cue premium VOD
'Unknown,' 'Just Go with It' expected to be offered for $30 next month

By Marc Graser

After talking to his pretend kids Kiki (Bailee Madison) and Bart (Griffin Gluck) Danny (Adam Sandler) tells them to start laughing and hug him as Palmer walks in, in Columbia Pictures' comedy JUST GO WITH IT.

"Unknown" and "Just Go With it" are among the first studio pics set to roll out as $30 early VOD offerings.
Hollywood has firmed up its plans to roll out premium VOD next month, though theater owners quickly protested the strategy.

Warner Bros., Sony, Universal and 20th Century Fox are the first studios that have agreed to launch Home Premiere as the official brand under which the industry will offer up movies to rent for $30 two months after their theatrical bows for a viewing period of two to three days, depending on the distributor.

DirecTV will exclusively launch Home Premiere nationally to its nearly 20 million customers, while cablers including Comcast will introduce the service in certain cities for an undisclosed period of time some time around the end of this month.

As first reported on Variety.com, the first films expected to launch include Warner Bros.' actioner "Unknown" and Sony's Adam Sandler comedy "Just Go With It," sources close to the new service say.

The launch plans come months after studios started to float the idea to experiment with higher-priced rentals of pics closer to their theatrical runs as a way to boost their homevid operations with film campaigns still fresh in people's minds.

WB, U and Fox have already succeeded in fending off companies like Netflix and Redbox, forcing them to wait 28 days after a film bows on DVD to offer those titles for rent through their online services and kiosks. Those same studios wouldn't mind lengthening that window even longer and have considered pursuing such talks.

On the premium VOD front, the majors say they're missing out on audiences who aren't making the trip to the megaplex because of the size of their families or the expense of babysitters or of food and other concessions.

But exhibitors worry that allowing auds to watch family fare at home, even at a higher price point, may get them used to staying away from theaters over the long run. A statement released by the National Assn. of Theater Owners Thursday at CinemaCon accused the studios of compromising revenues for the entertainment biz, saying, "These plans fundamentally alter the economic relationship between exhibitors, filmmakers and producers, and the studios taking part in this misguided venture."

Studios contend that offering up films 60 days after their theatrical run won't hurt the box office since most films generate most of their coin during their first three months.

But NATO says studios "risk accelerating the already intense need to maximize revenues on every screen opening weekend and driving out films that need time to develop -- like many of the recent Academy Award-nominated pictures. They risk exacerbating the scourge of movie theft by delivering a pristine, high definition, digital copy to pirates months earlier than they had previously been available."

Paramount is not participating in the Home Premiere program, reportedly due to piracy concerns.

The majors also say they wouldn't release any films via Home Premiere that are still performing strongly at the B.O.

DVDs and Blu-rays typically bow 90 days after a pic's theatrical run, although that's been shrinking for higher-profile titles.

A specific launch date was not revealed for Home Premiere, but sources told Variety that it would occur at the end of April.

DirecTV has recently launched a more aggressive effort to encourage its customers to upgrade their set-top boxes to be able to connect to the Internet as it readies to launch Home Premiere.

Comcast, meanwhile, is eyeing Home Premiere as a way to bolster its pay TV market share through enhancements of its broadband-based Xfinity TV service.

DirecTV was initially targeting a trial launch this summer, during which "we'll try something that's four to six weeks from theatrical release," DirecTV chief Michael White said in February.

Studios have talked DirecTV into compromising to a longer release window since then. One reason: The major theater chains, including Regal Entertainment, have threatened not to screen films should they become available during a six-week window via premium VOD.

The Digital Entertainment Group, which helped Hollywood launch and brand Blu-ray, will assist in building the Home Premiere brand.

While the price is still too high for me as a single guy, if I had a family with concession munching kids, it would be a bargain.

Now I have a choice of watching first run digital video out, or at home. While at present time this is not going to be a monumental change, it is one more blow against the exhibition industry.

Posted by Mike Frese (Member # 4361) on 04-01-2011, 11:48 AM:

Couple of thoughts:

a) At least in my area $30 is going to be a major hurdle.
b) Remember when the major chains complained about Disney releasing Alice In Wonderland 90 days after theatrical release? Just in the past month, there have been the following movies: Yogi Bear 95 days, Black Swan 116 days (102 since it went to 1500 locations), Tourist 102 days, How Do You Know 95 days, and Fighter 95 days (88 since it went wide). I have been surprised that little has been heard about this.

Posted by Bobby Henderson (Member # 840) on 04-01-2011, 01:09 PM:

Inch by inch the movie studios are trying to push movie theaters farther in trouble, not realizing there will be no movie industry without movie theaters.

Ask yourself this: would you be willing to pay $30 or even $5 to watch a made for TV movie via video on demand? I wouldn't.

The two month window between theatrical debut and this new premium VOD service may be enough for a lot of mainstream features. Not many movies continue to do decent business 2 months after theatrical release, particularly if the release is wide from the outset.

However, $30 isn't all that much for a PPV event if you consider how a lot of PPV events are watched: in groups. The average UFC PPV event costs around $60. No one I know just buys the PPV show just to watch it by himself. At least several other people show up and throw in a few bucks each or bring food/drinks or both.

It already costs a lot for an average sized family of four to attend a first run movie. The tickets alone are going to run upwards of $40 or significantly more if 3D is involved. Visit the snack counter and that cost can easily pass $60. For a lot of families a two month wait isn't a big hardship in order to save $30, particularly in the current environment of price gouging at gas pumps and grocery stores. I'm concerned the inflation going on in those and other areas will push more and more people into waiting for movies to arrive on home video or even Redbox.

Posted by Claude S. Ayakawa (Member # 1401) on 04-01-2011, 05:26 PM:

What is wrong with waiting a couple of weeks longer and have the opportunity to purchase the same movies for as low as $19.99 like Blu-Ray of THE BLACK SAWN at Best Buy and other retailers was the other day? The maximum resolution one can expect from a pay per view showing is 720i instead of the full 1080p from a Blu-Ray disc. On top of that, you would only get standard 5.1 sound instead of full DTS HD Master Audio or Dolby Tru HD a Blu-Ray disc offers. . Unfortunately , most people with large families could care less about waiting for the BD and would subscribe. What worries me the most about ON DEMAND VIDEO is the studios would no longer release new movies within the approximate current three month time period on BD and DVD after a movie opens at a theatre but hold back release a lot longer after the ODV showings are over.

-Claude

Posted by Mike Blakesley (Member # 26) on 04-01-2011, 10:40 PM:

quote: Bobby Henderson
The two month window between theatrical debut and this new premium VOD service may be enough for a lot of mainstream features.

That's fine for a megaplex but it really puts the screws to places where the movie doesn't always play on the break. (Like ours.) Used to be we could say it was going to be 3 months or 4 months before the video release...now, when we play a movie in week 5 it'll be what, 3 weeks?

The other thing that's going to happen is, if this thing doesn't bring in enough "coin" to prop up the sagging DVD revenue, then they'll try to boost it by moving it up even closer to the theatrical release, thus screwing everybody even more. Then if that doesn't work, they'll just collapse the DVD/BR window "because that's what the consumer wants" and we'll all be toast.

