Small movies are opening in theaters and online at the same time, but blockbusters aren’t (and they won't)

Kill Me Three Times

Big Hollywood movies play in theaters for about three months before they legally appear online—much to the annoyance of people who want to see the latest blockbuster immediately from the comfort of their homes. But small, independent distributors are experimenting with alternative policies that bring films into the home much sooner.

In a “compressed-window” release, the film plays exclusively in theaters for only a few weeks before going to video on demand (VOD). In a “day-and-date” release, the movie becomes available online the same day it opens in theaters. And with an “ultra-VOD”release, it’s available online first.

But while the small companies embrace these options, the big studios want nothing to do with them. Their business model depends on large theatrical releases, which you don’t get with day-and-date and other early VOD releases.

The arguments for and against early VOD releases

You can find many good arguments for providing little or no time between the theatrical and home releases. For instance, we live in a world where some people want to see movies in theaters and others want to see them at home. A smart industry should let customers buying their product in the way that makes the customer happy.

And then there’s the matter of piracy. If people can’t see the latest blockbuster at home right now, some of them would rather break the law then wait. Film critic Michael Dalton argued this in a 2012 blog post: “Most pirate copies of films are [of] terrible quality anyway, [and] people…want to watch films in good quality. Therefore through day and date, you beat the pirates to the punch.”

It Follows

When the horror film It Follows delivered unexpectedly strong results at the box office, its video-on-demand debut was quickly postponed.

But the arguments against it also hold water. A successful company must balance pleasing its customers with bringing in revenue, and a theatrical release brings in more revenue—at least for a big picture with a heavy advertising campaign. If Warner Brothers released their next superhero blockbuster day-and-date, the major multiplex chains would refuse to run it. And even in the theaters that did screen it, it would almost certainly have a shorter, less successful run.

According to Phil Contrino, Vice President and Chief Analyst for Boxoffice.com, an early VOD release doesn’t really help with piracy. “It’s just going to make [pirating] easier,” he told me in a phone interview. “I don’t think [pirates will] say ‘Well, I can pay five bucks and watch it at home and therefore I’m not going to pirate it.’ That’s giving people who pirate movies a little too much credit.”

Contrino has one very impressive statistic on his side. The Interview, probably the biggest film ever to receive a day-and-date release, is one of most pirated films in history. More on that later.

Why independents like day-and-date

While the big Hollywood studios focus on star vehicles and superhero franchises, small, independent distributors scrape modest profits out of serious art, cheap horror movies, and anything with subtitles. And they’re the ones enthusiastically embracing compressed-window, day-and-date, and Ultra-VOD releases.

One reason is flexibility. When working with unusual films and low advertising budgets, there’s no one size that fits all. “We evaluate each film on a case by case basis—this year we’ve done traditional theatrical releases, pre-theatrical (aka ultra-VOD) releases, and day-and-date releases,” Magnolia Pictures’ senior VP of marketing and publicity Matt Cowal wrote in an email. “We try to stay adaptable in the marketplace and do what’s best for each film, and many times for us, that involves a distribution strategy with an early VOD component.”

52 Tuesdays

Sundance Film Festival winner 52 Tuesdays is a story about the relationship between a teenage girl and her mother, who has decided to embark on a gender transformation.

The big theater chains that insist on the three-month window aren’t interested in these films, anyway. But independent theaters and small chains are happy to receive them. Often, there’s a business connection. For instance, Magnolia and Landmark Theaters—the USA’s largest art house movie chain—are both owned by 2929 Entertainment.

You’ll find these theaters almost exclusively in urban areas, which means that many people simply can’t see independent films theatrically. An early VOD release “allows you a footprint the size of a wide studio release at a fraction of the cost,” Cowal explains. “In most cases we find it a way to maximize revenue for a film.”

These releases can work even on a film with almost no visibility. Consider 52 Tuesdays, acoming-of-age, transgender drama from Australia, currently in day-and-date release by Kino Lorber. Rather than going the usual pay-per-view route, Kino is releasing the VOD through Fandor, making it available to anyone who subscribes to that specialized streaming service at no extra charge.

Fandor CEO Chris Kelly is bullish about this arrangement. “This is the model for where things are going long-term,” he told me in a phone interview.

But as I write this, only two theaters are showing 52 Tuesdays in the United States. Is this because of the day-and-date release, or because of the film’s hard-to-sell content?

