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David Poland

By David Poland

Paramount & The Stupidity of the Short Distance Runner (Pt 3 of 3 – Does This Matter?)

“It’s the future!”

“Stop fighting it. It’s stupid to leave a space between theatrical and Home Entertainment.”

“The future is digital! The future is change!”

No film has ever grossed $50 million in direct digital sales.

But surely, one will someday.

The simple question is whether the film industry is willing to risk the theatrical exhibition industry’s future to find out.

Th simple idea that seems to elude many is that while specific events can be manipulated (or have natural momentum) to expand the marketplace for a time, the overall market is finite. And the trend line in film entertainment continues to head towards a subscription-based universe and away from a la carte. But there are reasons why people make a la carte investments in movies. Getting out of the house and getting relatively inexpensive entertainment is a part of it for every age. For under 30s, there is a real excitement about seeing something early. And for people over 30, there is word of mouth that drives interest.

VOD for independents has been important because there is a functional cap on distribution. There are only so many screens and so many ad dollars and though “prints” are cheaper these days, only so many prints under an indie budget. VOD expands the market for these films.

This is not the issue with wide studio releases. Very little of the market is out of the range of a wide release. VOD is an extension of the theatrical release, not a needed expansion.

So what is the benefit of VOD for wide release major studio films? Well, the internal perception of those pushing the agenda is that it will expand the market. Also that because the return is slightly better, per unit sold, on VOD, that it will be more profitable. However, the fact that one person or 10 people can watch a rented film makes this imaginary concept dubious.

Let’s say 14 million people went to Harry Potter 7b in the US and Canada the weekend it opened, generating roughly $85 million for WB. The dream of day-n-date is that 20 million completely different households would so want to see the Potter finale on their home TVs that they would pay $30 to see it, maybe see it twice or three times, on that weekend, and generate $450m – $500m for WB. The prayer continues that the home revenue would not affect the theatrical.

Harry Potter‘s finale is the uber example and even there, the numbers seem iffy. No doubt, millions would buy VOD for it, many of whom had never purchased VOD before. No doubt, many more millions would see the film on TV that weekend, having been unlikely to see it in a theater. But what is the actual balance? How much cannibalism? And how much long-term (other non-theatrical) cannibalism? And would the home number be 20 million or 10 million or 5 million?

The biggest question, to me, remains, how much cannibalism will it take to start shutting down theaters? My estimate is, broadly, about 20%.

But it gets worse…

Because by taking the focus off theatrical exclusively in the early days and adding VOD whose pricing is controlled nationally and not by region, all of a sudden price competition becomes a part of the movie business. And that is a disaster waiting to happen.

The idea of discounting slow theatrical days or matinees has never been an issue for me. But when it becomes studio specific or “quality” specific, all of a sudden, there is a class system that causes potential viewers to question their spending. Never good.

But wait… I am discussing day-n-date in depth, when this effort by Paramount is not for day-n-date.

Why? Because the creep will creep… it always does.

But let’s go back to the deal on the table. Two weeks after a movie goes to under 300 screens, it can go into Home Entertainment distribution. Is that really such a big deal?

Well, firstly, it’s a moving target. So consumers can’t really follow it. They will only know when something is put in front of them. “Hey… if no one went to see it, you can see it really soon!” Great sales pitch, eh?

You wanna see April release Furious 7 on your TV in mid-July? Sorry. It’ll be another month. Avengers, too! But Aloha, you’re good to go.

The more the industry complicates its release patterns, the more likely consumers are to move on to some other kind of entertainment, especially when it’s still a minimum of 6 weeks since the giant push of theatrical. And with that thought, studios will shake their heads and say, “You’re right… let’s work to make it four weeks.”

That’s why I am discussing day-n-date. That is the fantasy… the Eden… the apple.

I have been saying for a very long time that I expect the future to offer only two distinct windows. Theatrical and post-theatrical. There will obviously be variables in post-theatrical, but those will be financial hurdles, not opportunity hurdles (for the most part).

I think that NATO and its members should absolutely be willing to go down the road with The Studios on shorter windows for lower-grossing product. I makes sense. If they can share some of the upside and downside, that’s a good business. The trouble, of course, will be that it could be very damaging to indie distributors who now are able to get that material for a price and make a reasonable profit. As we saw with indie, the majors will be more than happy to come in and trying to put that money in their portfolio too (until they get bored and/or frustrated).

