As Mel Gibson's Latest Film Goes Straight To VOD, Is This A Glimpse Of The Future Of Distribution?

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by Oliver Lyttelton
February 3, 2012 4:46 PM
11 Comments
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Something curious happened this week. It was announced that an action film from someone who has historically been one of Hollywood's biggest stars would be skipping movie theaters. That's not unprecedented, or necessarily surprising, considering that the star in question is disgraced A-lister Mel Gibson, who's been in the doghouse since his well publicized racist, abusive rants leaked two years ago. And doubly unsurprising considering that Gibson's last film, the Jodie Foster-directed drama "The Beaver" never made it over the million dollar mark at the domestic box office.

Instead, "Get The Gringo" (which is still set for theatrical release in certain international territories, like the U.K. and Australia) will be going directly to video-on-demand exclusively via DirectTV, starting May 1st, for the premium price of $10.99, ahead of a wider home entertainment release. It's the first time a major studio (in this case Fox, who've partnered with Gibson's Icon Entertainment) have taken such an approach, at least for a film with such a star, that was originally intended for theaters. And while it may be because of Gibson's tarnished reputation (although that didn't stop Warner Bros from developing a new project with him), or because the film looks kind of terrible, it still feels like something of a watershed.

And that's particularly in the light of some other recent events. At this year's Sundance, several of the starrier acquisitions landed distribution deals that will lead with VOD. Stephen Frears' "Lay The Favorite," which stars Bruce Willis, Rebecca Hall, Catherine Zeta-Jones and Vince Vaughn, which went to the Weinstein Company for $2 million, and "Arbitrage," with Richard Gere, Susan Sarandon and Brit Marling, which was picked up for about the same amount by Lionsgate and Roadside Attractions. In both cases, the deals were principally for VOD, although "Arbitrage" will receive a theatrical release (it's unclear if the Frears film, which was badly received, is planned for a theatrical release). And given their usual release patterns, we imagine that the films bought by Magnolia and IFC, like "Compliance," "Nobody Walks," "Liberal Arts" and "The Pact," will follow the same pattern. It's clear that what was once an experiment, is increasingly becoming the norm in the independent film world.

It helps that, while it was initially seen as a weak cousin to a full theatrical bow, the tactic is gaining both prestige and profit. Last October, "Margin Call" was released by Lionsgate and Roadside Attractions simultaneously in theaters and on VOD for the slightly-above-standard price of $6.99. It received rave reviews, and three months later, found itself nominated for an Oscar for Best Original Screenplay, having already picked up accolades from the Independent Spirit Awards, The National Board of Review and the New York Film Critics Circle, among others.

But perhaps more importantly it made some real cash. On a $3.5 million budget, the film didn't just take $4 million on its VOD release (with roughly 571,000 views), but it also made over $5 million at the theatrical box office (plus another $6 million to date internationally, where the film is still rolling out). According to a poll at the time of the film's release, 98% of those who attended a theatrical screening were unaware that the film was also available for home viewing, suggesting that thoughts that a simultaneous VOD release hurts theatrical numbers were unfounded.

And "Margin Call" wasn't alone last year. "Melancholia" hit VOD early, managing a $2 million gross to a $3 million theatrical take (making it, altogether, Lars Von Trier's most successful release since "Dancer in the Dark"). Furthermore, even relatively obscure films, which disappointed in theaters, made healthy sums on VOD. Takashi Miike's foreign-language "13 Assassins?" Less than a million dollars in theaters, but $4 million at home. Little-known Sean Bean horror flick "Black Death?" A mere $22,000 in theaters, but another $4 million from VOD. Most surprising of all, the Ryan Gosling/Kirsten Dunst drama "All Good Things," which never played more than 35 theaters, taking a mere $500,000, but managed twelve times that with its simultaneous on-demand release, bringing it to $6 million. Who knew?

It's possible that some of these may have had their theatrical box office takings harmed by the VOD release, but we're not sure that's the case, and certainly not for "Margin Call" and "Melancholia." Clearly, it's a way of getting nationwide audiences to access films that don't always play outside major markets, and it's helping independent film to find new, and arguably vital, revenue streams, particularly with DVD sales falling. But with some distributors still holding out (most notably Fox Searchlight), the question is, will it become standard practice in the next few years, not just for independents, but also for major studios?