I only hope that the studios will get off their butts and figure out why they can't make a movie available to small places for one week. That way we could play a new movie on the break every week, we'd sell far more tickets than we do now, and the studio would get a lot more money from us. But of course that plan is way too smart to ever happen.

Posted by Tom Petrov (Member # 1534) on 04-02-2011, 01:33 AM:

I don't think that this is a horrible idea. Movies only do well for the first 3-4 weeks anyway. Having a $30 rental right after two months will likely drive business to the theatre during the first few weeks.

If studios promote some movies as "In Theatres Apr 30 and On Demand June 29th" it will only add to the "I have to see it now" factor in my opinion.

What the AMC, Carmike, Regal ect need to do is get into the distribution of home video. Cineplex Odeon in Canada is renting movies online as well as showing them in theatres a few months before.

Posted by Ian Parfrey (Member # 5122) on 04-02-2011, 04:16 AM:

Bobby has nailed it.

I just can't wait for the idiot studios to start bitching about why all their new movies are doing death both at the Boxoffice AND for VOD. Think about this for one second... Without boxoffice buzz, the movie goer won't have a yard stick as to whether a film is shit or not. If that's the case then Mr MovieGoer sure isn't going to blow $30 on an unknown quantity an dthat equals no B.O and no VOD.

Just [sex]

ing stupid.

Posted by Mike Blakesley (Member # 26) on 04-02-2011, 12:37 PM:

Tom: You think this idea will make MORE people go to the movie in theatres in the first couple of weeks? You really are off your rocker.

Also, theatres distributing home video is not a new idea. It was tried during the VHS era. Everybody was being encouraged to put a big display of tapes in the lobby. Why? "What better place to promote movies than a movie theater!" Well, that flopped after about a year.

Posted by Bobby Henderson (Member # 840) on 04-02-2011, 12:50 PM:

Mike, since you went through the trouble and expense of converting your theater to digital projection and even adding Dolby 3D your movie theater should be getting any new release you want the very day the movie opens.

I can understand the reasoning behind making theaters in small towns wait an extra week or two (or months) to get a film print of a certain new release. Only so many 35mm prints were made for the inventory of a certain release.

With "digital" there is zero excuse. The DCP can be downloaded via satellite. Or it can be put on a hard drive and express mailed. Hard discs are very cheap compared to a 35mm film print.

Additionally, small towns in rural areas have next to nothing in terms of competing screens. You have to drive a considerable distance (usually to the next significant town or even farther) to find another theater. The way I see it movie distributors should be fighting over getting their movies to play on those rural screens, particularly the digital ones since there are so few of them at this point.

With this VOD nonsense Hollywood is pushing they will need to eliminate those wait times for rural theaters. Basically every commercial theater will need to be able to play a given movie on the break rather than later.

Posted by Bill Enos (Member # 440) on 04-02-2011, 03:49 PM:

If you're running film continue to do so until no more prints
are available, then close. Being rid of theatrical exhibition is obviously what they want. If you've converted to digital, sell it now while there is still a market and go back to film for as long as it lasts. Meanwhile try to figure out what to do with the building other than a fire.

Posted by Ian Parfrey (Member # 5122) on 04-02-2011, 04:15 PM:

I've been squawking about this for ages. As far as exhibition and the studios are concerned, movie theatre (and Drive In) exhibition is just a big pain in the studios arses. The exhibs are seen as an unwanted drain on the takings from the studio product and if that part of the equation is eliminated then obviously that income automatically goes straight to the studios. And that's exactly what they want - no print costs, no theatre overheads, basically product delivered straight to the home and all revenue going straight to the studios.

I feel very sorry for those cinema operators who spent huge $ on the digi upgrades only to be shafted by the studios .. yet again.

Posted by John T. Hendrickson, Jr (Member # 849) on 04-02-2011, 05:06 PM:

Awhile ago, 6 months after release, then 90 days. Now 60 days.

What's next? 30 days, then day and date? How far are the exhibitors willing to let this go?

Can you spell B O Y C O T T???? If the exhibitors (both independents and chains) grew a set of balls and said they would only accept a clasue in the rental contract that stated "The studio agrees not to release the title to DVD for a period of 90 days" or they would not play the film, do you think that would shake the trees?

Probably not, because the exhibitors will just sit back and take what few crumbs the studios will give them.

Sad. But if the exhibitors do nothing, then they get what they deserve.

Posted by Jonathan M. Crist (Member # 413) on 04-02-2011, 08:05 PM:

quote: John T. Hendrickson, Jr
Can you spell B O Y C O T T????

Hey John: Dont you know that an organized boycott is a violation of federal anti-trust laws?

Besides it wont happen anyway. The studios know that "If you gottem by the balls their hearts and minds (and checkbooks) will follow"

Posted by Mike Blakesley (Member # 26) on 04-02-2011, 08:38 PM:

Well guys...the problem is the film companies don't THINK they need us, even though we know they do. If we all said (at once) "we're not going to play your damn Harry Potter film if you put it on video in 60 days," they would say "Fine...it's going to video on July 15 then."

They know we need their product or we're screwed. That's why they have us by the balls.

quote: Bobby Henderson
Mike, since you went through the trouble and expense of converting your theater to digital projection and even adding Dolby 3D your movie theater should be getting any new release you want the very day the movie opens.

Bobby -- I totally agree with this. However, the studios are still operating on the exact same methods with digital as they did with film prints, meaning: There is a finite number of prints (no matter the format) available, and when those are committed, there are no more. If we don't play a movie on the break, we have to wait until some other town somewhere lets loose of a hard drive print. Just like it was with film. I agree, it's ridiculous and I've been repeating that scenario to everybody I've talked to who is working on conversion. Don't think that just because you're digital you can just get whatever you want.

To be fair, there have been a few occasions where we've been able to get prints a week or two sooner on digital than we would have on film, but those have been rare times.

My wife came up with a good idea. How about if the industry just decided to lower our prices? Why not? The film companies keep devaluing their product to the consumer, so why don't we do the same? Everybody goes to $5.00 a ticket, or something like that. No 3D surcharges either. We could trumpet that up with a massive ad campaign. The film companies would cry foul, but what could they do? Their contracts don't allow them to dictate ticket prices as long as we hit the minimum per cap. Our attendance would skyrocket and concession sales would be massive, while film rental payments would stay about the same. The only problem is, how to get the entire industry to do it at once?

Posted by Chris Slycord (Member # 4239) on 04-02-2011, 09:02 PM:

quote: Jonathan M. Crist
Hey John: Dont you know that an organized boycott is a violation of federal anti-trust laws?

A boycott doesn't have to be organized for everyone to participate though.

There've been examples where several big chains refused to play a certain movie because they didn't like the terms of agreement. And it didn't happen because all those chains colluded to do it. They each announced separately that they wouldn't play ball. Sure, when one announced maybe another said "Hey, that sounds like a good idea" but that's different from breaking those laws.

Posted by Chase Pickett (Member # 5975) on 04-02-2011, 09:06 PM:

quote: Jonathan M. Crist
Dont you know that an organized boycott is a violation of federal anti-trust laws?

I refuse to believe that. How the hell would you get prosecuted for choosing to not support something that's bad for your business?