But on bigger movies, I would be discussing widening the theatrical window, not shortening it. How can you make theatrical legs longer and more profitable for both sides? How can the line be more clear between theatrical and post-theatrical?

Paramount told the Wall Street Journal that a survey they did indicated that people were not aware of the 90-day-window. Of course they aren’t. No one has told them about it. No one has to… no one should. But who hasn’t heard a friend or many friends say, “I can wait for the DVD” or for it to come on cable. I would bet nearly everyone has. When the industry signals to audiences that the theatrical experience isn’t important, it becomes less important. This is simple human nature. The industry spends scores of millions on practically each film trying to convince people they HAVE TO GO SEE IT NOW and then, our of the side of their mouth, they say, “Ehhh… it’ll be available cheaper and more easily soon.”

Where is the highest revenue per person? Theatrical. Where is the indication that you lose a lot of eyeballs on a popular movie because it takes time to get to Home Entertainment? There is none… just the gut feeling that they shouldn’t be paying for more ads to sell it.

Follow The Money. Always.

Part 1 – Getting Here

Part 2 – What Paramount Is Doing

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4 Responses to “Paramount & The Stupidity of the Short Distance Runner (Pt 3 of 3 – Does This Matter?)”

  1. captain_celluloid says:

    It seems the studios are actively yet pretty much completely blindly trying to shoot themselves in BOTH the theatrical foot AND the physical media foot.

    Yes, it is indeed “follow the money” but also “follow the path of perceived least resistance to the money”

    It’s as if they’re giving up on theatrical and physical media in favor of some ill-conceived dream that streaming and digital downloads are THE answer . . . both of which are dependent on cheap, dependable and fast internet which is not at all a safe bet.

    Liking the series; could you address these “digital fantasies” as well

  2. js partisan says:

    Paramount aren’t a real studio, and haven’t been for quite sometime. They hardly make movies. When you have a new exec, that makes his job about making more movies. You really aren’t that much of a studio, and this is a fucking not much of a studio move.

  3. EtGuild2 says:

    It’s really up to three companies for day and date to ever work: Verizon, Comcast and Cox. They have the resources to track torrenting at this point. They just aren’t aggressive enough.

  4. Doug R says:

    Man, they sure are tripping all over themselves to follow the music industry down the rabbit hole. Is it really a great idea to offer expensive pay per view on the same platforms a lot of people download illegally for free?
    Studios should be helping theaters figure out how to give theater patrons a better experience without busting wallets.

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“But okay, I promise you now that if I ever retire again, I’m going to ensure that I can’t walk it back. I’ll post a series of the most disgusting, offensive, outrageous statements you can ever imagine. That way it will be impossible for me to ever be employed again. No one is going to take my calls. No one is going to want to be seen with me. Oh, it will be scorched earth. I will have torched everything. I’m going to flame out in the most legendary fashion.”
~ Steven Soderbergh

I feel strongly connected to young cinephile culture. The thing about filmmaking—and cinephilia—is that you can’t keep hanging out with your own age group as you get older. They drop off, move somewhere. You can’t put together a crew of sixty-somethings. It’s the same for cinephilia: my original set of cinephile friends are watching DVDs at home or delving into 1958 episodes of ‘Gunsmoke,’ something like that. The people who are out there tend to be young, and I happen to be doing the same thing still, so it’s natural that I move in their circles.

In terms of the filmmaking, there was a gear shift: my first movies focused on people around my age, and I followed them for three films. Until The Unspeakable Act, I was using the same actors, not because of an affinity for people at a specific age, but because of my affinity for the actors. I like to work with actors a second time, especially if I don’t feel confident casting a new film. But The Unspeakable Act was a different script, and I had to cast all new people. Even for the older roles, I couldn’t get the people I’d worked with before. But when it was over, the same thing happened: I wanted to work with Tallie again in the worst way, and I started the process all over again.

I think Rohmer did something similar around the time of Perceval and Catherine de HeilbronnHe developed new groups of people that he liked to work with. These gear shifts are natural. Even if you want to follow certain actors to the end of their life (which I kind of do) the variety of ideas that you generate makes it necessary to change. And once you’ve made the change, you’ve got all these new people around.”
~ Dan Sallitt