As Mark Cuban, head of medium pioneers Magnolia told The Wrap "In reality, for most independent movies, VOD will be far and away the largest source of revenue in the future. More than theatrical and far more than streaming."  And his prediction is not at all unreasonable. After all, companies like Summit and Lionsgate have been shrinking windows for some of their releases, bringing "Source Code" and "Abduction" to homes only 90 days after theatrical release. And it's certainly far more profitable than streaming -- Netflix pays somewhere between $5k and $25k per catalog title, per year.

However, the revolution to VOD still has a few hurdles. For one thing, movie theaters owners are still enormously resistant to the idea. AMC are the only big players who will book films with simultaneous or early VOD releases, and even then, they insist on the distributors "four-walling" the theaters -- namely, renting out the entire screen, meaning that if the film doesn't play, the distributors lose a lot of money. And when the big dogs have tried it -- most notably Universal, who announced plans to release Brett Ratner's "Tower Heist" on VOD three weeks after theatrical release, for the whopping price of $60 -- they've been shut down, with a number of theatrical chains saying they'd boycott the Ben Stiller/Eddie Murphy comedy if those plans went ahead. Unsurprisingly, they didn't.

And it's still not clear at this point if every film should be doing it. Let's take "Monsters" for example. A buzzed-about SXSW hit, Magnolia released it on VOD in September 2010, before putting it into theaters a month later, where it grossed a mere $237,000. In the U.K., a far smaller marketplace, the film went a more traditional route, and took six times as much. Could it have been a much bigger sleeper hit had it not been available at home first? Similarly, if "The King's Speech" or "Black Swan" had gone VOD, it's unlikely that they would have taken their surprising mega-grosses. As Tom Bernard, the head of Sony Pictures Classics, said last fall, "If your movie can play through all the windows that start with the theatical release, nine times out of 10 it will be much more successful than the VOD/theater box office."

Still, with theatrical grosses dropping across the board, the big-screen experience becoming increasingly unpleasant (from incompetent projections to persistent texters), and home theater systems becoming bigger and better, things are evening out. Movie theaters are not going away, at least not anytime soon, but one day soon, a major studio is going to go ahead with the VOD experiment, and "Get The Gringo" may be the first stepping stone along that way. Certainly, the reception it receives will be followed closely by industry types. What people are after these days is convenience; "Avatar" is both the most pirated film of all time, and the biggest-grossing.

And already we can see a world in which virtually every indie release tries a simultaneous VOD release. It may take a little longer before someone like Fox Searchlight tries it with an A-grade title, but that day is coming. Their colleagues at Focus Features are already branching out with Focus World, who have so far dropped James Franco's "The Broken Tower" on VOD prior to theatrical release in March, with the Linda Cardellini/Michael Shannon film "Return" opening in NY/LA next week before hitting your television at the end of the month. Of course we'll always prefer to watch a movie in the theater (and we hope you do too), but as far as opening up more and more films to wider and wider audiences, it's hard to think the widening proliferation of VOD is a bad thing.

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11 Comments

  • rex | November 24, 2012 9:17 PMReply

    best movie created

  • Mohammed | February 15, 2012 1:33 PMReply

    It saddens me what's been happening to the film industry. Little by little, piece by piece the new technology is taking away from the way we used to see films. I'm 58 years old, so I'm not a young man like most of the audience and internet users. Yet, I don't think age is playing an issue here, but what I'm trying to say is that I can only feel the loss of the best the cinema pre-the 80s had to offer. The cinemascope, the film noire, the westerns, the extra ridden historical epics (not like the computer graphic treated films). I don't know... is it too much to ask filmmakers to resist and help keeping this great heritage of Hollywood alive by not driving the industry into the big fade-out? Cinema today has become like a match-box. You use the match once then you throw it away. Unlike in the past were films (even so-so works by middle range directors) were considered jewels and achievements that are made to last, today's films (in general of course) under today's technologies and the supervision of those who care much less about art and value, and towards audience who hate to leave the coach, are just a one look fair: Pay. Watch. Go.

  • Mike O | February 6, 2012 8:09 PMReply

    Don't forget the movie, 'SUING THE DEVIL' - as reported in the LA Times, it was one of the most illegally-downloaded movies in history.

    It's going VOD in April, but how do these illegal torrent sites play a part in hurting Hollywood films?

