-An Alternative Method for Theatre Chains to Keep Films Their Own, and Cater to the At-Home Audience.-
There has been lots of talking, scoffing, and downright outrage as of late about the recent news that certain film studios will begin distributing their movies via at home service providers (DirecTV launches a VOD service this week) a mere weeks after the films are released in theatres. This is of course very detrimental to the movie theatres themselves. When a film is released the Studios and Theatres have a contract in place for the rental of the film, per se. The key part of this agreement is the percentages allotted to the Studio and the Theatre on a week by week basis from ticket sales. The Studio makes the bulk of the money in the first few weeks, leaving the Theatre to hope that the film is popular, with longevity, because as each week passes they see more of the profit. The opening weekend to a Theatre is not as important as the fourth week of release–except that opening weekend and word-of-mouth, critical reviews, and social media now determine whether a film even survives to the fourth week.
I am sure all of us who pay attention can name ten films that came and went so fast in a theatre you would have never known they were there. The Theatre Chains cannot afford to keep running unsuccessful films and will drop them from their marquee as quickly as possible. There is always another wannabe blockbuster in another seven to fourteen days anyways, right? Now we consider the Video-On-Demand epidemic–as it is being seen by many. Video On Demand is a fantastic tool for smaller film distribution companies. The cost involved in distributing a film nationwide is large, and many independent films only see the larger markets, New York and Los Angeles. If they are lucky they may get exposure in Chicago, San Francisco, Denver, or a similarly sized city. But what about the rest of America? Unlikely, unless the local film festival picks it up–and this is where most of these films are discovered. With Video On Demand smaller films, like the recent Hobo With A Shotgun, are making money by being available at home via on-demand services such as Amazon-On-Demand and iTunes. People can rent the film, for around ten dollars, and watch it at their leisure. Amazon-On-Demand is available in every city across the country, as is iTunes. Instantly this small film that will only see a “big” screen in two cities for a couple weeks has the ability to reach millions of people. For an independent filmmaker this is an amazing opportunity–and it is cheap!
Are Theatre Chains up in arms about these indies playing on demand? No. They were not going to show that film in their megaplex anyways; they are reserved for the arthouse cinemas. The Theatre Chains are angered over the “BIG ONES”, like Warner Bros., Sony, Fox, etc., putting their films on-demand in homes. These are the movies with marketing budgets, that will open on over 1,000 screens on opening day and expect to rake in upwards of $20 million dollars on opening weekend (if they are lucky in this economic climate). The Theatre Chains do not want to lose out on the possibility of a big screen success going to Cox, DirecTV or Time Warner Communications and the Studios, or Amazon-On-Demand and iTunes.
This is completely understandable. Their business model is dependent upon people going to the cinema. If people know that in four weeks time they can watch the movie at home, for one flat fee, regardless of how many people are in the room, then many will wait. It is similar to DVD purchases (better termed ‘media’ since releases are available in a variety of formats for purchase now). The most common phrase I hear when telling people about a great film coming to theatres is, “I will watch it on DVD.” As much as this hurts to hear it is the reality of the market. Movies come out on media faster and faster now, especially if they proved unsuccessful at the box office. It is now April and a film that was released in February is scheduled for media release in May. I remember when it took a year, sometimes longer, to buy the VHS and/or DVD of a film and now it happens so fast one cannot believe it. Considering how many movies are not worth the high ticket prices at theatres today who can blame people for waiting, especially when it is only a few months. But you cannot condemn the studios for wanting to make the leap to on-demand, as it is good business practice. Imagine if you could watch the newest release from Warner Bros. pictures on your Ipad in-between classes at college? Or while on a road trip with your family put in the latest Disney movie, currently in theatres? The possibilities for on-demand entertainment are endless, and the Studios are hurting for profits also. Attendance is down, ticket prices are up, and film budgets are not getting any smaller. The product is also hurting drastically but well, that is another topic for another day.
What is a Theatre to do then?
Why not start your own video-on-demand service? AMC, Regal, Loews, you have the money to do this, and the Studios are warming up to the idea so run with it. Take the money you are wasting on converting theatres to 3D and start your own at home video-on-demand service. Make it available through Roku players, Blu-Rays, on Computer Systems (a Netflix-type system), and see just how fast it grows. Partner with Fandango. and MovieTickets.com to advertise the on-demand feature as well as buying tickets. Sure, you may not make as much money as you do at the theatre but you just may make more on those films that are costing you tons of money to run and seeing no return. You could even expand to include more independent films, opening you up to another market of filmgoers. It is time to stop allowing yourselves to be treated like the unwanted step-child. There are great possibilities here. Change is inevitable. You can’t stay open all night, but your on-demand service sure could. Take advantage of the opportunities that are ahead with on-demand and maybe in the process, with the extra revenue, you could lower the price of your concessions and introduce some more healthy options for moviegoers–just a thought.
This idea may make people angry, or cringe at the thought of not going to the cinema to see the newest release. I am with you as I will always be a dedicated theatre patron. I am also aware of the changing habits of people and with how quickly they are adapting to the new distribution models of entertainment. The thought of watching a film on an Ipod is outrageous to me; yet I see it happening on airplanes all the time. Movies will always exist, but the ways in which people watch them is changing and will continue to do so. It is time to step-up Theatre Chains and pave the way for this new distribution model, instead of being told what you will concede to by those who rely on you to show their product. You have power, it is time to use it.