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Michael Bay, Kathryn Bigelow, James Cameron & More Stand Up Against Premium VOD Plans

by Kevin Jagernauth
April 20, 2011 5:26 AM
12 Comments
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As you may have heard over the past few weeks, the major studios (with the exception of Paramount), will be testing the waters this spring with a new premium VOD plan that will make films available in your own home 60 days after they hit theaters. As outlined by Deadline, the plan right now is limited to DirecTV subscribers who have HD DVRs, but for $29.99, you can get a crisp copy of a film complete in high definition and 5.1 surround sound and 48 hours to watch it as many times as you want. But the program is starting slow, kicking off with "Just Go With It," and introducing a new film every two weeks. But needless to say, theater owners are incensed. Already battling for audiences, they see this move as the death knell for the theatrical movie going experience. Well 32 filmmakers -- including Michael Bay, Kathryn Bigelow, James Cameron, Michael Mann, Todd Phillips, Guillermo del Toro and more -- have now issued an open letter to the industry citing their concerns and they make some valid points.

Firstly, they argue that theatrical dollars still make up for a huge portion of the financial windfall for a movie, and reducing that window puts those dollars at risk. Moreover, they rightly assert that the $30 price point simply won't stand and that eventually it will tumble down to a point where the current potential for a lucrative new avenue of revenue will be meaningless. As for piracy, they argue that making pristine digital copies available will only exacerbate the problem, not solve it (indeed, it's pretty easy to find pay-per-view rips of movies already). And perhaps most importantly, the filmmakers are concerned that the end result of this shortening of the theatrical window will mean only blockbuster and tentpole fare will get a release in cinemas whereas smaller or riskier films won't have a chance to find an audience and build the word-of-mouth those films need to be successful.

But, theater owners aren't entirely innocent here either. While the open letter touts how special and amazing the movie going experience is, theater owners need to come to grips that going to the cinema these days is a huge pain in the ass. The reality is that for most of America, going to the movies means dealing with escalating ticket prices, sticky floors, morons who don't shut up, texting, Cracker Jack box sized "theaters," piss-poor projection with everything from underlit screens to improperly framed movies that leave boom mikes in the shot, and an irritating amount of commercials before the actual movie we paid for. If theater owners want people to return to the movies, they need to accept that there is a lot of improvement to made around the industry to make that experience something people look forward to, not simply tolerate.

That being said, while we understand the studios are freaking out over rapidly declining DVD sales and the shift to alternate methods of watching movies via mobile streaming and other digital avenues, cutting into their own box office window seems reactionary and not completely thought through at this point. While yes, many movies make over 50% of their box office take within the first few weeks, there are also scores more than chug along for weeks quietly racking up millions; just look at "The Social Network" which needed 22 weeks to haul in $96 million. If it was yanked from theaters after 60 days, it would have only made a fraction of that number.

There are likely still more volleys to be tossed from both sides as this premium VOD plan slowly rolls out. Check out the open letter from the filmmakers below as well as some interesting thoughts on the plan from former Fox studio head Bill Mechanic.

AN OPEN LETTER FROM THE CREATIVE COMMUNITY ON PROTECTING THE MOVIE-GOING EXPERIENCE

We are the artists and business professionals who help make the movie business great. We produce and direct movies. We work on the business deals that help get movies made. At the end of the day, we are also simply big movie fans.

Lately, there’s been a lot of talk by leaders at some major studios and cable companies about early-to-the-home “premium video-on-demand.” In this proposed distribution model, new movies can be shown in homes while these same films are still in their theatrical run.

In this scenario, those who own televisions with an HDMI input would be able to order a film through their cable system or an Internet provider as a digital rental. Terms and timing have yet to be made concrete, but there has been talk of windows of 60 days after theatrical release at a price of $30.

Currently, the average theatrical release window is over four months (132 days). The theatrical release window model has worked for years for everyone in the movie business. Current theatrical windows protect the exclusivity of new films showing in state-of-the-art theaters bolstered by the latest in digital projection, digital sound, and stadium seating.

As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry.

Major studios are struggling to replace the revenue lost by the declining value of DVD transactions. Low-cost rentals and subscriptions are undermining higher priced DVD sales and rentals. But the problem of declining revenue in home video will not be solved by importing into the theatrical window a distribution model that cannibalizes theatrical ticket sales.

Make no mistake: History has shown that price points cannot be maintained in the home video window. What sells for $30-a-viewing today could be blown out for $9.99 within a few years. If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty, premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue. Some theaters will close. The competition for those screens that remain will become that much more intense, foreclosing all but the most commercial movies from theatrical release. Specialty films whose success depends on platform releases that slowly build in awareness would be severely threatened under this new model. Careers that are built on the risks that can be taken with lower budget films may never have the chance to blossom under this cut-throat new model. Further, releasing a pristine, digital copy of new movies early to the home will only increase the piracy problem—not solve it.

As leaders in the creative community, we ask for a seat at the table. We want to hear the studios’ plans for how this new distribution model will affect the future of the industry that we love.

And until that happens, we ask that our studio partners do not rashly undermine the current – and successful – system of releasing films in a sequential distribution window that encourages movie lovers to see films in the optimum, and most profitable, exhibition arena: the movie theaters of America.

We encourage our colleagues in the creative community to join with us by calling or emailing NATO at 202-962-0054 or nato@natodc.com.