  • jingmei | February 5, 2012 9:51 PMReply

    i think this post used Mel Gibson's film in the article's title as a case apparently potentially said no to this trend 8)

  • David Holbert | February 5, 2012 4:09 PMReply

    Don't we pretty well know that the future of distribution is VOD and that VOD is a work in progress? At least for movies that are not spectaculars anyway. Theatrical is good work when you can get it. For now, it has two things VOD does not: the perception of validity in reported results; and, usually, a vigorous promotional process, or at least one that is well understood. Right now, I'm not aware that there is anything convincing on reporting VOD results (what is reported seems suspect - if someone knows otherwise I would value knowing). Promotion for VOD is pretty much a blank slate. LA200 is on to this with some really good ideas. Recommending, social, and internet ads simply have not communicated that "must see" urgency. They're good, but by themselves not good enough it seems. I would be suspicious of claims of inherent democratization through the VOD medium. Anyone can tack onto the skinny end of the long tail but without some kind of promotion or broader marketing, not much is likely to happen. So I'd like to see a lot more about results reporting and marketing for VOD.

  • bruckey | February 5, 2012 12:56 PMReply

    In relation to Fox they do have Fox International Productions which releases foreign language films abroad and when they can't sell off the US rights they release it via VOD

    http://www.deadline.com/2011/05/fox-home-entertainment-launches-world-cinema-video-label/

  • Frank Casanova | February 4, 2012 6:45 PMReply

    This is a boon to the low-budget and micro-budget Indy Filmmaker. Most of these movies would never see the light of day (or a theater) with the traditional distribution model. Now, the playing field is starting to see a bit of a leveling... and the audience will also benefit by being able to see many new artists that might have only had two days of showings in some forsaken art-house theater. This is a very good thing.

  • LA2000 | February 3, 2012 8:29 PMReply

    I think the best use of VOD hasn't really happened yet - that would be to use the format to "sneak preview" a solid film to build word of mouth prior to theatrical release. The film would hit VOD a week or two prior to theatrical, would have a limited number of views available (say, 200,000), would be comparably priced to a theater ticket, would be marketed as a "special, limited time/quantity event", and would be pulled from VOD on the date of theatrical release (or when the view ceiling gets reached, whichever comes first). This would allow VOD to serve as a money generating promotional vehicle (waaaay cheaper than billboards and TV spots) to build water cooler chatter for an upcoming theatrical release that might otherwise get ignored. And by doing this consistently only for pictures which are considered "quality", a VOD early release becomes the signifier of a good picture rather than a dumping ground for garbage and misfires.

    A great little movie like "Let Me In", which faced the insurmountable promotional behemoth of "The Social Network" in the run up to its theatrical release, strikes me as the kind of picture that would have greatly benefited from a VOD "preview" release strategy.

    After all, word of mouth only works if people have seen the picture.

  • Mike | February 5, 2012 12:14 AM

    That's a really cool idea actually, and you'd give people some incentive to watch your film on Demand because they'd feel part of something exclusive, so instead of free test screenings you could create buzz/gauge reactions and generate revenue at the same time.

  • Ryan | February 3, 2012 7:37 PMReply

    This is a very interesting trend that's starting. On the more extreme end of this trend we've seen filmmakers like Kevin Smith with Red State completely roll out his film on his own, cutting out the studios completely, and he did it pretty successfully. One might argue that this is because he already has a fan base built in, however while this may be so this still gives a lot of hope to the independent filmmaking industry giving the indie filmmaker himself a few options, and enticing studios to buy up more indies as they see they have new avenues of revenue stream to reap from.

  • Chris | February 3, 2012 5:32 PMReply

    "According to a poll at the time of the film's release, 98% of those who attended a theatrical screening were unaware that the film was also available for home viewing, suggesting that thoughts that a simultaneous VOD release hurts theatrical numbers were unfounded."

    You really need to brush up on your logical reasoning. If people who saw the film in theatres weren't even aware it was available at home, how the hell does that suggest that VOD doesn't hurt theatrical viewing? That argument makes no sense whatsoever.

    In fact, if anything, you could draw the conclusion that it DOES hurt theatrical viewing, because there's a good chance that if some of the 98% HAD been aware it was available at home, some of them (perhaps many) would have chosen to stay at home instead.

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