Yesterday 23 influential Hollywood directors wrote an
open letter to the major studios asking them to reconsider the plan to introduce premium video on demand 62 days after a film opens at theatres. Currently movies have at least a 132 day period after opening in theatres until the Blu-ray and DVD is released, the new move backed by large studios including Warner Bros. and Sony Pictures Entertainment cuts that window down by more than half. The studios say by doing this they will open up a new revenue stream, but the directors and National Association of Theatre Owners say this move will take revenue from traditional sources such as box office gross and home video, they say this will harm their business model irreparably.
The directors fear that the reduced window will lead to lower box office takings as people will opt to stay home instead of going to theatres because of the shorter wait. They say this will lead to the closure of theatres across the country which will increase competition for screen time, and eventually independent productions will be forced out of the market because the only way theatre owners will be able to make money is by serving the mass market. Running screens for niche or independent movies will no longer be possible under the new model. They say that risk taking in the industry will be diminished and Hollywood will lurch even further towards big blockbuster sequels.
"The
competition
for
those
screens
that
remain
will
become
that
much
more
intense,
foreclosing
all
but
the
most
commercial
movies
from
theatrical
release.
Specialty
films
whose
success
depends
on
platform
releases
that
slowly
build
in
awareness
would
be
severely
threatened
under
this
new
model.
Careers
that
are
built
on
the risks
that
can
be
taken
with
lower
budget
films
may
never
have
the
chance
to
blossom
under
this
cut‐throat
new
model."
Another problem with the plan, according to the directors, is that early release VoD will lead to higher levels of digital piracy. At the moment full high quality 'rips' of digital media only show up a week or so before the release of Blu-rays and DVDs as they become available to distributors and retailers, under the new window these high quality rips will show up a full two months before the release of physical discs available to buy in stores. The directors say this will lead to higher piracy and lower home video revenues and be damaging to the movie studios in the long term that are so dependent on home video revenue to secure financing deals for future productions.
NATO say that this is the thin end of the wedge and eventually the $30 rental fee could turn into a $9.99 fee and there could be an instance where the fee has become so low that the only way studios can raise their margins is by introducing a new, even shorter window with a higher fee attached to it. Eventually, a likely scenario is that the theatrical window could disappear completely and movies will be released on VoD and in theatres simultaneously.
All in all, the movie studios seem to have underestimated the resistance of both the theatre owners and content producers to this plan. There are bust ups brewing and the biggest casualty could be Harry Potter and the Deathly Hallows part two as NATO have
threatened to pull it from their chains if the movie studios don't budge. With both sides ratcheting up the pressure, one will have to give way sooner rather than later. We contacted Sony Pictures for a comment, but as it is Easter weekend we don't expect any answer soon. If they reply, we will update the article with their response.