New strategies for theatre chains, digital movie downloads

By Sarah Sluis

Technology is a tricky beast, and changes in home entertainment technologies have caused both exhibitors and the home entertainment market to change their tune.

First up, AMC and Regal announced their plan to get into the acquisition and distribution market. Yes, exhibitors are adopting vertical integration, the same strategy that was outlawed by the 1948 U.S. vs. Paramount case. According to this article by the L.A. Times, enforcement of the edict has become lax, and there are several instances of exhibitors also involved in production or distribution. AMC and Regal will acquire small independent films for theatrical release. What could this be a response to? The rise of the simultaneous theatrical/on-demand market. Distributors like IFC Films have offered VOD releases for amped-up prices during a film's theatrical run, or even in advance of its release. However, AMC and Regal also plan to handle video/Internet distribution, so preventing the theatrical window from disappearing isn't their whole rationale. The article also points to declining amount of movies. Even as the number of screens increased slightly, product decreased 15%. I'm more skeptical of this argument. Theatres need more quality product, not just more product--even with more films, there could still be the same percentage of duds and winners.

The market for downloadable/streaming movies is also in flux. A recent survey of people who pirate movies conducted by PricewaterhouseCoopers released dismal news. Many of the piraters would only buy movies if they were cheaper, around $3. THR pointed out another comment from the survey's responders: They download because of window restrictions, wanting to watch the movie at home before it comes out on Netflix or legitimate online downloads. Because of the pressure to see content sooner, I predict the windows of availability for Blu-ray/Netflix/online rentals/downloading will continue to change. It's still being figured out. Warner Bros. is trying something new for its marquee releases Inception and The Dark Knight. A free "app edition" can be downloaded by iPhone/iPad/iPod users, which has a few short extra features and five minutes of the movie. Then, for prices ranging from $7.99-$23.99, depending on the country, users can download the full movie. The app-to-download purchase allows for flexibility between devices and could also be a way to include more bonus content, like an Inception-themed game for a mobile device, for example. But it appears that Warner Bros.' biggest reason for releasing this is to work around Apple's own shortfalls. Apple simply doesn't have iTunes stores (or ones that offer video downloads) in every country, and this could be a way to bring Warner Bros. releases to underserved territories.

With new innovations (and challenges) in the movie downloading market and AMC and Regal stepping into the independent acquisition and distribution game, the entertainment market is showing itself to be surprisingly dynamic. It already seems laughable that people used to have to wait six months to see a movie on video. What other practices will seem dated a few years from now?