As you may have heard over the past few weeks, the major studios (with the exception of Paramount), will be testing the waters this spring with a new premium VOD plan that will make films available in your own home 60 days after they hit theaters. As outlined by Deadline, the plan right now is limited to DirecTV subscribers who have HD DVRs, but for $29.99, you can get a crisp copy of a film complete in high definition and 5.1 surround sound and 48 hours to watch it as many times as you want. But the program is starting slow, kicking off with “Just Go With It,” and introducing a new film every two weeks. But needless to say, theater owners are incensed. Already battling for audiences, they see this move as the death knell for the theatrical movie going experience. Well 32 filmmakers — including Michael Bay, Kathryn Bigelow, James Cameron, Michael Mann, Todd Phillips, Guillermo del Toro and more — have now issued an open letter to the industry citing their concerns and they make some valid points.
Firstly, they argue that theatrical dollars still make up for a huge portion of the financial windfall for a movie, and reducing that window puts those dollars at risk. Moreover, they rightly assert that the $30 price point simply won’t stand and that eventually it will tumble down to a point where the current potential for a lucrative new avenue of revenue will be meaningless. As for piracy, they argue that making pristine digital copies available will only exacerbate the problem, not solve it (indeed, it’s pretty easy to find pay-per-view rips of movies already). And perhaps most importantly, the filmmakers are concerned that the end result of this shortening of the theatrical window will mean only blockbuster and tentpole fare will get a release in cinemas whereas smaller or riskier films won’t have a chance to find an audience and build the word-of-mouth those films need to be successful.
But, theater owners aren’t entirely innocent here either. While the open letter touts how special and amazing the movie going experience is, theater owners need to come to grips that going to the cinema these days is a huge pain in the ass. The reality is that for most of America, going to the movies means dealing with escalating ticket prices, sticky floors, morons who don’t shut up, texting, Cracker Jack box sized “theaters,” piss-poor projection with everything from underlit screens to improperly framed movies that leave boom mikes in the shot, and an irritating amount of commercials before the actual movie we paid for. If theater owners want people to return to the movies, they need to accept that there is a lot of improvement to made around the industry to make that experience something people look forward to, not simply tolerate.
That being said, while we understand the studios are freaking out over rapidly declining DVD sales and the shift to alternate methods of watching movies via mobile streaming and other digital avenues, cutting into their own box office window seems reactionary and not completely thought through at this point. While yes, many movies make over 50% of their box office take within the first few weeks, there are also scores more than chug along for weeks quietly racking up millions; just look at “The Social Network” which needed 22 weeks to haul in $96 million. If it was yanked from theaters after 60 days, it would have only made a fraction of that number.
There are likely still more volleys to be tossed from both sides as this premium VOD plan slowly rolls out. Check out the open letter from the filmmakers below as well as some interesting thoughts on the plan from former Fox studio head Bill Mechanic.
AN OPEN LETTER FROM THE CREATIVE COMMUNITY ON PROTECTING THE MOVIE-GOING EXPERIENCEWe are the artists and business professionals who help make the movie business great. We produce and direct movies. We work on the business deals that help get movies made. At the end of the day, we are also simply big movie fans.
Lately, there’s been a lot of talk by leaders at some major studios and cable companies about early-to-the-home “premium video-on-demand.” In this proposed distribution model, new movies can be shown in homes while these same films are still in their theatrical run.
In this scenario, those who own televisions with an HDMI input would be able to order a film through their cable system or an Internet provider as a digital rental. Terms and timing have yet to be made concrete, but there has been talk of windows of 60 days after theatrical release at a price of $30.
Currently, the average theatrical release window is over four months (132 days). The theatrical release window model has worked for years for everyone in the movie business. Current theatrical windows protect the exclusivity of new films showing in state-of-the-art theaters bolstered by the latest in digital projection, digital sound, and stadium seating.
As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry.
Major studios are struggling to replace the revenue lost by the declining value of DVD transactions. Low-cost rentals and subscriptions are undermining higher priced DVD sales and rentals. But the problem of declining revenue in home video will not be solved by importing into the theatrical window a distribution model that cannibalizes theatrical ticket sales.
Make no mistake: History has shown that price points cannot be maintained in the home video window. What sells for $30-a-viewing today could be blown out for $9.99 within a few years. If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty, premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue. Some theaters will close. The competition for those screens that remain will become that much more intense, foreclosing all but the most commercial movies from theatrical release. Specialty films whose success depends on platform releases that slowly build in awareness would be severely threatened under this new model. Careers that are built on the risks that can be taken with lower budget films may never have the chance to blossom under this cut-throat new model. Further, releasing a pristine, digital copy of new movies early to the home will only increase the piracy problem—not solve it.
As leaders in the creative community, we ask for a seat at the table. We want to hear the studios’ plans for how this new distribution model will affect the future of the industry that we love.
And until that happens, we ask that our studio partners do not rashly undermine the current – and successful – system of releasing films in a sequential distribution window that encourages movie lovers to see films in the optimum, and most profitable, exhibition arena: the movie theaters of America.
We encourage our colleagues in the creative community to join with us by calling or emailing NATO at 202-962-0054 or firstname.lastname@example.org.
Guillermo del Toro
Gale Anne Hurd
Paid for by the National Association of Theatre Owners