Why should consumers have to wait for four months after every film opens in cinemas to watch it on DVD or iTunes, BigPond Movies and Foxtel on-demand?
Distributors say the traditional gap no longer makes commercial sense for most films in an era when people expect and want to see entertainment content on multiple platforms in a reasonable time frame.
Stephen Basil-Jones, Sony Pictures Releasing Executive Vice President for Australia, New Zealand and Northern Asia, says the four-month holdback in Australia is antiquated.
He advocates the gap should be reduced on average to three months. “For some films it may be longer, shorter for others, but the average should be around 90 days, replicating the US model,” he told IF.
Basil-Jones argues that reducing the gap between cinema release and home entertainment will not damage the box-office. “I am a theatrical guy; I want to protect my business,” he said.
There have long been informal discussions between distributors and the major cinema chains over adopting more flexible release windows, so far without success. Exhibitors are adamant that the four-month gap must remain in order to protect the tens of millions of dollars invested in digital projection and new and upgraded cinemas.
“Cinema exhibitors do not want to see any contraction in the theatrical window – they do not want to risk the stability of the economic model and relationships they have with film distributors and film producers,” said Michael Hawkins, Executive Director of the National Association of Cinema Operators Australasia.
“Australian and New Zealand exhibitors lead the world in terms of quality of cinema comfort and presentation. Australian Premier Class or Gold Class cinemas are simply world-leading examples of that and the massive investments cinema exhibitors have made to the leisure past-time of movie going. It should not be forgotten that film distributors and film producers reap the reward of those investments by virtue of the share in revenue admissions yield.
“In relation to specific movies, there must be negotiations held directly by the distributor and exhibitor concerned – there may be particular competition issues at play that I can’t engage in.”
Yet the impetus for change from the distributors is becoming stronger as many films are pulled from cinema screens after four or five weeks, or even shorter runs for flops, and ancillary revenues continue to decline.
Distributors say marketing a film across proliferating media platforms is more costly than ever before, exacerbated by the life of a film being largely determined by its opening weekend results. Hence all marketing dollars are committed upfront to support the opening, with no ability to finesse the marketing campaign should the film open lower than expected.
Universal Pictures International Australasian MD Mike Baard told IF, “Distributors are finding it very tough to recoup production costs, minimum guarantees and spending on marketing and distribution when home entertainment and television revenues have diminished, and so are looking to find meaningful ways to recoup this expense of releasing films to cinemas.
“I can understand how for a certain type of release, consumers would like to be able to watch them whenever and however they choose. However there is no question that we would like consumers to choose the cinema experience which is the optimal environment to consume the type of content we create and distribute.”
Baard acknowledged that exhibitors have a lot at stake and are yet to be convinced that shortening the release windows will not hurt B.O. takings but said, “Both sides need to sit down and work out a formula that retains each other’s share and potentially grows the pie. People are watching more content than ever.”