Online Distribution: The War Has Begun

Harvey Weinstein has scored a first. He has succeeded in getting a movie shut out of theaters before it is even finished being made. In the past, he at least waited until the MPAA got a look at it. I can’t wait to see the fit he will throw this time.

Especially since the issue will effect the entire future of film distribution. With his recent announcement that Crouching Tiger, Hidden Dragon: The Green Legend will be simultaneously released on both Netflix (via video on demand) and IMAX (to theaters), Weinstein has just fired the biggest shot yet in the rapidly emerging war for digital distribution.

The response has been incredible. The three biggest theater chains have all announced their intentions to not show the film. In turn, the parent company of the AMC theater chain, the Chinese firm Dalian Wanda, is hinting that they might also refuse to show the movie in China. Not since 2006, when Steven Soderbergh tried to release the film Bubble on the same day to both theaters and cable TV, has there been such a massive negative reaction.

But Weinstein is extremely committed to pursuing the digital approach. Less widely reported is the current handling by The Weinstein Company of the British film One Chance. Before its national release on October 10, the movie is being made available on Yahoo! Screen. Viewer response to this movie has been slightly more positive than the critical reviews, and the advanced digital release just might create some positive word of mouth for the title.

Obviously, theater owners are not very happy with this experiment. I have no doubt that some of them are ready to get out the pitchforks and form a mob. Despite various upbeat presentations from the National Association of Theater Owners, the traditional system of theatrical distribution is in decline. Theater owners know this, and they quietly fear the rise of digital distribution. They do not see VoD as a possible “partner” for a movie’s release. They see it as the worst threat since broadcast TV. And they are right in their fear. To be honest, it is a far greater threat than TV ever could hope to be.

Of course, everybody has to pick their battles which is why One Chance is slipping through its digital presentation with barely a whisper of complaint. It is not the type of movie that is likely to get wide distribution. Mostly, it will be steered into a small screen near the back of the multiplex. No one in the theatrical distribution business cares.

A bit of the same is true of the recent announcement that Adam Sandler will make four films direct to Netflix. Virtually all of his recent movies have bombed at the box office. But he has just enough of a fan base to score on DVD and VoD rental. So at this point, Netflix is just cutting out the middle man, much to many theater owners’ relief.

Crouching Tiger, Hidden Dragon: The Green Legend is a very different matter. The original film made over $128 million at the US box office despite being viewed as a foreign film. Most likely, the sequel will not do as well in the US market but should still be strong enough to be extremely desirable. Especially since it will be in IMAX. It might even be a welcome break in the summer of 2015 when most screens will be tied up with men in superhero tights. It is possible that a bit of exotic spice would appeal to a wider demographic market than the usual tent-pole production.

So the current refusal by Regal, AMC, and Cinemark to show the film amply demonstrates how worried theaters are about digital distribution. In some ways, they really are slicing off their nose to spite their face, though it should be noted that they may change their minds at any moment. The simultaneous digital release will cut into the box office, but the IMAX presentation just might offset the impact. I am partly taking this stand because I see it as a grand experiment and would love to see the outcome, good or bad. Most theaters do not share in my sense of scientific curiosity. They have a business to run, even if they sometimes seem determined to run it straight into the ground.

It is also a major risk for Harvey Weinstein. He undoubtedly knew that the exhibitors’ reaction to this plan would be negative. But he also has some grasp of the impending future of the film industry. So far, he is willing to take this gamble, though this could also change at any moment – hey, this is a business. What I view as a grand experiment Weinstein must see as a calculated risk that shifts the parameters of the distribution model. We will both be anxious to see the outcome.

Fortunately, I do not lose anything with this experiment.

The simultaneous release model that Weinstein is using will not be the actual future of distribution. It is more of an accommodation of current and emerging forms. Both the cost and IMAX production format attached to this movie will also prove atypical to the impending future model. But digital distribution is about to turn a major corner regardless of the immediate outcome of this one project.

For all practical purposes, the theatrical model is over. It will still take a period of time before it truly vanishes (except for a few operations that will continue to exist as a type of museum showcase, perhaps staffed by “re-enactors”). But the theater model is now a vestige of the 20th Century, beginning to fade into a digitally enhanced twilight.

Which also means that the battle for the digital future is now in full swing.

Copyright (c)2014 Dennis Toth All Rights Reserved