Standing guard

Shortly after being named president of The Walt Disney Company in 2005, Robert Iger set off tremors in the motion picture industry by musing about a film future in which consumers could see new pictures simultaneously in theatres, on disc, via satellite or on the internet. The reaction, particularly among members of the exhibition industry, was beyond alarm and cemented the executive’s status as public Enemy Number One in that community.

In the ensuing five years, Iger’s vision of tomorrowland may just be starting to become the new reality. Niche distributors in the US, such as IFC and Magnolia, have established templates for their releases that involve simultaneous (or near-simultaneous) premieres in cinemas, on DVD and video-on-demand platforms abetted by both companies’ interlocking interests in theatres and cable broadcasters.

Additionally several studios have, whether in consultation or unilaterally, collapsed traditional ancillary windows with early DVD releases or VoD offerings of such pictures as GI Joe: The Rise Of Cobra and Cloudy With A Chance Of Meatballs.

But what appeared to be the proverbial straw that broke the camel’s back was Disney’s announcement earlier this year that it planned to make its 3D Alice In Wonderland available in ancillary outlets three months after its theatrical premiere. The news came shortly before the film’s theatrical opening in early March and while US theatre operators fumed and threatened, several European cinema circuits responded by pulling the film from screens.

Disney quickly made nice with an undisclosed arrangement that saw the European playdates reinstated (the film has subsequently passed the $1bn mark at the global box office). In the US, meetings with the National Association Of Theatre Owners (NATO) led to a statement that the organisation would consult with members of the Motion Picture Association Of America and in appropriate instances allow for expedited releases in non-theatrical windows. Those “appropriate” situations, according to NATO president John Fithian, might include a high-profile movie opened in off-peak calendar times such as March or September with an eye to capitalising on summer or year-end holiday buying periods for DVDs.

Windows in their current incarnation evolved in the 1980s when ancillary monetary streams emerged, first with the popularity of video cassettes and later in the decade when pay-cable penetration became significant. It did not take long for the majors to realise that the bigger the box-office success, the better a film did on VHS. Added to that was the fact US cable outlets were willing to pay fees based on a percentage of theatrical rentals.

“Windows are exhibition’s rain-forest,” says a senior executive for one of the national US circuits. “We all understand what happens if you were to completely deforest.”

According to industry statistics released at ShoWest in March, a wide-release film had an average window of four months and 11 days from its theatrical debut to arrival on DVD in 2009. That span has not varied by more than a few days in the past four years.

Alice In Wonderland had mapped out a strategy that significantly sped up the process to 92 days.

For the majority of the industry, the question of speed is seen as a bogus issue. One does not require a PowerPoint presentation to realise that movies still playing in more than 200 theatres after 16 weeks are anomalies. The studio marketing gestalt is designed to maximise on a movie’s opening weekend and soften the box-office blow in the subsequent weeks. A two-and-a-half times multiple from the opening weekend gross is viewed as a better than average result for most wide releases; 75% of their theatrical take occurs in the initial 17 days in theatres.

So why are theatre operators stirred up about shrinking windows?

In the case of Alice In Wonderland, there is no question that part of the sensitivity was Disney and a handful of quotes Iger has made over the years that are dismissive of the future significance of conventional theatrical release. Conversely, no-one blinked when Warner Bros made Valentine’s Day available on DVD in May, just 94 days after its theatrical premiere. And while contracts provide exhibitors with more favourable terms the longer a movie stays on screen, the reality is that major circuits invariably agree to overall settlement conditions with the studios following the completion of a movie’s run in multiplexes.

It is not far off the mark to say the four-month window is a line in the sand that is guarded ferociously by the exhibition community. For veterans in the arena, there is a true appreciation of the fragility of the industry.

Two decades ago, financial institutions decided movie-going would spike and financed a building boom of multiplexes which resulted in a string of bankruptcies, reorganisations and mergers that shrank the ranks of national chains from seven to three.

While the exhibition scene has stabilised of late, the transition to digital-cinema has slowed to a crawl the construction of new venues. There is a mood of caution in part because most major suppliers have indicated they plan to reduce the number of annual productions following the financial turbulence that rippled through the industry during the recent recession. But the product downturn is unlikely to be evident for at least a year and may not happen if, through a combination of independent financing and acquisition, studios and recent start-ups fill in the gaps.

The other unknown, should the number of films in circulation sink appreciably, is how or whether the box office will be affected. Does a dependable core audience exist that will maintain current admission levels and, if that is the case, would it not logically translate into longer theatrical lives for most films?

Regardless, theatre owners remain suspicious of the intentions of MPAA members. Two years ago it requested a waiver from the US government regulatory Federal Communications Commission (FCC) to enable it to transmit product via secure connections to televisions and presumably other platforms such as mobile phones and iPods.

At the time of submission, then MPAA CEO Dan Glickman positioned the application as a benefit for people unable to go out to the movies as a result of health, family or geography.

The intention relates clearly to video-on-demand, and that raises the hackles of theatre owners. One US exhibition executive says that, unquestionably, VoD availability is the greatest concern of theatre owners. And it is tacitly understood that sooner rather than later, an “experiment” with a one-time day and date theatrical/VoD release of a major movie is likely to occur.

“It could happen before the end of the year,” says Mike Pade of Krikorian Premiere Theatres. “It probably will be a family title and it’s hard to imagine someone paying $50 and inviting in the neighbourhood or relatives so it makes financial sense. This is still a long way from being a viable revenue stream for the studios.”

“There’s no question that squashing the windows on DVD and pay-per-view has had an effect on our business,” says Greg Laemmle, president of the Los Angeles-based Laemmle circuit that largely programmes alternative movies. “It’s most apparent in films that appeal to a younger demographic.”

He says that as a result, runs tend to be shorter and he books individual film titles on fewer screens. But he does play movies that have simultaneous availability on other platforms.

“For the time being, there’s sufficient theatrical business to warrant booking those films. It’s something we’re watching closely because that could clearly change in the future.”