Posted by Chris Slycord (Member # 4239) on 04-02-2011, 11:24 PM:

quote: Chase Pickett
I refuse to believe that. How the hell would you get prosecuted for choosing to not support something that's bad for your business?

He didn't say you couldn't.

Organized boycott != boycott where I chose what to do only on my own. He's referring to where different competitors work together to organize a boycott and thereby negatively affect the third-party's ability to engage in commerce. If your company chose to boycott without consulting your competitors, you'd have no problem. And if you instead consulted your competitors to organize, you could be liable to antitrust issues. There've definitely been court cases related to this.

Posted by Jonathan M. Crist (Member # 413) on 04-02-2011, 11:44 PM:

quote: Chase Pickett
How the hell would you get prosecuted for choosing to not support something that's bad for your business?

Let me give you an example which actually happened here in Central Pennsylvania a few years ago. At that time Blue Shield was the biggest provider of dental insurance in our area. As with most participating medical plans the dentists who were providing services under the Blue Shield dental plan agreed that what Blue Shield determined was a prevailing charge for a given service was all that could be charged to the patient (and charges above that amount were written off). Dentists usually then got 80% of the prevailing charge from the carrier and 20% as co-pay from the patients.

Well the dentists were really upset that Blue Shield simply was not setting the prevailing charges high enough. At the urging of both the statewide dental society as well as various local chapters, Pennsylvania dentists were urged to consider discontinuing participation with the Blue Shield dental plan. Not surprisingly most dentists in the area then dropped their participation in the Blue Shield plan (meaning those people and employers who had purchased dental insurance through Blue Shield now no longer could use it).

Blue Shield brought suit in federal court against the statewide dental society as well as their local chapters alleging restraint of trade under the anti-trust laws - that the societies had caused a boycott by urging their dentists to de-participate in the Blue Shield plan. The court ruled that what happened amounted to a boycott and awarded millions of dollars in damages against the various dental societies.

In reality the word boycott means an agreement of people to act in concert to punish or cause something (named after Captain Boycott - anybody ever see the movie? It made the recently deceased Stewart Granger a star.)

Posted by Frank Angel (Member # 248) on 04-03-2011, 12:20 AM:

quote: Chris Slycord
different competitors work together to organize a boycott and thereby negatively affect the third-party's ability to engage in commerce.

But isn't this exactly what the MPAA does when its members get together and decide in concert that they are going to make the theatre-to-video window go from 120 days to 90 days, then even down to 60 days? Doesn't that negatively impact and punish a third party -- exhibition -- in a huge way and in some cases may even put smaller operations out of business altogether? So how come THAT isn't considered anti-trust violation?

Should be exhibition's new mantra: Movies Direct-to-Video without a Movie Theatre are nothing more than made for TV movies. They should print this up as stickum banners and plaster them on the bottom of EVERY 1 sheet they display.

Posted by Chris Slycord (Member # 4239) on 04-03-2011, 12:42 AM:

That'd require the MPAA to be sued on behalf of the exhibitors. Good luck finding anyone willing to do that. It sure as fuck won't be NATO.

Posted by Mike Blakesley (Member # 26) on 04-03-2011, 01:05 AM:

Yeah. While I don't agree with the prevailing feeling around here that NATO is totally worthless, they sure have proven their complete powerlessness with this particular issue. The only thing the exhibition industry has to "fight back" with, according to NATO, is to not play trailers or display onesheets for those movies headed for VOD. Big deal.

Posted by Christian Appelt (Member # 1067) on 04-03-2011, 09:56 AM:

Once upon a time, studios had their contract players, built their own stars and owned theatres. Today, movies are not made in the assembly-line manner of the studio system any more. Stars, stories and creative talent are bundled into single or multiple packages.

If the studio/distribution side does not deliver their product to the exhibitors exclusively, if they keep demanding a larger piece of the pie (or want the whole pie), this may have other consequences. When studios and distributors make it impossible for exhibitors to run their business with a profit, they are in fact abandoning a part of the market.

In a system of free trade, if a company decides it will not deliver its product any more or at a reasonable price, someone else will step in. There is an audience that wants to leave home and enjoys the cinema experience. If the major studios are unwilling to give exhibitors enough to make a living, theatres should look for product at better conditions.

I see a chance for that because producing and distributing films can be done with less money than ever before, the marketing makes it expensive.
The current state of studios reminds me of the late 1960s: they are afraid to take chances, rehash formulas ad nauseam and forget parts of their audiences. Bad decisions, little innovation - the dinosaurs are heading for the tar pit again.

They don't want to deal with the exhibition industry any more? Fine, keep your pie and see if you can sell more of it to people at home. Everything it takes to make movies, good or bad, can be bought, and there's enough money out there to buy it. Just a matter of time.

Posted by Bobby Henderson (Member # 840) on 04-03-2011, 08:48 PM:

Organized theater boycotts of major distributor product may cross anti-trust lines. However, I think major movie distributors are already violating anti-trust with the way they keep screwing the exhibitors. Multiple studios decide to market a new VOD system that will indeed cut into theater profits? Sounds like collusion against the interests of exhibitors to me.

It's really laughable how so many bean counters out there believe the movie industry can survive without theaters. I don't think they have really considered just what could happen if theaters are taken out of the movie business.

What movie studio is going to spend $100 million, $200 million or more to produce and market a major motion picture if the end product is essentially a made for TV movie without a TV network to showcase it?

If the movie studios are so sure they don't need theaters, then why not start going direct to video immediately? Why not take one of this summer's coming event releases, such as Super 8 or Harry Potter and the Deathly Hallows Part II and port it directly to VOD and home video release? If what they believe is true the immediate release to home video should generate even more money from the movie being available much faster. Right?

The problem is the theatrical release generates quite a lot of money for studios on its own. A lot of people will see a big event movie in theaters AND buy it later on video. With a video-only release there is no double dip on the customer. Say goodbye to hundreds of millions in potential revenue. The theatrical release also delivers an extra marketing punch for the movie. The buzz on a good movie sticks around for months while the show is still playing in theaters. In a direct to video/VOD environment movies will come and go quickly and often quietly.

Direct to video release just has a certain stink to it. That's because so many low budget crappy "made for cable" movies are churned out direct to DVD. A truly major release would get lost in the tide of that crap. The theatrical release elevates the real movies above the low budget garbage.

I've repeated the dire warning many times before. I really do not think the movie industry can survive without the movie theaters. Simple as that. Big media companies will really screw themselves badly by cutting movie theaters out of the mix.

Without theaters, the public's perception of the movie industry would be irreversibly damaged. Major movie releases would vanish and so would a lot of those direct to video garbage releases. We would end up with a smaller number of lower budget movies made for TV. In the end broadcast/cable TV would end up being the showcase for the best "movie" productions -and those are already very different, typically shows in mini-series form. A mini series like Mildred Pierce on HBO has a luxury of showing so much more of the original novel's story line than the old 2 hour movie could ever manage. Unfortunately cable TV is a pretty limited market, not big enough to recover the loss of major movie release revenue. Even cable TV networks would suffer for the loss of steady stream of theatrical releases to re-broadcast on cable.

quote: Christian Appelt
Everything it takes to make movies, good or bad, can be bought, and there's enough money out there to buy it. Just a matter of time.

