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What Is So Special About A Movie's Theatrical Release?
from the put-the-horse-in-front-of-the-cart dept
The complexities of Hollywood economics are something of a mystery to most Hollywood outsiders who don't understand how the money flows from movie-goers to the producers, movie distributors and the studios behind major films. Despite a ton of reporting (and even some studies) focusing on ticket sales at the box office, Edward Jay Epstein points out that box office revenues are far from being the bread-and-butter of Hollywood:
Box office sales no longer play nearly as important a role. And yet newspapers, as if unable to comprehend the change, continue to breathlessly report these numbers every week, often on their front pages. With few exceptions, this anachronistic ritual is what passes for reporting on the business of Hollywood.So what is the actual business model for Hollywood movies? Epstein notes that only about a tenth of the total revenues for the major movie studios comes from American theaters -- and the lion's share of revenue comes from licensing deals in the form of DVD sales, TV broadcasting rights and all sorts of other distribution deals. It's no wonder, then, that the industry is so anchored to intellectual property rights and so focused on doing anything to preserve its lucrative licensing business.
We've seen a lot of alternative proposals for making money from movies, but if the box office sales are really just a fraction of the movie industry's revenues, why are theatrical releases made out to be such a big deal? Perhaps instead of delaying the release of movies to home theaters, certain movies should be released to Netflix/RedBox/Blockbuster first -- and then only the titles that have enough demand for the big screen should make it to a theatrical release. Obviously, there's the argument that if an audience could watch a movie at home for ~$1, there would be no reason to pay $10 to see the same movie in the theater. But that assumes there is nothing special about seeing a movie on the big screen.
Given the example of how Paranormal Activity only screened in nationwide cities after fans demanded it, offering movies that people actually want to see in theaters may be a better way of filling seats. Or maybe there really is no reason to go to movie theaters anymore.
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you're not thinking paranoid enough
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predictors
"Pearl Harbor" was the canonical example.
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... but the current way may not be optimal?
My point here is that theatrical releases might not be the best way to advertise a movie. Is buying a superbowl ad for a movie the best way to promote a movie? Sometimes. Sometimes not. (or oftentimes not.) Sometimes the best promotion for a movie is a more viral/grassroots campaign.
The costs of distributing film to movie theaters is almost like buying a superbowl ad -- if that's how you're promoting a movie. I'm suggesting that some movies (or more movies) can be effectively promoted by distributing them over the internet to people's homes.
Maybe Avatar wouldn't have been as big a hit if it were made available on Blu-Ray first and then distributed on the big screen. But there might be other movies that fit a "home first, theater later" approach.
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Re: predictors
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Box office sets the pace
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Re: predictors
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Re: you're not thinking paranoid enough
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Re: ... but the current way may not be optimal?
Earning 1/10th of a money in a few weeks is not bad thoughh especially since recovering the other 90% might take years.
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Re: Box office sets the pace
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Why?
1. Because the quality of my experience at home is also going way up.
2. Because sometimes young teenage girls with cellphones are allowed into the same movie. It ruins it and I'm not going to pay for that experience. "Like, really, no way."
3. Because of the pre-roll ads. I like the previews, but I didn't pay to watch ads. You know why the cinemas serve such large portions of food now? So that a few people MIGHT have something left when the movie starts.
But getting back to the main point, I usually only watch a movie once. If I watch it again, it's at least years later. If I watch a movie at home first, there is zero chance I will pay to see it on a larger cinema screen within 5-10 years.
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Re: Re: Box office sets the pace
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Re:
Whats so great about theaters..
Whats changed in the last 60 years??
Sound.
Thats all. And even that STILL isnt the greatest.
They have been using 70mm WIDE screeen(which still TV/TFT hasnt done) for ALONG time.
If you really want to know, the SEATS havnt gotten any better.
I can sit at home, drink a beer, and have dinner, snacks, and even make out with a girl/boy IF I WANT(and continue after the movie), and NOT=
leave my home
Sit in a room with 200+ others
Worry about my car being ROBBED, in an unpatrolled lot.
