Is the video-on-demand business bad for Hollywood? An open letter says yes

04.20.11 6 years ago 46 Comments

Sony Pictures

We have reached a very strange moment for our industry, and moving forward, we have some very important decisions to make.

DirecTV, working with Sony, Universal, Warner Bros, and Fox, is getting ready to launch their new premium video-on-demand service this Thursday, and at first glance, it looks fairly awful to me.  The fact that they’re launching it with Adam Sandler’s miserable “Just Go With It” seems appropriate.  You’ll be able to download a different film every two weeks for $29.99, and for that price, you can watch the film for 48 hours.  It’ll be in 1080p HD, and available only to customers who have an HD DVR.  The films are going to be movies that are available before the home video window, but after the theatrical, collapsing the release schedule even further than it was already collapsed.

I don’t really get this one.  I understand the debate that pops up from time to time regarding a day-and-date pay-per-view window, offering a premium price for a movie that’s opening in theaters, and I can honestly say that there are films I’d consider doing that for.  If they offered a chance to see “Pirates Of The Caribbean 4” at home opening weekend for $50, it would make sense for my family to do that.  Two months after release for an Adam Sandler film I hated?  I can’t image that.

But when I say I would pay for a day and date release, that’s not the same as me saying that I think the industry should move in that direction.  And today, an open letter was published that focuses this debate a bit more.  Here’s the full text of it, including the signatures, which I think you’ll recognize:


We are the artists and business professionals who help make the movie business great. We produce and direct movies. We work on the business deals that help get movies made. At the end of the day, we are also simply big movie fans.

Lately, there”s been a lot of talk by leaders at some major studios and cable companies about early-to-the-home “premium video-on-demand.” In this proposed distribution model, new movies can be shown in homes while these same films are still in their theatrical run.

In this scenario, those who own televisions with an HDMI input would be able to order a film through their cable system or an Internet provider as a digital rental. Terms and timing have yet to be made concrete, but there has been talk of windows of 60 days after theatrical release at a price of $30.

Currently, the average theatrical release window is over four months (132 days). The theatrical release window model has worked for years for everyone in the movie business. Current theatrical windows protect the exclusivity of new films showing in state-of-the-art theaters bolstered by the latest in digital projection, digital sound, and stadium seating.

As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry.

Major studios are struggling to replace the revenue lost by the declining value of DVD transactions. Low-cost rentals and subscriptions are undermining higher priced DVD sales and rentals. But the problem of declining revenue in home video will not be solved by importing into the theatrical window a distribution model that cannibalizes theatrical ticket sales.

Make no mistake: History has shown that price points cannot be maintained in the home video window. What sells for $30-a-viewing today could be blown out for $9.99 within a few years. If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty, premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue. Some theaters will close. 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. Further, releasing a pristine, digital copy of new movies early to the home will only increase the piracy problem-not solve it.

As leaders in the creative community, we ask for a seat at the table. We want to hear the studios” plans for how this new distribution model will affect the future of the industry that we love.

And until that happens, we ask that our studio partners do not rashly undermine the current – and successful – system of releasing films in a sequential distribution window that encourages movie lovers to see films in the optimum, and most profitable, exhibition arena: the movie theaters of America.

We encourage our colleagues in the creative community to join with us by calling or emailing NATO at 202-962-0054 or


Michael Bay
Kathryn Bigelow
James Cameron
Guillermo del Toro
Roland Emmerich
Antoine Fuqua
Todd Garner
Lawrence Gordon
Stephen Gyllenhaal
Gale Anne Hurd
Peter Jackson
Karyn Kusama
Jon Landauv
Shawn Levy
Michael Mannv
Bill Mechanic
Jamie Patricof
Todd Phillips
Brett Ratner
Robert Rodriguez
Adam Shankman
Gore Verbinski
Robert Zemeckis

The truth is, I wish the home video window was longer, and I remember when it was.  I also wish filmmakers and studios considered holding some films off of home video as long as possible, indefinitely even, with an eye on re-releasing some things theatrically.  I’ve watched the window get shorter and shorter over the years, and for me, the real turning point was with the 1989 “Batman,” which seemed to me to be rushed onto video at a price low enough to become a home video phenomenon, hot on the heels of the triumphant theatrical release.

Before that, there was still a sense that some films were special enough that they were held back, and there was still room for films to play in theaters for a ridiculously long time.  For example, working at a movie theater, I saw two different examples of films that played for a year or more, and in both cases, the films kept drawing crowds.  I can’t even explain why those films played as long as they did.  One was “The Karate Kid Part II,” and the other was “Dirty Dancing.”  WIth both of them, they continued to play to happy audiences the entire time we had them.  With “Dirty Dancing,” we saw the same faces over and over, and when they announced the film for home video, we thought for sure that was the end of those ladies turning up at the theater.  Nope.  Even after the VHS was released, those women came back to see it a few more times, and it was because of the difference between watching something at home and watching something in a darkened theater.

For me, the difference is simple.  When I watch something at home, there is always the potential for interruption, the possibility that I can put the film on hold.  No matter how great the sound is, no matter how sharp the picture is, there’s still the feeling that I am in control and I can watch the film any way I want.  In a theater, there is a feeling of surrender at the start of any movie.  I’ve got no control.  There’s no way to shut things down.  Once the movie starts, I’m in for the whole ride.  There’s no backing out.  There’s no pause button.  It’s an experience.

And that’s how it should be.  The theatrical experience absolutely must remain the beating heart of this industry, and every single person who is working to push the business towards the home theater experience as the primary way we digest our movies is working counter to this industry’s best interests.  This open letter is just one small part of a larger conversation going on behind the scenes, and my feeling is that when content providers really start to revolt, you’ll see companies back off of this 60-day window.

And if they don’t?  Well, l hope you enjoy a homogenized experience where only the twelve or fifteen biggest films at any given time get a theatrical release, because if we start losing screens, theater owners will take fewer and fewer risks, and the only things that are able to get booked will be big dumb hollow blockbusters, lowest common denominator films that look like sure things.  And outside of festivals, our days of seeing things like “Marwencol” or “Four Lions” or “Bellflower” in a theater will be finished.

We can’t let that happen.  If you love movies, please… don’t use this DirecTV service.  Then again, if you love movies, you’re probably not in a rush to see “Just Go With It” any time soon.

We’ll continue this conversation tonight in this week’s Big Question, but from a  slightly different angle, and we’ll absolutely keep talking about this as the industry continues to wrestle with the questions in the days and weeks and months ahead.

Around The Web