Money War: Movie Studios and Theatre Owners

movie studios and theatre owners

You would think movie studios and theatre owners, two organizations that rely on the success of one another, would be more interested in making each other happy that trying to find their own piece of the money pie at the expense of the other.  We, the movie-watchers, are looking at new ways of consuming our favourite flicks (streaming, downloading, etc), which chips away at their 100 year-old business model. “We make movie, you pay ticket to go to movie, you wait three months and rent movie again on video. Studio and theatre make money.” It doesn’t really work that way anymore and movie studios are trying to be innovative and tricky with how they get your money or pique your interest. Unfortunately, their ideas don’t always jive with the economic goals of theatre owners. Three recent instances have shown that they aren’t on the same page:

VOD (Video On Demand) – the span from when a movie leaves the theatre until when it shows up for your rental pleasure is getting shorter and shorter.  It use to be a difference of 90 days but that window is getting smaller. With VOD, it’s sometimes shrunk to 60 days or even (if you spend the big bucks) available at home at the SAME TIME it’s in theatres. Theatre owners are not fans. In 2011, a couple of Hollywood studios got together to support a new VOD service that would let them cash in no matter how you liked to watch the movie. Which begs the questions, how does this help theatre owners? It doesn’t. It kind of screws them actually. Which is why you haven’t seen a lot of it over the last 2 years. Thankfully, they’re looking at rethinking the VOD idea.

Revenue SharingThe Disney Company (the organization that now owns your childhood: Pixar, Marvel and Lucasfilms) decided to try something new with this year’s release of Iron Man 3… a renegotiation in their deal with major theatre chains AMC, Regal and Cinemark.

Typically, studios and theater owners agree on a general ticket-revenue split well in advance and then refine after the theatrical run based on outperformance or underperformance, said Dale “Bud” Mayo, chairman and CEO of Digital Cinema Destinations Corp – from

Disney reportedly wanted a big cut of the pie, obviously thinking that theatre owners wanted their movie so badly that they’d be open to this. Yeah, not so much. The owners cancelled pre-sales for Iron Man 3 tickets. Disney blinked. And they resolved their movie ticket issues a week before the movie was released.

Shorter Trailers – Have you noticed how movie trailers are getting longer and longer? So have theatre owners. Don’t get me wrong, I’ve long complained that trailers are getting ridiculous, revealing far too much of the plot. The theatres say that the trailers are delaying movies and need a limit of no longer than 2 minutes. Of course the studios are pissed because this is their prime-captive-audience-advertising-real-estate. Keep in mind there’s a bit of BS around this, and don’t think for one minute that the theatre owners are worried about your precious time.

  • The advertising before the trailers. If owners are so worried about audience experience, why not cut those down to free up some of our valuable minutes?
  • Owners get paid per trailer. So if the trailers are shorter, like they say they want, they aren’t going to play less, they’re going to play more.

I don’t really know who the winner or loser of this battle will eventually be. Will it be the studio who owns those precious movies but haven’t figured out a lucrative, pain-free way to make up for dying DVD/Blu-ray sales? Will it be the theatre owners that are trying to entice movie-goers back into the theatres while better and better technology keeps them at home? Or will it be the audience who really just wants to see movies when they want, where they want and how they want?

Who do you think will win?

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