Walking home in the dark
Fighting to get OUT of the parking
PAYING to park
I can pay 1 time for a DVD and watch it MORE THEN 1 time..
PEE BREAKS.
BABY breaks..
PHONE BREAKS..
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There's money to be made
So with all of the revenue coming in from licensing deals all over the place, who cares if people watch the movies at home even for free? I mean those people will STILL watch the movies on TV, they will STILL buy the video games, they may even still buy the DVD to have a good quality version at their fingertips without the need of a computer.
Even if movies were never screened, they would still produce quite a bit of revenue.
On the other hand, movies today (Dark Knight, Avatar, etc) seem to make a killing on opening box office weekends which is far too good to pass up (because it's millions they otherwise wouldn't have).
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Box Office is a good judge of popularity
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Simply put the studios are spending to much money. They out source CGI, have layers of payments, legal agreements, various trade unions (writers, etc), and tons of deal making management. At each level someone takes a cut of the profits. All this is wasteful and the reason why in the end efficient garage studios that do everything in house will prevail. No writer guild to deal with, no lawyers writing contracts, no rental of cameras, etc.
There is nothing Special About A Movie's Theatrical Release. It is all hype and marketing of movies that were created after spending way to much money on production.
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Re:
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That said, today the theatrical run of a film is nothing more than a giant commercial for the DVD release and whatever products are featured in the film. Look at what's popular on DVD (newspapers print that too) and it's pretty much the same as what was popular in theatres. What's popular in theatres? Whatever movie got the most promotion.
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Re: ... but the current way may not be optimal?
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There is nothing Special About A Movie's Theatrical Release.
I've been a lurker in these parts for quite some time. And I didn't do anything with Mike....
If there's nothing special about a theatrical release, then it seems like there should be a lot more experimentation with the business model behind distributing movies. I think Netflix has the potential to become its own studio of sorts. And maybe HBO will be able to expand into theaters someday?
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Re: you're not thinking paranoid enough
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Re:
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Re: Re: ... but the current way may not be optimal?
Erm, no it wasn't. It was released theatrically in June 2009, and then released on DVD in January 2010. There was talk of releasing it straight to DVD, but the studio eventually relented and allowed a theatrical run. it was re-released theatrically to try and wring some extra cash from its Oscar win, but this wasn't its debut.
"However, no one went to see it, even after it won."
It actually did OK for a movie with difficult subject matter that was totally uncommercial. For the first 2 weeks of its release, it actually had the highest per-screen revenue in the country.
Having said that, if attendance was disappointing, even the studio admitted that it had no clue about how to market it. That's why it never received a wide release in the US - in other words, the studio didn't give it a fair chance at cinemas (its widest run was 535 screens). The movie has grossed over $40 million (nearly 3 times its production budget) at cinemas internationally.
So, it's a successful film as it went into profit on its theatrical run (until Hollywood accounting comes into play, of course). Not every film has to be an Avatar sized hit to be termed a success, and not every "blockbuster" makes money - many lose tens of millions for the studios.
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Late again
Mark Cuban & Magnolia Pictures are already doing this eg Eclipse
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Instead of blocking Netflix and RedBox from providing new releases, they should strike up a new licensing agreement for providing the movies while they are still in the theater.
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No one knows...
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Look how well some re-releases have done, such as the original Star Wars movies. There are plenty of movies that I would love to watch on the big screen that I never got a chance to like The Godfather, Die Hard, or Back to the Future. I did get excited over talk a couple years ago of re-releasing Back to the Future on the big screen this year for it's 25th anniversary, but that seems to have fizzled out. Each of these movies I own on DVD or can watch on TV all the time, but I'd pay some money to go see them with other fans in the theater.
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Re: Re: Re: ... but the current way may not be optimal?
Great info on the Hurt Locker... indeed not every film has to follow Avatar's footsteps.
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Leverage on the deals?
That may not be the case, but it would seem logical to me. It may be really hard to price streaming distribution of a film without getting some kind of "opening weekend" number first.
It may be a better business model for them to offload some of the risk onto these other companies, but we know how much they like changing business models.
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