Three years ago , I visited a small cable operator in Southern Illinois. Sycamore, Illinois sits in the southern part of the state and is nestled along highway 64 in DeKalb County. It is well off the beaten track. The Kerasotes Circuit closed down their local theatre and now the once proud hometown theatre had to bear the melodic foot poundings of many a dance recital. People miss their movie theatre but do not seem to have enough community inertia to re-launch it.
The cable operator and I were talking about the movie theatre and as well how folks could launch more local programming. He was rushed and knowing that I had a background in movies asked me if I knew what was going on with the MPAA visiting every small cable operator. I said I did not but I was more than interested. He showed me a business card and on it was the name and office of an employee of the MPAA. It turns out the the MPAA wanted to install a box in every small local cable or internet company in order to block piracy. This box would only allow MPAA signed content over the web, if it did not have this algorithm embedded in the video signal, then the signal would not allowed to go any further down the digital pipeline.
Before moving on, as a ardent movie buff and a strong advocate of smaller business and free enterprise there has always been something about the MPAA that irks me. Since Jack Valenti, I have always have the suspicion that they were always up to something. The information I was given at Sycamore further heightened my paranoia. While I know piracy is an issue, there are more elegant ways and cheaper ways to implement a solution, for example implementing a similar algorithm in the chipsets that reside in set top boxes, dvd/blew-ray, players and numerous ott devices that are needed in order to decode the digital video signal.
I have been aware of studio studies since the third Star Wars installment that the studios were more than hungry to develop a one to one relationship with the consumer. They wanted to avoid the theatres entirely. They wanted a pipeline directly into the home of the American consumer. One of the studies claimed that if Star Wars 4 was released directly into the home then in 1985 dollars they could see revenue in one evening of $120 million. Their intent is to recoup the negative cost of a movie and to avoid sharing any of the box office with the theatre owner by creating a marquee event , piping the movie directly into the home and receive 90% of the revenue. The internet and digital deployment has gotten so deep in our economy that now their plans have the tool sets to become a reality.
Film booking offices have been closed an consolidated, independent distributors have found it harder and harder to find theatres in which to release into theatres. Fewer titles are being released and because of VPF’s theatres are increasingly unable to book independent product.
Away from the watching eyes of the US based circuits starting in 2013, Disney and Sony Pictures Entertainment have floated premium VOD releases in South Korea, with titles available online or on cable VOD three to five weeks after theatrical debut. The trials, involving Sony’s “Django Unchained” and Disney’s “Wreck-It Ralph” and “Brave,” mark the first time Hollywood movies were available to home viewers in the region while they were still in the theater windows
Studios have been known to always float trial balloons offshore prior to launching them in the USA. and the Korean experiments could mean majors are on a path to again try early-release premium VOD. Studios watched the trials in 2013 and began to tweak and tinker.
In July 2015, Paramount announced that it had struck a deal with AMC Entertainment and Cineplex Entertainment to make Scouts Guide to the Apocalypse and Paranormal Activity: The Ghost Dimension available digitally, 17 days after they dropped below 300 theaters. They asked other chains to join in, most refused some did not. ,Paramount advanced its plans. In return, Paramount has agreed to share a portion of proceeds of the VOD revenues. From inside industry sources industry sources, Paramount is giving participating exhibitors an estimated 2-4% share of their digital revenue made between the time the film drops below 300 theaters and 90 days after its opening date. Those agreeing to Paramount’s formula include AMC, Canada’s Cineplex, National Amusements, and Alamo Drafthouse. But many circuits including Regal Cinema, Cinemark, and Carmike soundly rejected Paramount’s offer. Now with the absorption of Carmike a voice of dissent against the studio machinations has been silenced.
Scouts Guide to the Zombie Apocalypse grossed $3,703,046 in North America and $11,157,720 in other territories, for a worldwide total of $14,860,766, against a budget of $15 million.
The film opened on October 30, 2015, alongside Burnt, Secret in Their Eyes, and Our Brand Is Crisis. The film was initially projected to gross $2–4 million from 1,509 theaters in its opening weekend. The film grossed $1.8 million in its opening weekend, finishing 12th at the box office
Rob Moore, vice chairman of Paramount Pictures said, “There is no question that we are going to do less theatrically, but I believe we will make it up digitally. This is about the long-term health of the business, so there is not this long period of time when a consumer can’t watch a movie.”
Last week the news hit that AMC was in talks with Sean Parker’s “The Screening Room” concept. Parker, of Napster & Facebook fame, announced plans for a new venture called Screening Room which will give movie goers the opportunity to screen movies at home at the same time they open in theaters for a premium price of $50. Variety claims that Hollywood Heavyweights like Spielberg, Peter Jackson, J.J. Abrams, Ron Howard, Brian Grazer, and others are in full support of this new assault against the theatres. Rumors are that they have been gifted shares in this new venture.
How does Screening Room work? Layout 50 bucks and you’d be able to watch the film in the comfort of your own home. As studios are deeply worried about piracy, consumers of Screening Room would shell out $150 for access to the anti-piracy equipped box which would sit in their homes. Once a film has been purchased you’d have 48 hours to watch it. I can imagine large college dorm parties for a new movie release or video projection in neighborhoods on large portable screens.
Screening Room is looking to prevent theatres resistance by offering large chains chains as much as $20 out of that $50 fee. No plans are in the works to include local independent theatres and smaller chains. Folks who shell out $50 will also receive two free tickets for the film at a local theatre and will probably have the choice of AMC or AMC. It’s a bad idea, but Hollywood knows it. But they really want to see where it ends up and will take advantage of the chaos and market fragmentation news like this will create.
It’s just another attempt to erode the theatre base and move to a direct to consumer relationship. Comcast, the parent company of Universal knows full well that its cable offerings will evolve quickly to a totally non-linear offering and that networks like CBS, NBC, FOX and ABC will soon more or less go away. They know that if they can cut out the theatre, they eventually will take in up to a 100% of revenue from a new form of windowing, the new release into the home window.
Theatres must either come to the conclusion that it’s day are numbered or fight back against the machinations of Hollywood, not by offering chicken tenders but by offering alternative content, using the examples of Argentina and Norway where increased releases has turned to massively increased revenue and viewership.
I look back to Sycamore Illinois and my realization what was happening, that maybe the fight against piracy had some hidden agendas woven into a noble cause. Day and Date is such a flawed idea and in the end will create confusion, and market erosion of every segment of the movie business.
Hollywood wants to take away your customer base, it is as simple as that. They want all the money and it’s time to push back.