Video on demand alongside theatrical releases, a new reality for movies?

By Silva Gentchev on Nov 04 2014 at 11:45 AM

The times, they are a changing, especially when it comes to how Americans watch movies. Movie fans are now watching more movies directly from their living rooms, sometimes even while the movie is still playing in theatres. In an era of on demand everything, newly released movies are now becoming increasingly available on demand alongside their theatrical releases.

In 2013 alone, Rentrak reported that On Demand orders of movies and TV shows increased a whopping 46% from the year prior, equivalent to about $1.18 billion. By 2018, it is predicted that video on demand will be a $45 billion market.

It’s no secret that viewers want options on when, where and how they watch their favorite television show or movie. This began with Netflix, and now it is finally coming to the realm of new movie releases.

Earlier this year, Henry Weinstein made headlines when he announced the sequel to hit “Crouching Tiger, Hidden Dragon” would be debuted in IMAX theatres and Netflix, at the same time. The announcement brought widespread backlash from theatre companies such as AMC and Cinemark worried about how this would cut into their ticket sales. After all, if fans could see the same movie on Netflix in the comfort of their own home - why would they go to the theatre?

Even more recently, The Weinstein Company also  released a sci-fi film “Snowpiercer” on demand only 2 weeks after it was debuted in theatres. The digital box office hit $5 million in only three weeks, a striking comparison to the $4 million in six weeks for the theatre. It is difficult to argue with those results, even if the film was in the less-advertised indie sci-fi genre. For movies without massive advertising budgets or franchise recognition, this dual-release model could ultimately be a more profitable path.

Typically, a majority of theatres demand that distributors hold a 90-day window before releasing films on demand. Most are not even willing to book films that open in advance of that window, save for about 500 smaller theatres nationwide. The big question is, will movies survive outside of that model?

According to Henry Weinstein and Netflix, the answer is yes.

If you need more convincing, just look to Netflix’s partnership with Happy Madison Productions (owned by Adam Sandler) for four films that will debut directly on Netflix. This marked the first time a global star liked Sandler cut an exclusive deal with Netflix completely bypassing the movie studios.

Not only that, as I was researching this article I came across a banner ad for a film called “The Babadook.” The headline read “Now playing exclusively on DirecTV, and in theatres November 28th.” The horror movie (garnering superb reviews) is available to rent or buy via DirecTV a full two weeks before it’s available in movie theatres. This one is by far the most interesting strategy since it's reversing the model by forcing theater-goers to wait for the release after DirecTV, rather than the other way around. 

A new reality is shaking out for movie releases, I predict that there will be more experimentation in the next year in finding the optimal release model. One thing is clear though, movie theatres will need to grow with viewer preferenes if they want to hold on to those $15 movie ticket profits. 



 

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