Top 10 Film Industry News Stories of 2005: #2: Prospect of Simultaneous Theater/DVD Release
By Stephanie Star Smith
January 2, 2006

Hard times ahead for these guys

There's been a lot of chatter this year about what the industry calls windows. Basically, the window is the length of time between a film's theatrical release and its appearance in the home video market and on cable outlets. As more people tend to wait until after a film leaves theatres before viewing it, the window between the end of a film's box office run and its release on DVD or appearance on pay-per-view has become smaller, to the point where the DVD is sometimes released while the film is still appearing in a few theatres.

Of late, the idea of same-day/date release in theatres and on DVD has been floated. This is already being seen to a certain extent with regard to the international market, as more and more films are receiving same-day/date releases in the United States and several overseas markets, particularly the United Kingdom. Mostly, however, it was upstarts in the theatrical distribution field - most notably Mark Cuban's recently-formed theatrical-film conglomerate - who were touting the idea of having a film be available in all distribution methods on the same day. The idea recently took a quantum leap toward becoming a reality when none other than Disney CEO Robert Iger spoke out in support of the idea of same-day/date releases across all markets.

Why is this such a big deal? Simple: it cuts the proverbial middle-man, in this case theatre chain owners, out of the profit picture.

The problem with - or, perhaps more accurately, the obstacle to - same-day DVD release is the way in which the revenue stream is structured in the film distribution business. As it currently exists, and has existed for more years than most of us have been alive, the theatre chains make their money backwards. During the theatrical run of a film, the studio takes the lion's share of the box office receipts for the first few weeks, usually between two and four, although depending on the film, the time may be shorter (rarely) or longer (as is often the case with a big blockbuster). The split is usually 90/10, and remains so for however many weeks it stipulates in the distribution contract (on a side note, this is one reason why theatre snacks and drinks are priced so outrageously; theatres make a helluva lot more from their concessions stands than they do on the majority of the films they show). After the four weeks-or-whatever period has expired, the box-office split begins to change, with the studio taking less and the theatre chain getting more with each successive X-number-week period, until eventually - if a film runs that long - the theatre is getting nearly 100% of the take. Of course, most films never run that long; in fact, even before the one-and-done pattern of box-office supremacy that has taken hold this year, films rarely ran long enough to even get to 50/50 distribution. If a theatre owner was lucky, a film might see a 70/30 split before exiting first-run theatres and hitting the remaindered circuit.

And the thing driving the shorter-theatrical-run trend is DVDs and the availability of high-quality components that increasingly-more-accurately recreate the viewing side of the theatre experience. Just as CDs and advancing technology have changed the music distribution industry - whether the RIAA wants to acknowledge it or not - so are the DVD and home theatre technology changing the film distribution industry. DVDs offer not only superior picture and sound quality to VHS tapes, but also loads of extra features that could never be included on a video tape. And with more-than-respectable home-theatre sound systems to be had for under $400, and big-screen HDTV sets nearly all below the $2,000 level (and some of the older CRT-style sets below the $1,000 mark), the experience of watching a movie at home now competes favorably with viewing a film in theatres. In some ways, in fact, home viewing surpasses the theatre experience: no paper-rattling or drink-slurping; no one kicking the back of your seat; no fidgety kinder; no loudly-vibrating cell phones or, worse yet, people talking on same; no one talking back to the screen or providing a running commentary on what we all just freakin' saw on-screen; and staying home to watch a film becomes a very attractive proposition indeed. And with the home video market increasingly providing the bulk of a movie's receipts, the studios have found it to be in their best interests to make the window between theatrical release and DVD release ever shorter.

But there's still something to be said for seeing a movie in a theatre, and something for the studios to gain from showing a movie a theatre. Which makes the sticky problem of how to accomplish the audience-popular idea of a same-day/date release without having the theatre owners revolt more complicated. The situation was going to come to a head eventually, but with the Mouse House publicly joining the fray, it seems likely to happen sooner than later, and for a while, at least, it won't be pretty.

#2: Malaise at Summer Box Office