Sincerely,

Michael Bay
Kathryn Bigelow
James Cameron
Guillermo del Toro
Roland Emmerich
Antoine Fuqua
Todd Garner
Lawrence Gordon
Stephen Gyllenhaal
Gale Anne Hurd
Peter Jackson
Karyn Kusama
Jon Landauv
Shawn Levy
Michael Mann
Bill Mechanic
Jamie Patricof
Todd Phillips
Brett Ratner
Robert Rodriguez
Adam Shankman
Gore Verbinski
Robert Zemeckis

Paid for by the National Association of Theatre Owners


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12 Comments

  • tundra | April 30, 2011 5:04 AMReply

    Wow, well that's just something they're just gonna hafta DEAL WITH! Honestly, I can't stand waiting 6 to 8 months for a movie [after first hearing (about) it] to come out on Netflix.com.

    It is a little bit interesting to hear from these people who are supposed to be literal, rock, gods of our times (the directors and actors of our times; who make way too much money anyway) praying publicly to the studios.

    Interesting.

  • lol@you.com | April 22, 2011 4:05 AMReply

    the nation is in a financial crisis... deal with it.

  • Connor | April 21, 2011 12:21 PMReply

    Whats ironic is that while in America, The Cinema business is going down, In the UK however, The Cinema Business is at its biggest highs in years. Safe to say Movie Theatres will be around for the long run in The UK.

  • Martin | April 21, 2011 5:03 AMReply

    The reality is that for most of America, going to the movies means dealing with escalating ticket prices, sticky floors, morons who don’t shut up, texting, Cracker Jack box sized “theaters,” piss-poor projection with everything from underlit screens to improperly framed movies that leave boom mikes in the shot, and an irritating amount of commercials before the actual movie we paid for.


    This is why I'm so happy I live in Austin, where we have the Alamo Drafthouse. They don't fuck around there. Strict no talking, no texting rules, no commercials before the movies, no one brings the baby — it's awesome. When a theater is run by people who are clearly in it for the movies and not just the money, you can tell the difference!

  • Kevin Jagernauth | April 20, 2011 9:24 AMReply

    No one really gets those big paydays anymore. It's all percentages of gross these days.

  • Jesse | April 20, 2011 9:23 AMReply

    Here's a plan. How about all those big name directors and actors and screenwriters and producers take, I don't know...a pay cut? No reason for paying people $20 million a movie.

    Hollywood really needs a pay cap. $5 mill tops. That's good enough to buy another summer home in this market.

    There. I just fixed everything.

  • pete | April 20, 2011 8:08 AMReply

    I think it's funny that all of these comments are written sitting at a computer. Not in person, or by phone, or written letter. Not to say that horse and buggy is my preferred choice of transport, but it's sad that our comfort level has to be so high just to leave the house these days.

    No, I'm not 90, I'm 35, and I love going to the movies. I love the theatre. The smell of popcorn, (even though I don't eat it) the big screen, the communal gathering. I can't imagine it all ending. I tend to watch more independent films than big budget studio films, so I don't know where, other than places such as this site, I'm going to hear about my new possible favourite film.

    However I do believe that things could be improved at the theatre's. A cell phone ban would be nice, and prices are a bit high especially with so many commercials being shown, but other than that I don't think that you can watch a movie in a better way than going to a theatre with a group of people and experiencing it together. Hearing the laughter and seeing the tears of others, it shows us we're not alone. It's a cultural experience watching our stories and history together. Go to any film festival and you'll know what I mean. I would hate to see these movie houses close simply because people don't want to get off the couch.

    There are bigger theme's to discuss here, but I won't get into them on this blog. I'll just say that the golden age of cinema happened because people experienced films together. The lazier the audience becomes the harder for the artist to get films off the ground, and the more quality will suffer because film makers and exec's will be scared to take a chance.

  • Piotr | April 20, 2011 7:06 AMReply

    The Bloor Cinema?

  • Bickle | April 20, 2011 6:59 AMReply

    Whether these filmmakers like it or not, the industry (and how its goods are consumed) is heading towards a future that's not nearly as lucrative as it has been this last decade. How easy is it to just download Vuze, type in a movie that's in theaters, and have it on your computer in an hour? They'll either take a dip in revenues and go with a more consumer-friendly VOD model, or lose it all trying to hold onto the status quo, like the music industry did.

    The answer isn't to put the screws to the consumer and force them to wait 4 weeks for videos to become available on Netflix and Redbox (with the hopes that they'll say "UNCLE" and buy the $35 Blu-ray instead). Like you said, the theater-going experience sucks. I can't stand on the side of these theater-owners, who took their control over the marketplace for granted. They wouldn't streamline the quality of their locations or put their foot down on talking & texting during movies, while jacking up the prices to ungodly levels - why is the matinee price literally twice as much now as it was when I saw Sin City, six years ago?.

    Like I said, it's easy to say fuck the theaters, fuck the studios, fuck the artists, I'm watching a movie for free tonight with my girl because I have no job and live off of Bugles and PB&J sandwiches. Piracy's kind of a scary problem that they need to handle (without blowing it like the RIAA did and make even my grandmother say "fuck those guys, I'm downloading this shit like it's cool!").

  • starway2001 | April 20, 2011 6:15 AMReply

    Evolve or die. Today's twenty-somethings don't give a shit that you spent $200M making it and $80M promoting it. They're going to steal it and laugh at you in the process. Evolve or die!

  • Cory Everett | April 20, 2011 5:51 AMReply

    "Theater owners need to come to grips that going to the cinema these days is a huge pain in the ass. The reality is that for most of America, going to the movies means dealing with: escalating ticket prices; sticky floors; morons who don’t shut up; texting; Cracker Jack box sized “theaters”; piss poor projection with everything from underlit screens to improperly framed movies that leave boom mikes in the shot; to an irritating amount of commercials before the actual movie we paid for starts."

    This is key here. I don't feel any sympathy for NYC theatres charging $13 for a movie (with no matinees after noon) regardless of what shape their theatre is in.

  • rotch | April 20, 2011 5:48 AMReply

    feels like we're witnessing the dead of the movie theaters in a slo-mo car crash. how sad.

    Good write-up!

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