While quality production and post production tools are getting much less expensive, it still takes a hell of a lot of money to produce a good quality movie. Actors, sets, costumes, unique locations and more really balloon the size of a movie production budget.

Posted by Mike Blakesley (Member # 26) on 04-04-2011, 02:36 PM:

I agree with everything in your post, Bobby. It seems so blatantly obvious! So why can't all the educated suits at the studios see it?

Our film booker has told me repeatedly that the studio decision-makers "live in a world of their own." Well that's never been more obvious than it is these days.

Here's a blog post we got in our email from NATO today.

The Wrap
Hollyblog: Studios Are Determined to Kill the Film Business
Published: April 02, 2011 @ 1:01 pm
CINEMA-CON, LAS VEGAS:

Film studios seem determined to kill the movie business completely. After putting video stores out of business by authorizing Redbox to rent videos for $1 per day from what amounts to a Coke machine, now they want to put movie theaters in a coma by authorizing a new at-home video-on-demand release during what has until now been the exclusive first-run theater window.

This comes after demanding for the last 10 years that theaters spend $ billions on digital sound, stadium seating, digital projection, 3D projection and new locations.

Now James Cameron wants a completely new system put in place with enhanced frame rates for further $ billions.

In a stunning suspension of disbelief, many studio executives argue that an enhanced early at-home alternative will encourage MORE people to go to the movie theater -- do people this naive really exist? It sounds exactly like the last ten years of internet gurus and solons calmly insisting that free (stolen) music would encourage higher CD sales. See how well that worked out. Fool me once ... call me a record executive; fool me twice ... what do they think, we're politicians?

I ask: "Are you a movie without a movie theater?"

If you answer “yes” a movie is a movie even if released just on television, then go ahead. In fact, if that’s true why aren’t you doing it now? The TV networks have no exhibitor relationships to destroy, why aren’t they spending $300 million to produce Avatar, or $150 million to produce “the Hobbit” or even $60 million to produce “The Hangover?” I know why because I’ve asked TV network heads in the past. They say it’s ludicrous to assume they could spend like a movie studio for TV product.

The TV movie model does not support the economics of a major feature film. It is the theatrical release that makes a movie a movie and builds the momentum and interest that enables it to gross over a billion dollars. For a major worldwide hit, it is also the largest contributor to the profits of a movie. Don’t be fooled by “retail” numbers. Home video was a very big retail number but the share to the studios was around 35 vs. 60 percent for a major hit in the movie theater.

Further, a major theatrical hit has an unlimited upside while a major video hit is intrinsically limited. Video and television are great for catalog, but they do not fund a front line release schedule -- for that you need the movie theater with its higher per capita income and greater share to the studio.

As for the impact on theatrical attendance, I believe it will be devastating. However, among studio execs the best case quoted to me was a 10 percent drop in attendance with the executives insisting that, "Some theaters will close, others will raise prices ... it's all good." The reality is that a 10 percent drop in total attendance, across the board and permanent, will cause 2/3 of all the theaters in the U.S. to close their doors and never open again.

When I brought this up, the response was that movie theaters were just a real estate play anyway so profits didn’t matter to the theater companies -- something which hasn't been true for 30 years. Today, virtually all theaters are in leased premises rented from mall owners with only older, outdated facilities still existing on owned property.

The lack of knowledge of the economics of the theaters is stunning – but it pales in comparison to the lack of interest in hearing any point of view other than their own.

What is true is that the studios f---ed up the video business deliberately and with full knowledge. They were told by every video store chain that $1/day Coke machines dispensing videos would kill the bricks and mortar video stores. Their response was the typical studio response: "F--- off and get out of my office!"

When Hollywood and Blockbuster shut their stores studio revenue dropped immediately by $ billions. The public’s demand didn't drop by that amount and in fact the volume of video rentals was increasing when this took place, but with increasing volume at 40 percent of the price the stores could not be profitable. The exigencies of a retail business dictate that when revenue drops below the break-even point the entire store closes, not 10 percent of it.

Studio executives are desperate and have invented this accelerated video/internet window mainly as a means to keep their jobs -- see how clever we are, how progressive and forward thinking? The utter denial that this will affect the movie theater is stunning to behold and laughable to listen to if they weren't so serious.

I'm going to say it again -- a 10 percent drop in attendance, with the attendant loss of box office revenue, concessions income and advertising income will CLOSE the theaters. Most theaters have only 15-20 percent operating margins. Amazingly, studios executives are simultaneously haranguing (and alternately ridiculing) the theater owners by demanding they increase their spending on new technology, even as they plan to undermine the theatrical release.

The contempt the studio executives have for the theater owner/operators reminds of the Silicon Valley contempt for what they laughingly refer to as "authored product" -- you know, like books, music, movies and TV shows, stuff people have to think of, write and create and pay for.

Don’t believe me? There are many theater companies which are public. Run the numbers yourself.

What are the options? Theaters could raise their prices -- like Broadway theaters are a viable model for the movies, or maybe Grand Opera is the new model? Go twice a year for $150 a person. The main advantage movie theaters have in the marketplace is that movie-going remains the single cheapest thing a family or couple can do on a night out of the house. Despite complaints over ticket prices and parking fees, by any comparison to restaurants, sports events, concerts, theme parks etc. movies are far and away the cheapest entertainment alternative out of the home.

You could cut the theater in on the income, but: (a) that wouldn’t make up for the lost concessions and advertising income which together are 70 percent of a theater’s operating profit, and (b) wouldn’t that be contrary to the reason for creating the window to begin with making it moot?

Raising prices will simply drive more people to the home alternative. What about cutting costs? Rent for theaters is fixed -- pay it or file Chapter 11 and a drop in attendance doesn’t reduce the mall owner’s need to turn a profit on their development. Over 80 percent of the labor costs are at the minimum wage and people are already complaining that staffs are too small. Utility rates are unaffected by theater attendance. Sugar prices won't go down and neither will the cost of candy. Popcorn notoriously costs only pennies to begin with and the soda companies actually subsidize soda sales.

There are literally NO costs the theater can reduce except two: They can stop cleaning the theaters ... OR ... they can stop paying film rental. Hard to see how either helps things.

On top of all this, a decision to cut off the theatrical window is what strategic planners (something studios seem to have a lot of these days, most with the world "digital" in their title) call a "point” decision. Once you make it, it becomes irreversible and dictates everything that comes after. The famous business school case involves the Navy deciding on the length of the runway for an aircraft carrier. If you put in this window and it cripples attendance as I believe it will and as most studies suggest it will, the theaters will close and they won't reopen.

But you sure look smart for being the one to suggest it, don’t you?

Gotta go now, there's a new Blockbuster opening down the street ... What? Where?

Posted by Frank Angel (Member # 248) on 04-04-2011, 05:41 PM:

Great piece. We pretty much have all been saying much of this for quite awhile. I'll just add this -- we know the studio execs sit in their plush offices and salivate over the opening weekend numbers, hoping against hope that THIER big tent-pole will be up there in the 30, 40, 50 million dollar bracket. Right or wrong, this seems like it is the all-consuming laser focus on which they think their fortunes hang. For them it's the still point of the turning world.