I would argue it’s the latter. Magnolia released another Australian film, Kill Me Three Times, in 16 American theaters on April 10. It had been available on VOD for two weeks before that. But then, it’s a comedy-thriller starring Simon Pegg—a far more commercial offering (and one I liked very much).

kill me three times

Kill Me Three Times hasn't enjoyed the critical praise that 52 Tuesdays has garnered, but Simon Pegg has his own fan base.

Another example: The horror film It Follows makes a good argument against day-and-date but for flexibility. It was originally released by Radius-TWC with a compressed window—opening theatrically on March 13 with plans to go online on March 27. But when it turned into a smash hit in theaters, Radius postponed the VOD release.

Alamo Drafthouse CEO and Founder Tim League summed it up in a BadAss Digest article: “The real story here is this nimble distribution strategy deployed by Radius. When It Follows shattered records…Radius postponed the week 3 VOD launch and opened the floodgates to quickly confirm over 1000 theaters.”

Why Hollywood studios prefer a wide window

For the big blockbusters that define Hollywood in recent years, early VOD releases make no sense. When you spend hundreds of millions of dollars to make and release a single movie, you can’t afford to let it find an audience in small theaters. It has to be a theatrical smash on its first weekend.

Assuming a guaranteed audience, a theatrical release is inherently more profitable. As Boxoffice.com’s Contrino put it, in a multiplex, “you know that for every person that sees that movie, you’re getting some kind of money from a ticket. If it’s available in the home, if you put the rental for six dollars, you’re not getting six dollars for every person watching it.”

And most of those tickets will be sold by the major multiplex chains: AMC, Regal, and CineMark. And they have the most to lose from giving up the three-month window. Universal tried that in 2011 with Tower Heist, giving it a compressed window in two cities. Theaters revolted all over the country, and Universal backed down.

AMC has experimented with a few day-and-date releases, including Veronica Mars, a special case where Warner Brothers had to rent the auditoriums. But AMC’s director of corporate communications Ryan Noonan told me in an email that overall, “window-shortening experimentation…hasn’t created a better experience for the guest, it hasn’t driven business, and the economics haven’t proven it to be successful.” He added that “We are keeping an open mind, but we have yet to see any evidence or potential for game-changing success in the industry.”

the interview movie premiere REUTERS/Kevork Djansezian
Heavy security surrounds the entrance of United Artists theater during the premiere of the film "The Interview" in Los Angeles, California December 11, 2014.day

Remains of The Interview

Late last year, The Interview became the biggest, most widely visible day-and-date release in Hollywood history. Sony had no choice in the matter. The big multiplex chains refused to show The Interview because of terrorist threats. To make any money at all, Sony had to release it in a handful of less-fearful independent theaters while putting it out on VOD.

Thanks to all the free publicity generated by the threats, it became the most successful online film in Sony Pictures’ history. But it still lost money. Sure, a few people bought tickets because of the controversy (I was one of them). But with an estimated $75 million budget, it needed a huge opening weekend in thousands of multiplexes—not in a few theaters and for people sitting at home.

And not all those home viewers paid for the entertainment. According to an Indiewire article by Paula Bernstein, it was one of most pirated films in history. “Within 20 hours of being made available online, the movie was downloaded illegally more than 750,000 times, passing the 1.5 million mark after only two days.”

So much for day-and-date release as piracy protection.

Tower Heist

Universal tried to give 2011's Tower Heist a compressed-window release, but movie-theater owners wouldn't hear of it. They should have left well enough alone.

The future of movie releases

Home entertainment has been “killing” theatrical movie presentation now for generations. And yet people still go to the movies.

But the business and the audience keeps changing, and even big fans of the theatrical experience (I’m one of them) see far more films at home than in theaters.

For small and independent films, day-and-date, compressed-window, and ultra-VOD releases will probably stay around for a long time. This is clearly the better choice for specialty films from serious art to exploitation.

But for big Hollywood films, things aren’t likely to change soon. “…with the levels of money at stake, piracy issues, and the fierce opposition that studios receive from the major exhibitors,” Magnolia’s Cowal wrote me, “a lot of things will still need to evolve with the industry for that to happen.”

This story, "Small movies are opening in theaters and online at the same time, but blockbusters aren’t (and they won't)" was originally published by TechHive.

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