Mark Cuban and Todd Wagner’s media company, 2929 Entertainment, is releasing a new Steven Soderbergh film simultaneously in theaters, TV, and DVD. They’re going to do 6 different simultaneous releases for 6 films that Soderbergh will direct and shoot on 1080i high definition video.
Why release a film in theaters, DVD, and TV simultaneously?
Gross Misunderstanding by Edward Jay Epstein has the answer:
The cost of prints and advertising for the opening of a studio film in America in 2003 totaled, on average, $39 million. That’s $18.4 million more per film than studios recovered from box-office receipts. In other words, it cost more in prints and ads — not even counting the actual costs of making the film — to lure an audience into theaters than the studio got back.
The theatrical release of a film is a massive advertising blitz for the DVD and TV release that will follow later (and any video games and merchandising that are launched with the theatrical release). On average, a theatrical release makes no money. It is pure advertising.
Cuban and Wagner reason that it makes no sense to put on a massive advertising campaign (the theatrical release) and then release the real product (DVD and TV) months or years later. No sane business would do that. Yet the movie industry does. (2929’s simultaneous release is also a Purple Cow that will garner a fair bit of free advertising, e.g. this article.)
So, why isn’t everybody doing simultaneous releases?
Fear and stupidity.
Film producers fear that the different distribution channels will cannibalize each other. 2929 is betting this isn’t going to happen. Simultaneous releases may actually increase revenues since theatre-goers could purchase the DVD at the theatre if they liked the film.
The public expects big, serious movies from major studios to be released exclusively in theatres first. Film studios may fear that the public will assume a film that is simultaneously released is bad or cheap because it is going “straight to video”. A newcomer like 2929 does not have a brand like 20th Century Fox to sully.
2929 is vertically integrated. They have a film distribution company called Magnolia Pictures and they own Landmark Theatres. Cuban/Wagner are also partners in HDNet television. They can “force” Magnolia to distribute the film and Landmark and HDNet to show the film. Or at least 2929 can get better than normal economics from the deal. Traditional production companies are not vertically integrated. I don’t believe most independent television broadcasters and theatre owners would show a film that is simultaneously released in theatres, DVD, and TV because they fear the channels would cannibalize each other.
So Ladies and Gentlemen, you have my theory of the simultaneous release: Advertise a product that is actually available for purchase.
Duh.