So do these people REALLY think it is even remotely possible that they would be able to see this kind of monetary return if they went direct to all those ancillary markets for which they seem to get enormous erections -- cable, $1 Redbox rental, Netflix, DVD, Video-on-fuckin-Demand? Do they honestly believe they can do anywhere near theatrical level business without theatres? Do they really want to risk their $200 million investment in a major production on Home Video?! How much crack can these guys be smoking?

Posted by Joe Redifer (Member # 3) on 04-04-2011, 06:13 PM:

Did the studios really demand the industry spend billions on stadium seating? I can understand digital sound, digital projection and 3D, but the stadium seating argument sounds weak. To me, that's just competition between exhibitors. Did studios withhold bookings fro complexes solely due to the fact that they weren't stadium seating?

Posted by Steve Guttag (Member # 268) on 04-04-2011, 08:28 PM:

Theatres also ceased being the "cheapest" out-of-house entertainment too. I always throw up minor-league baseball as an example of a much better/cheaper bang for the buck...if you want to see baseball. Going out bowling has proven to be cheaper than going to the movies too and I'm sure I could rattle off a bunch more. As such, raising ticket/concession prices is not a good idea to spur attendance in movie theatres.

If exhibitors could do it independently, they should simply refuse to play ANY movie that is to be in this early release to home video. Yes, it would hurt, but it would spread the hurt to the studios the most...they have the most invested in any single movie...loosing the theatre revenue and publicity would hurt them more. It would really take the likes of Regal and AMC to refuse to play the movie to get the studio's attention. That would be a huge hurt.

-Steve

Posted by Bobby Henderson (Member # 840) on 04-04-2011, 08:59 PM:

In the 1990s movie distributors really didn't care much at all if a theater installed digital sound or stadium seating. The only thing that mattered to them was the seating count. With digital projection that was an "upgrade" that really did affect their costs: no more film prints to make or ship.

The stuff these media company bean counters are doing is no different than how bean counters are wrecking so many other American businesses. These fuckers are so blind and hell bent on making the next quarterly report look good for share holders they have lost sight of the company's true purpose: selling product to CUSTOMERS. It's the damned customers that matter, not the fucking share holders. If the customers aren't into buying the product the damned company and its stock will be sunk.

I like to bring up Apple as a good example. Its stock isn't over $300 per share because some bean counting dick did some amazing numbers fudging on financials and "down-sized" enough of those icky employees businesses shouldn't have to be burdened with hiring. Apple's stock is priced sky high because its customers love the product. Simple as that. Apple damned near imploded back in the 1990s due to a parade of dip-ship bean counter executives who didn't get it. It took Steve Jobs, a guy who both understood and loved the product, to get Apple steered back into the right direction.

Instead of doing numbers tricks the movie studios and movie theater chains ought to be populating their ranks with people who really understand and LOVE the movie business. The movie studios have to get back to making actual new movies rather than remaking the same old shit over and over and over and over again. The movie studios need to work with theaters to make as many of them a great place to see a movie as possible. Some theater chains, like Warren, are trying to bring back at least some of the movie palace concept. I think the studios ought to be bolstering that rather than undermining it with bad deals and bullshit like this new VOD thing.

Posted by Mike Blakesley (Member # 26) on 04-04-2011, 09:37 PM:

quote: Steve Guttag
I always throw up minor-league baseball as an example of a much better/cheaper bang for the buck...if you want to see baseball. Going out bowling has proven to be cheaper than going to the movies too and I'm sure I could rattle off a bunch more.

Those aren't "entertainment" in the same sense that a movie is though. There are lots of out-of-home "activities" that would be cheaper than going to the movies. Such as having a picnic in a park. But that doesn't tell a story or take you out of your hum-drum world on a flight of fancy for two hours (and, you have to make and bring your own snacks). And...come on, bowling? [Big Grin]

Posted by Joe Redifer (Member # 3) on 04-04-2011, 10:27 PM:

In that sense, Mike, movies only compete with plays since they tell a story. Entertainment is entertainment, so minor league baseball does count. Picnics wouldn't, though, as they aren't something you usually pay for. Plus, you aren't being entertained. You are just enjoying each others company and that's it.

Posted by Steve Guttag (Member # 268) on 04-05-2011, 06:33 AM:

If Picnics are not entertainment, you aren't doing them right [Razz]

And, for me, both baseball and bowling ARE entertainment. To each their own, I guess. Note, in the case of baseball, I get closer to 3-hours, each game of LIVE entertainment. Now certainly baseball is not for everyone but there are other events that too will compete favorably with movies for a 2-hour (on average) time/cost. Heck, on a strictly cost/hour, even amusement parks compete favorably to going out to the movies (unless you only go to the park for 2-hours...if it is closer to 8-hours...then most are less than $10/hour).

-Steve

Posted by Scott Jentsch (Member # 1681) on 04-05-2011, 09:35 AM:

When I read about this development, it wasn't surprising. It shouldn't be to anyone that is paying attention to the industry.

The studios are boiling the frog the right way; turning up the heat a few degrees at a time.

They know that audiences won't accept direct-to-home releases -- yet.

They know that they need movie theaters and can't do simultaneous releases -- yet.

So they continue to chip away at the release window. If they get too much resistance, they back off for a while, and then start in again.

Meanwhile, movie theaters have occupied themselves with making the entire experience of going to a movie more expensive, but not necessarily more enjoyable. VIP seating, at-your-seat waitstaff, etc. are great luxuries to be enjoyed once in a while, but who's going to pay $30 per person for that kind of experience? Gold Class tried that, with success of execution in my opinion, but iPic just bought them out and converted their auditoriums with more traditional seats (don't know if the service has gone down, though).

I've been to the iPic here in the Milwaukee area, and the Gold Class in South Barrington (before the iPic purchase), and the iPic had good food, but the projection wasn't perfect, the screen was too small and too high for the seating position, and it was pricey. That was for the last Indiana Jones movie, and I haven't been back since.

Some time in the near future, we're going to see an A-list director and/or a movie with some A-list staff, with a budget that approaches average numbers, released simulataneously to theaters and to the PPV/VoD market.

Do I think that's a good thing? No. Especially given that my business revolves around people going to movie theaters to see movies.

Do I understand it? Yes. The appeal of the home market is too great for the studios to resist. It may be a bad decision in the long run, but I think the climate is such that it's going to be attempted. If it is a bad decision, hopefully they'll know before the entire market has been killed off and all the movie theaters are gone, and reverse course.

However, what I didn't see in any of the news from CinemaCon, from any official statements from NATO, or anyone here, is:

What is going to happen now?

Assuming that this news leak wasn't a trial balloon that was only intended to gauge response from exhibitors and analysts, the new reality is that theaters are going to have a 60-day exclusivity window on some major releases. They'll probably have another additional 30 days before the Blu-ray/DVD release.

What are theaters going to do with the window of opportunity they still have?

What can a theater do to improve attendance in those 60-90 days that will make the home video release a non-issue for them?

If a movie studio exec in charge of deciding what to do were to go into a movie theater (pick your theater, or pick an average movie theater nearby) to see Source Code or Hop, and use that experience as a judge about the quality of the moviegoing experience for their customers, what would they say?

