Monday Morning Quarterback Part III
By BOP Staff
September 20, 2012
BoxOfficeProphets.com
Kim Hollis: Arbitrage became the biggest opener ever with a simultaneous video-on-demand release, earning $2 million. This leads to a larger question. What is the tipping point on price where you would prefer to watch a title at home rather than in theaters? Also, what sorts of films are you more inclined to want to watch in theaters independent of price?
Bruce Hall: Since I have multiple home theater setups, I would always prefer to watch a film at home. I will pass up the sticky floors, whiny children, smart ass teenagers and high concession prices every single time. Ignoring the hypothetical logistics of why such a pricing model would never work, if I could watch The Dark Knight Rises on opening night at home on my big screen for the same cost, I absolutely would. I am just more into the story than the spectacle of the cinema experience, and I get more personal enjoyment from watching films in the comfort of my home than in a bustling theater.
For the record, I'd watch Skyfall opening night on a 15 inch black and white screen if I could do it for five bucks.
Samuel Hoelker: I'm surprised by this result, mostly because no customer at my theatre this weekend could pronounce it correctly, and watching it VOD would prevent the embarrassment of asking for a ticket to "Ar-burr-terr-age." Then again, I think the target audience for this skews older (much like last year's success Margin Call), which is not exactly the same age range as on-demand.
Jason Barney: As far as budgeting for movies at the theater, I am already making those choices. I would certainly see more films on the big screen if it didn't cost $9 per person to go. We actually try to go after we have eaten to avoid having to buy popcorn and soda. Throw in those, and sometimes it is impossible to leave a movie without having spent $30 on one film, and that is just not worth it. Just take a look at the price of gas or food, and the movie is going to get skipped. That said, I went to the movies a lot this summer, but each time it was a pretty economical choice. At the drive-in theater you get to watch two for one. Afternoon showings are cheaper. Movies are about as expensive as they can be without me starting to go less. Price is one of the reasons I avoid 3D films.
Reagen Sulewski: Factoring in the price of a babysitter and the logistics of actually getting out to a theater, I think I'm right there with the "Same price? Okay" people. Same-day VOD is kind of the jetpacks/flying cars of the cinephile's world - this is what the future feels like.
Felix Quinonez: I think if all movies were released the same day for VOD, I might never go to the theater. The higher ticket price doesn't seem like a big deal to me because you can invite a few friends over and split the cost. At the movies you each wind up paying overpriced tickets and the even more overpriced concession items. At home you can just order a pizza or something and have a couple of beers and split the cost on everything. It seems like it evens out and instead of dealing with annoying kids and people who text during the movie you're with friends who you can tell to shut up or even pause the movie. So yeah, I'm all for VOD.
I think there are very few movies that I would HAVE to see in theaters if this option was available. I guess maybe a movie like Avatar where the 3D and visuals were pretty much the only thing I liked about that movie. But I mostly don't care about the huge screen and surround sound stuff.
Edwin Davies: I try to see pretty much everything in the theater, but that's primarily because the theater near me has a day where you can see any film (even 3D ones) for $6, which hugely defrays the cost of the experience. If that option wasn't available to me, I'd probably check out more things on VOD. There's no difference in cost, but the experience would be a lot more pleasant and stress-free viewing at home than at a theater, if only because you avoid the hassle of travelling and waiting in line, neither of which I'm ever particularly happy about.
In terms of types of films, I don't think I'll ever choose to see a blockbuster or a visually spectacular film at home over the theater, because as good as my home set-up might be, it'll never quite match the big-screen experience. I'd never opt to see The Dark Knight Rises or The Master at home if I could see it on a big-ass screen.
David Mumpower: We occasionally broach this subject in anticipation of the day arriving when a tipping point occurs. This will be the day when day and date is a viable option for most titles in release. Until then, I enjoy these threads wherein we debate exactly what we do and do not like about the theatrical experience.
In giving Ultraviolet/Vudu serious consideration this year, I have come to realize how much I prefer watching the same titles on home video. Think Like a Man and John Carter are recent examples of titles that my wife and I had intended to watch at a theater. Circumstances prevented us from doing so. When we watched at home, I probably enjoyed the titles more than I would have in a crowded theater. The overriding positive is that we control the viewing environment much more when we watch at home.
We laugh every time Regal Cinemas shows that vile pre-movie commercial about how the cinematic experience is exponentially better at a theater because TVs are too small. Not only is the ad obnoxious since we are already AT the theater but it is also written by someone who does not understand the simple physics of the situation. The idea is that watching a giant screen is better yet since we are at least 30 feet away from it, the picture does not engulf the optics the way that a large screen TV a few feet away would. Our 47" 3D TV is only five feet away from our couch. No IMAX experience in the world can match that. To that point, we watched The Lion King re-release in the theater then skeptically exhibited it for family members during a housewarming party at our new residence. Every person there was blown away by how strong the 3D was in the home environment. It *surpassed* the theatrical viewing. So the tipping point has already arrived in terms of visual satisfaction.
Ignoring the preferred visuals, however, the discussion comes down to economics. It always will. Studios have built an business model around the release cycle of a new product. A deal is brokered with exhibitors to license the film with most of the opening week's gross going to the content creator. After the product exits theaters, the rental/ownership phase begins. After a massive amount of sales volume occurs in this phase, we enter the television phase that sees the movie licensed to air. This is the way most movies get viewed, a dirty little secret of the industry.
The changing circumstance of VOD is that Arbitrage is available at home and in the theater simultaneously. Margin Call was shockingly successful with this day and date distribution model last year. And it has become clear that at least some consumers are ready to ignore theatrical release altogether in order to watch at home. The catch thus far is that anyone who wants to watch Bachelorette, Arbitrage or Flying Swords of Dragons Gate, the three most popular VOD titles at the moment, is that the consumer can only rent the title. They cannot buy a digital copy as of yet. Ergo, the existing business model holds. When the day comes when a person can own a title forever on day one, studios will lose a portion of their income; however, they will not be tethered to theater chains for revenue splits, either.
Fox took a trial run with this on Tuesday. They spent what we calculated as a seven figure ad buy in order to hype to the debut of their "new" format, Digital HD. This is effectively selling a digital license for a movie a couple of weeks prior to its home video release. Several studios have been doing this for a while now. Fox took the plunge with Prometheus and wanted to trumpet the practice as much as possible. For $14.99, a person can own an HD Ultraviolet copy of Prometheus forever.
I found this particularly noteworthy because I still had my theater ticket for Prometheus. It was $17 for me plus the Fandango "We Hate Our Customers" surcharge. For less than what I paid on opening weekend, I bought a digital license for Prometheus. It even includes a couple of featurettes such as we see on DVDs. When ownership becomes a viable competitor to rental or, in this example, cheaper, I will switch almost exclusively to home video viewing.
Once studios take a strong step toward this forward-thinking business model, the theater going experience as we know it will become much less ubiquitous. I know that people are wondering why the distributors would want to skip a step of release. They will not, obviously. Since there is no additional cost to them for digital licenses and no manufacturing expenses, what Fox calls a DHD copy is close to 100% pure profit. The negligible cost of completing the transaction plus the internet hosting are their only fees. In addition, the secondary marketplace that movie content creators despise, used software sales, is completely eradicated the moment physical media becomes the less popular sales practice.
We are on the precipice of cataclysmic marketplace change.