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August 9 , 2005If I could talk to the animals…
Okay… I'm going to lay out my vision for a healthy industry future one more time, really simply…
The 20 Week Theatrical Release-to-DVD Window.
Real simple.
Agree as an industry to maintain that window.
After that, let all hell break loose.
You want to do in-home delivery of product day and date with DVD release? Do it!
Want to create an ultra-premium early release channel with limited product for significantly more than a current premium cable channel? Do it!
Want to make films available over the web, via cable, via satellite, via DVD, pushed to DVRs, available for download at your local grocery store, for your iPod, for your PSP, for viewing on airplanes for a price? Do it!
If you want to maximize revenues and there is a significant demographic that is not going to the movie theaters - a large percentage of people that has been a large percentage of people since the late 50s - go to town. Make it remarkably easy for people to get to the digital possibilities of filmed entertainment.
But don't break the window.
And while you are busy coming up with the greatest new ways to deliver movies into people's homes that haven't been willing to spend money on movies most of the time, have another group working on upgrading the theatrical experience.
Don't get distracted by the slump talk. In this situation, it is truly irrelevant. Make the improvements on both sides of the window that you need to make. A better home entertainment experience will generate more money. A better theatrical experience will generate more money.
1. How much money is really involved with in-theater ads? Is it incremental enough to eliminate or is the nest real step to teach Americans how to accept the ads? Are there advertising quality standards - like not running spots transferred from edited video to film so it looks crappy - that will make the experience more palatable?
The industry has an agreed on standard for how many trailers can run? Can ad time be standardized?
Is a sponsor like American Express willing to step up as the savior of movie lovers by being a sole sponsor?
2. How much price resistance is really there and how much of the idea that there is price resistance generated by people who would not spend the money on going to the movies anyway?
If there is price resistance, will the studios step up to keep exhibitors in the black if prices drop slightly or freeze?
Is there a new revenue sharing plan between studios and exhibitors that will work to serve the end users better?
3. Can a second run opportunity flourish if it is given some structure? As much as I hate the Beverly Center Cinemas here in L.A., what if the MPAA took over the space for a year (as the Loehmann's transition seems to have stalled) and played movies for $5 starting 6 -8 weeks after initial theatrical release. It is the only way to find out whether, even in less than ideal playing circumstances, people would come out to see product in second run. And while you're at it, grab 6 screens somewhere in Valencia. Let's see if it works. And maybe you can get The Arclight to cough up 6 screens on weekdays for the experiment.
4. Want to deal with pricing aggressively? Forget variable pricing based on perceived popularity. It is a dangerous idea. Price competition leads only to lower prices, not higher prices. But how hard would it be to create a movie gift card that offers a discount for the cost of 10 tickets or more? Or even something as simple of discounting $.50 a ticket when buying more than four tickets online or at the theater? $2 off a $40 purchase is nothing… but it builds consumer loyalty.
5. Can the AMC MovieWatcher program be expanded to work across all major theater chains? Back in the day when I paid for a lot of movies, I was really happy when I earned a free movie or even a free soda and popcorn.
Of course there is competition between theater chains. But look at the big picture. If the MPAA studios put $20 million apiece into a fund to fund such benefits, wouldn't that be money well spent? And wouldn't the ability to market to people based on the movies they attend be worth a lot more money than that?
Think about it… people don't really mind trailers. They are ads. If you are over 40, wouldn't you like to get a newsletter tailored to your likely interests, filled with info on upcoming docs, dramas and art films? Wouldn't your teenager like to get that Star Wars, Batman, War of the Worlds flier in late April that also has a coupon for a discount on an action figure and a free soda if you buy two tickets to any of those movies at any theater in the country?
MY POINT IS… find solutions, not more problems. There is not a real crisis right now, but there are ways of investing towards both a better experience and potentially, more revenue.
But the hair on this Sampson is the DVD window.
20 weeks.
2004 was, in my opinion, the peak of the current formula for theatrical and home entertainment. It will never get anything more than incrementally better. And the only way to make it worse is to keep shortening the window and to mess with the paradigm recklessly.
20 weeks.
Then spin the big wheel. The digital universe awaits.
Exhibition is mature. There are more tricks to be embraced, but it won't change very much.
Home Entertainment just finished its blazingly successful freshman year. Piracy is overrated… full steam ahead… there are endless possibilities. But experiment on your turf. Don't turn exhibition on its head just because it seems like this week's fashion.