Would they say that "this is the way we think our customers want to see our movies" or would they say "now I see why so many people wait for the video release"?

Many theaters that I have attended have every right to be very afraid of having to compete with direct-to-home releases. That's because they aren't doing enough to deserve the money that's out there, but they get it anyway because of the exclusivity of product that the studios grant to them.

Netflix and Redbox killed Blockbuster and Hollywood Video because the video stores weren't offering enough value and the money they were getting flowed to the competition instead. Blockbuster had the chance to compete head-on with Redbox and chose not to. They had the chance to provide more value than Netflix but couldn't get their act together before they started to hemorrhage money so badly they couldn't mount a serious defense.

I'd like to see movie theaters rise to the challenge and be the best damn place to see a movie, period.

Absolutely perfect presentations, an enjoyable time for the customer from the sidewalk to the exit door, and a positive lasting impression on the customer no matter how bad the movie was.

Where's the call from NATO for theaters to rise up and meet this challenge?

Posted by Mitchell Dvoskin (Member # 751) on 04-05-2011, 09:58 AM:

> Blockbuster and Hollywood Video because the video stores weren't offering enough value

I can't speak about Hollywood Video, but Blockbuster failed because they treated their customers like dirt. For example, a no late fee policy that consisted of renaming their late fees to "restocking" fees. NJ successfully sued them for false advertising on that one. Before that, they were in trouble for 1 day rentals that were actually less than 24 hours before late charges kicked in. I don't like being nickeled and dimed, and I will not do business with companies that do so. Personally, I used to rent from Blockbuster on a regular basis until I bought a BluRay player, and was told that I needed a charge card to rent BluRays. I left the store, went home and signed up at Netflix, and have not set foot in a Blockbuster since. The issue for me is not the charge card, as I needed one for Netflix, but rather I was offended that a local store that I did business with regularly would not let me rent a BlueRay with cash. Screw them. I guess they learned that once you lose a customer, it is very hard to get them back.

Posted by Mike Blakesley (Member # 26) on 04-05-2011, 12:17 PM:

quote: Scott Jentsch
occupied themselves with making the entire experience of going to a movie more expensive

I don't think any theatre operator has raised the prices on purpose. They do it because that's the cost of doing business. I lose sleep every time we have to raise prices. I hate raising them.

I would guess that about 90% or more of people I talk to who say they haven't been to a movie in a long time give "cost" as the reason. Yet they have no problem spending $2000 on a flat TV set to replace the old tube model that's still working, or $10,000 on a snowmobile they can only use four or five weekends a year, or going into hock taking the kids to Disney World for $5000 for five days, or dropping $300 on a pair of shoes they'll wear once and then put in the closet forever. If the movie theatre business has a problem, it's the public perception that movies are expensive. They're not, when you consider what you get for the price.

quote: Scott Jentsch
what I didn't see in any of the news from CinemaCon, from any official statements from NATO, or anyone here, is:

What is going to happen now?

It's impossible to answer that question because nobody knows what to do. If I didn't already have a digital projector sitting here, given the developments in the past couple of months, I probably wouldn't be investing in one right now.

Even if it was possible to create the "perfect" moviegoing experience for every patron, are there enough people who would prefer the "night out" experience when the same content is available to watch on their home TV? I hope so, but I have my doubts, because we all know that people are FAR less picky about quality in their own homes than they are when they go out. The number of TVs set to the wrong aspect ratio bears that out.

Posted by Bobby Henderson (Member # 840) on 04-05-2011, 01:03 PM:

If the electronics company executives were really aware of the repercussions of theaters being seriously harmed or eliminated those guys would be very alarmed.

Big hit movies have been the top thing that has driven sales of new, big screen HDTV sets, DVD & Blu-ray players, surround sound systems and other pieces of home theater related gear. If theaters are eliminated the stream of big budget Hollywood movie epics will vanish. And so will a lot of new TV and home theater hardware sales. That market can't survive on a supply of old, catalog movie release product. Gotta have movies that are big, cool and new.

People who only watch movies at home still depend on theatrical releases to know which movies were successful commercially and critically. They still recognize the difference between a movie that played in theaters versus yet another straight to DVD Cuba Gooding Jr. movie. The marketing blitz makes a big difference. So do the movie critics. Without the theatrical release they have no more road map on what and what not to rent. I don't think institutions like the Academy Awards could survive if the movie industry was an entirely made for TV venture. The Emmy Awards might get a little bigger, but probably not.

The folks at Redbox better wake up on this point. Their $1 DVD and $2 Blu-ray soda pop style video rental machines are stocked overwhelmingly with major studio release product and nearly all of it has played in movie theaters. There is little if any indie fare found in those kiosks. Who the hell is going to bother spending money in a Redbox machine if it is only stocked with made for TV movies?

Even streaming companies like Netflix and Vudu will be hurt seriously and long term if theaters are eliminated. Who is going to have any enthusiasm about streaming movies if there are no more big blockbuster releases to provide a halo effect for everything else? In the end Netflix, Hulu+, etc. would be fighting each other in an attempt to only survive as an alternative cable TV service.

And cable TV would get hammered too if Hollywood's product was only made for TV. How many people will continue to subscribe to premium TV networks like HBO & Showtime if the supply of big budget Hollywood hits runs dry? I'm not going to keep paying $14 per month for 8 channels of HBO just to see True Blood or Boardwalk Empire.

These big media companies think they have all their bases covered by virtue of their ownership of broadcast TV networks, cable TV networks and movie studios. But they really don't. The customers still have to come along to make the deal work. I don't think they will. Without the exclusive theatrical release platform the studios won't be able to finance and market major productions. Customers will see far less value and prestige in the made for TV product Hollywood will be trying to sell and certainly will not pay movie theater premiums just to watch the made for TV show at home.

In trying to force movies into home video release faster or instantaneously those global media companies will end up killing a big part of their business. Instead of making more money they will actually end up making a lot less.

The movie industry as a whole will not die. But the American part of it probably will without movie theaters. I think the business of feature film production and exhibition might continue to survive and even thrive in countries like China and India. In the long run those countries may end up dictating the terms of popular culture to the rest of the world rather than the United States. The US is losing its edge on selling entertainment to the rest of the world thanks to goofy corporate mistakes. Like so many other industries the United States has lost, those damned bean counters will just ruin the business model with stupid mistakes and then make a fast buck off of liquidating the business to foreign competitors.

Maybe this looming situation is one of the reasons why Steve Jobs won't put Blu-ray burners into Apple computers. Why fart with something like that when the movie industry is trying to kill itself?

One positive thing I see about this situation: people will be bored shitless sitting on their living room couches and be forced to go outside to be entertained. It might put a dent in this country's costly, complicated health care problem.

Posted by Tom Petrov (Member # 1534) on 04-05-2011, 08:13 PM:

I am actually all for releasing movies on bluray or downloading ASAP for a number of reasons.

1. Most importantly, it will create some competition, theatre owners are going to have to make the experience better and better. Which is good for the moviegoer.

2. I hope it does close some theatres, there are way to many screens and the market is oversaturated with product.

Do I really need 70 screens within 15 miles each way of my house?

