Simultaneous release: Death threat, ultimatum, or good sense?
I’m not sure why comments made by Robert Iger, CEO of Disney, in March have been so extensively re-reported on the web today, but now seems like as good a time as any to re-examine the concept of a simultaneous theatrical and DVD release.
What Mr. Iger said all those months ago (or threatened, according to some) is that maybe things would be better if movies were released on DVD the same day as their theatrical release. This would have a number of effects on the industry. Camcorder piracy would be ended, millions of dollars per movie would be saved on marketing campaigns, DVD sales would increase (and at this point its starting to look like they may need it), but, most importantly, theater attendance would drop at an unprecedented rate. For an industry that’s already in trouble, this might be the nail on the coffin.
So what’s really been said here? The way I see it, there are three possible ways to read Mr. Iger’s statement. The first is the way the studios perceived it: as a death threat. He was letting everyone know that this monkey business has been going on long enough, the theaters have outlived their usefulness, and its time for them to be cut out of the picture. This may indeed be the case. As I’ve said before on Kiosk.net, things change. But I don’t think anybody really wants the movie theater, as an institution, to be wiped out.
So maybe it wasn’t a death threat so much as an ultimatum. “If you don’t start turning some better receipts, I’ll cut you out of the picture.†This may be the wake-up call that theater operators like Loews need to get their acts together. If it is indeed their fault, as some have speculated, the theaters will have to step up the theater-going experience in order to prove themselves worthy again. People are sick of high ticket prices, ridiculous concession prices, uncomfortable seats, sticky floors, talking neighbors, ringing cell phones, and the half hour of commercials before every single movie. If the experience was improved, maybe people would come back to the theaters and they wouldn’t need to worry about Iger’s death threat.
All the same, the theater operators make a valid point: the whole thing may very well be the fault of the studios themselves, producing a glut of crappy movies. Hard to argue that point.
Then again, the simultaneous release may just be good sense. At least for the studios. DVD sales and TV licensing make up the bulk of their sales, so even if movie attendance was cut in half, they’d still be making most of their money. The theatrical release functions more as a commercial for the DVD release than anything else; more and more movies aren’t even making back their cost of production at theaters. The theatrical releases would still fulfill this function, that of a commercial, even if they were released at the same time as the DVDs. After all, when you can hear a song on the radio you can buy the CD right away. When you see a commercial for Tide, you can buy the soap right away.
Speaking of commercials, the biggest economic benefit to releasing movies in both formats is probably marketing costs. When a movie is released in the theaters, studios launch multi-million dollar ad campaigns to raise awareness. The same thing is then carried out five months later to promote the DVD. Cutting advertising costs basically in half would more than account for the drop off in theater attendance resulting from a simultaneous release.
But there is another option. According to an article that’s being bandied about the web, a company called 2929 (which owns film, television, and theater distribution channels) is considering a different approach to the simultaneous release:
In April, 2929 Entertainment, which owns two television networks, a chain of movie theaters and film and television distribution companies, announced a partnership with Oscar-winning film director Steven Soderbergh to direct six films and release them simultaneously in theaters, on TV and on DVD.
Wagner, the company’s co-owner, said under his model, theater owners share in the revenue made from distributing films on DVD and other media.
“We want the exhibitors to be a part of this because they should be and from my perspective, they always should have been,” Wagner said.
So there you have it. Maybe profit sharing is the best way to go about this, increase revenue, and make sure nobody is left out in the cold. A bit friendlier than a death threat at any rate.