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Ignoring the preferred visuals, however, the discussion comes down to economics. It always will. Studios have built an business model around the release cycle of a new product. A deal is brokered with exhibitors to license the film with most of the opening week's gross going to the content creator. After the product exits theaters, the rental/ownership phase begins. After a massive amount of sales volume occurs in this phase, we enter the television phase that sees the movie licensed to air. This is the way most movies get viewed, a dirty little secret of the industry.

The changing circumstance of VOD is that Arbitrage is available at home and in the theater simultaneously. Margin Call was shockingly successful with this day and date distribution model last year. And it has become clear that at least some consumers are ready to ignore theatrical release altogether in order to watch at home. The catch thus far is that anyone who wants to watch Bachelorette, Arbitrage or Flying Swords of Dragons Gate, the three most popular VOD titles at the moment, is that the consumer can only rent the title. They cannot buy a digital copy as of yet. Ergo, the existing business model holds. When the day comes when a person can own a title forever on day one, studios will lose a portion of their income; however, they will not be tethered to theater chains for revenue splits, either.

Fox took a trial run with this on Tuesday. They spent what we calculated as a seven figure ad buy in order to hype to the debut of their "new" format, Digital HD. This is effectively selling a digital license for a movie a couple of weeks prior to its home video release. Several studios have been doing this for a while now. Fox took the plunge with Prometheus and wanted to trumpet the practice as much as possible. For $14.99, a person can own an HD Ultraviolet copy of Prometheus forever.

I found this particularly noteworthy because I still had my theater ticket for Prometheus. It was $17 for me plus the Fandango "We Hate Our Customers" surcharge. For less than what I paid on opening weekend, I bought a digital license for Prometheus. It even includes a couple of featurettes such as we see on DVDs. When ownership becomes a viable competitor to rental or, in this example, cheaper, I will switch almost exclusively to home video viewing.

Once studios take a strong step toward this forward-thinking business model, the theater going experience as we know it will become much less ubiquitous. I know that people are wondering why the distributors would want to skip a step of release. They will not, obviously. Since there is no additional cost to them for digital licenses and no manufacturing expenses, what Fox calls a DHD copy is close to 100% pure profit. The negligible cost of completing the transaction plus the internet hosting are their only fees. In addition, the secondary marketplace that movie content creators despise, used software sales, is completely eradicated the moment physical media becomes the less popular sales practice.

We are on the precipice of cataclysmic marketplace change.

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