3. There are number of theatres that have been playing product even though it is out of dvd/bluray. Black Swan can be downloaded at Cineplex.com, picked up at Blockbuster or view at one of the theatres that in my area (part of the 70 screens)

Finally. Lets not kid ourselves folks. No studio, producer, director or whomever is going to release a movie on downloading or bluray after 60 days if they have a big hit on their hands. Let me repeat that, the studios will make sure the suck every dime out of the theatrical run before it hits downloading.

Its the movies that are not making money after 4 weeks that need to be released at home right away.

Posted by Mike Blakesley (Member # 26) on 04-05-2011, 09:00 PM:

quote: Tom Petrov
No studio, producer, director or whomever is going to release a movie on downloading or bluray after 60 days if they have a big hit on their hands.

Actually, I believe the studios have all of the relevant "dates" well in hand before the movie ever leaves the starting date. Theatrical, video, Netflix/Redbox, satellite, hotels/airlines, cable, network TV. We've canceled more than one booking over the years because the stupid video announcement came out while the movie still had plenty of theatrical legs left in it.

It is true that some of the directors and stars might have some pull in this issue. I hope some clearer thinking will prevail at some point, but that would be a first.

Posted by Bobby Henderson (Member # 840) on 04-05-2011, 10:39 PM:

quote: Tom Petrov
Most importantly, it will create some competition, theatre owners are going to have to make the experience better and better. Which is good for the moviegoer.

Tom, what you're describing simply will not work. Theaters and video stores are NOT meant to compete with each other. That crap will be destructive to both of those release platforms. I already explained why, but you obviously skipped past that.

The business model of the movie industry depends on separate release windows for first run movie theaters, second run, international release, sell through video release on DVD/Blu-ray, rental/VOD, uncensored release on premium cable networks and edited for commercial TV release on regular cable and broadcast channels. All of those different revenue streams will be severely reduced if theaters fail.

quote: Tom Petrov
I hope it does close some theatres, there are way to many screens and the market is oversaturated with product.

Some areas in North America are over-screened. But I disagree theaters are over-saturated with product. Theaters certainly are not over-saturated with quality movie product. Many movies released in theaters are badly derivative, but they're far better than big number of low budget, straight to DVD releases. Quality content is rare on cable and network TV. So many of those networks have a glut of unscripted, so-called "reality TV" shows.

quote: Tom Petrov
There are number of theatres that have been playing product even though it is out of dvd/bluray. Black Swan can be downloaded at Cineplex.com, picked up at Blockbuster or view at one of the theatres that in my area (part of the 70 screens)

There are two major fallacies in that argument.

1. Black Swan was not released to theaters and home video at the same time. It had an exclusive run in theaters and played in enough theaters to be considered a wide release. I saw it here in Lawton at the Carmike 8 in January. The movie had a lot of buzz surrounding it, much of it free buzz from the critical press.

2. The greater Toronto area is one of the most populated metro areas in North America. More than 5.5 million people live there. In a market that size, there's probably at least a few hundred people there who consider themselves film buffs, routinely watch independent movies and even insist on watching them on movie theater screens. That kind of customer is RARE. But there's enough of them in a giant-sized metro like Toronto that some art house theaters can survive and even get away with showing movies that have already arrived in video stores.

Here's an example of why the Black Swan example doesn't work in most other cities and towns. A decade ago the Carmike theater in Lawton played the religious movie Left Behind. Lawton has a lot of churches and church members so the sales potential was pretty big. Despite grass roots marketing at churches the movie played to a mostly empty house and left the theater after only one week. Other religious movies with large or small budgets have done very well at the Carmike. The difference with Left Behind: it was already available on DVD & VHS to buy or rent. Most church-goers just watched the movie at home at their own convenience (if they even watched it at all).

Posted by Scott Jentsch (Member # 1681) on 04-05-2011, 10:48 PM:

quote: Mike Blakesley
I don't think any theatre operator has raised the prices on purpose. They do it because that's the cost of doing business. I lose sleep every time we have to raise prices. I hate raising them.

I was referring to the large number of IMAX/ETX/RPX/XD/etc. screens that have been converted/added to movie theaters, all with their associated surcharges.

If you want to see a movie in the latest and greatest equipment and auditoriums at theaters that have added these "enhancements," you have to pay upwards of 45% more for your movie ticket.

In some theaters, you don't have a choice. If you want to see the new releases, they are only available in the new auditoriums with the upcharges.

Combine that with the 3D upcharge (for those that like wearing funny glasses), and going to see a movie these days has gotten much more expensive than it was just a year or two ago.

Posted by Tom Petrov (Member # 1534) on 04-05-2011, 10:53 PM:

quote: Scott Jentsch
If you want to see a movie in the latest and greatest equipment and auditoriums at theaters that have added these "enhancements," you have to pay upwards of 45% more for your movie ticket.

Scott- Didn't the studios charge more for 70MM theatres?

Posted by Bobby Henderson (Member # 840) on 04-05-2011, 11:02 PM:

I saw lots of movies in projected in 5-perf 70mm. I never had to pay a premium for it. The movies were the same price whether the show was in 70mm 6-track Dolby Stereo or just 35mm.

IMAX and the DMR blow up thing got this premium price thing going. But even there IMAX theaters were already long established as being more expensive theaters to visit. A true IMAX theater cost a hell of a lot of money to build and operate. The higher admission prices were justified.

I see little if any reason at all to justify a price premium for IMAX Digital or any of the wannabe fake IMAX also-ran theaters popping up in various places. It's just digital projection, not giant format 15-perf 70mm. And the idea of paying a premium for sound done well or sound done right is just asinine. It makes crappy sound the new normal for regular first run theaters.

Posted by Aaron Garman (Member # 1653) on 04-06-2011, 01:06 AM:

Maybe we can just clone Selznick, DeMille, Chaplin, Mayer, and Warner to save the movies.

Agree or not, movies are an art form like music, theatre, or a painting.

It is interesting to consider though: when you want to see "great art" like a Davinci you need to go somewhere like the Louvre or if you want to hear Beethoven at his finest, visiting Berlin or Vienna may not be a bad idea. Scary to think that films may one day be that way. The beauty of cinema is that if there is a great film made, it may be playing very close by and you don't have to travel the world over to see it. Sure, we can view great films in the home better than ever before, but nothing can top a proper cinema for conveying the art form in the best way possible.

AJG

Posted by Tom Petrov (Member # 1534) on 04-06-2011, 04:51 AM:

quote: Bobby Henderson
I saw lots of movies in projected in 5-perf 70mm. I never had to pay a premium for it. The movies were the same price whether the show was in 70mm 6-track Dolby Stereo or just 35mm.

Maybe it was a Canada thing. I posted a few ads with the pricing.

quote: Aaron Garman
The beauty of cinema is that if there is a great film made, it may be playing very close by and you don't have to travel the world over to see it.

I kind of agree here but I also kind of don't. You usually have to travel to see great films made years ago. I had to travel into Toronto to see 2001 or Playtime in 70MM.

I play on hitting Ottawa this fall for the 70MM festival there.

Just imagine if I lived in Winnipeg or P.E.I.

Posted by Mike Blakesley (Member # 26) on 04-06-2011, 12:34 PM:

Regal just announced they will curtail trailer playtime for the studios that are doing the VOD thing. I don't know if that's a good idea either...but what else is there?

Are we heading for a time when there are no movie trailers before a show -- just 30 minutes of Starbucks and Toyota commercials? I hope not...since trailers are the best marketing tool we have, I'm not exactly keen on cutting back on them too much.

Posted by Steve Guttag (Member # 268) on 04-06-2011, 12:47 PM:

Don't play VOD movies...send the message (meaning to Regal/AMC types...singles will have little effect on studio decisions).

Posted by Scott Jentsch (Member # 1681) on 04-06-2011, 02:30 PM:

I think that there's a good chance that this was a trial balloon that may not see the light of day (at least not right now). Keep in mind that none of this has been announced officially.

But if it does actually happen, there are only two options that I see for theaters:

1. Not play any movies that will be part of this program.

This has to be done on a wide enough scale to impact the studios, so the big chains are going to have to stand up and draw that line in the sand. There has to be a financial disincentive for the studios to get them to back away from such a plan.

Of course, this could backfire should the line be drawn, the studio goes ahead anyway, and it still meets their expectations. Those theaters will have proven themselves insignificant.

2. Theaters must rise the challenge.

If this is going to be the new reality, movie theaters will have 60 days, 90 days (whatever it ends up being) to get the most revenue from each movie in the time they have.

(This should be the case already, as how many first-run theaters are still playing movies after 60 days?)

I'm sure that many organizations represented here do not fall into this category, but I think many theaters tend to treat their customers like cattle to be run through the gates as quickly as possible, while extracting as much money from the process as possible.

There is little that's impressive about going to the average multiplex. I've often compared it to eating at McDonalds. They set the expectation that you aren't going to have a great experience (if you're over the age of 6), but you will get a moderately acceptable product for your money on a pretty consistent basis.

In this alternative, theaters will have to work harder to be relevant not only to the studios, but to their customers. That's the primary problem with this announcement, in my opinion, and it's the ugly secret that NATO doesn't want to talk about. If given the choice, a large number of moviegoers would not choose to attend a movie theater to see a movie.

The good thing is, that if you solve that problem, it also solves the problem with the studios, because now the theaters will have a more significant impact on their bottom line (directly and indirectly). Theaters win by getting more business. Customers win by having a better experience for their money.

Posted by Mike Blakesley (Member # 26) on 04-06-2011, 03:05 PM:

quote: Scott Jentsch
the ugly secret that NATO doesn't want to talk about. If given the choice, a large number of moviegoers would not choose to attend a movie theater to see a movie.

I think this goes back to my post awhile ago where I said people (many, many of them) don't give a crap about quality. They just want to see the movie they want to see. If they have to go to a theatre, they'll go. If it's available in their house, that's easier, so they'll stay home. It won't matter if it's on a 12" RCA TV, they'll be able to lay on their couch and sleep through the last half of the show.

If it causes a lot of bad theatres to clean up their act though, that's great....but I don't think it would matter to some people if you were passing out free $10 bills at the door, if they could see the movie they want in their house, they'd just stay home because that's the easiest thing to do.

Posted by Bobby Henderson (Member # 840) on 04-06-2011, 05:31 PM:

This is also why it is so seemingly easy to predict how destructive it would be for theaters if the theatrical release window is severely reduced or eliminated. If people have the option to watch the same movie at home versus seeing it play in a theater the overwhelming majority of people will just see it at home. Theaters would lose too many customers in order to stay in business. It wouldn't matter how opulent the theater made its environment or how great a job it did with presentation quality. Too many customers would stay at home.

Far too often customers continue to visit shitty theaters when they have better alternatives a few miles away. I have said it before how the Central Mall 12 here in Lawton has significantly better attendance levels than the Carmike theater on the West side of town. I hate the mall theater. I refuse to go there. But lots of people keep going there despite the lackluster presentation quality and all the disruptive teens. They complain about the theater yet keep visiting it. They keep doing this because the theater is in the mall. Whatever. If these people aren't willing to drive 5 miles across town to a better theater I sure won't expect them to drive an hour up to Moore to see the show in the state's best movie theater (the Warren 14). And if the movies were released "day in date" at theaters and on home video simultaneously they would all watch at home. Netflix streaming has allowed more people to figure driving to the video store is too much of a pain in the ass.

Some people might consider what I've said on this topic to be a little too much on the "doom and gloom" side. But I think my "what if" prediction is on target. The death spiral currently underway at big video store chains due to Redbox and Netflix is a good hint at how rapid the market can turn from good to very bad.

The bean counters in Hollywood are betting business will go on as usual and they'll make even more money with this VOD scenario. I think the plan could bite them in the ass. And once that chain of events unfolds with theater failures Hollywood will be powerless to stop the disaster.

Posted by Eric Robinson (Member # 2966) on 04-07-2011, 02:23 AM:

Its funny that the movie companies are all paranoid about someone recording a video of a movie in a theatre auditorium but they suddenly don't care if people do it at home?

Posted by Jonathan M. Crist (Member # 413) on 04-08-2011, 10:28 AM:

Actually from what I understand the 60 day window was a compromise. Originally the studios wanted only 30 days.

Want to bet it will soom morph down into thirty days?

Posted by Frank Angel (Member # 248) on 04-09-2011, 07:17 AM:

quote: Bobby Henderson
The bean counters in Hollywood are betting business will go on as usual and they'll make even more money with this VOD scenario.

This might work IF the numbers work out for them; but really, that is a very questionable theory. It seems the majority of people will choose convenience over quality more often than not and theatres for a long time have gotten the almost universal reputation that, even when they convenient, they not a desirable place to watch movies. "I hate going to the movies." is too prevalent to expect that the VOP will not be a desirable alternative as soon as it becomes made available to the general public.

But here's the thing about the numbers studio bean counters seem to be coming up with that are WAY out of wack and need a serious reality check. VOP can't possibly make up for theatrical ticket revenue that will be lost in almost any scenario other than the single person or couple paying the $30 to see a first run VOP release. Those would be one or two tickets lost to the theatres and which would be a gain for the studio. But what happens when a family of three, four or five or worse, a party in a college dorm or just a bunch of family friends getting together to watch that $30 movie? Not only does the exhibitor, but the studio looses money hand over fist in almost all scenarios with VOP. Now multiply that across the country and even putting the exhibitor aside, there is no way this can be a positive economic model for the studios either. What it can easily become is a pox on both their houses.

And let's not forget what Eric rightly brought up -- how will this impact the piracy issue? You know that 6 BILLION dollars loss to piracy the MPAA is always whining about. Well, how easy will it be to get pristine copies out to the bootleg market now in only 60 days after theatrical and even BEFORE DVD release? As easily as pressing RECORD. Not only can this impact theatre attendance, but DVD sales, video rentals....in short, EVERY ancillary non-theatrical market as well. And it will pretty much put an end to MPAA's constantly inferring that it's the off-screen-camcorder-in-the-trenchcoat copies that are made in theatres which are the cause of the piracy problem; well, who are they going to blame it on after VOD debutes?!

Posted by Mike Blakesley (Member # 26) on 04-09-2011, 09:32 AM:

I think "piracy" is the least of the worries. The pirate copies always surface on Day 1, not Day 61. By that time everyone who wants a pirate copy has got one.