New trends in film distribution: experiential, global, digital, promotional

From Imax premieres to early home entertainment debuts or day-and-date release, independents and now studios are rewriting the rules of how they movies to the consumer market, with mixed results. Compelling television programming and an endless selection of online content are making it tougher than ever either to get eyeballs into theaters. Despite the value chain is still strictly connected to the theatrical release, monetizing the other windows and increase the ancillary revenue streams is key. Therefore it’s increasingly imperative to seek the right business model that maximizes the potential of each movie.

'The Walk' started with a limited Imax release.

‘The Walk’ started with a limited Imax release.

Universal and Sony aimed at building word-of-mouth by launching the spectacular ‘Everest’ and ‘The Walk’ on limited Imax release before expanding to more theaters, with the intention of grabbing the willingness of people to pay more to maximize their experience.

While digital players such as Netflix are entering the theatrical distribution business to get collateral publicity effects from an Oscar nomination, perhaps the most revolutionary studio gambit is Paramount giving exhibitors a slice of digital grosses in exchange for launching the films on demand just 17 days after they leave most theaters, in theory saving on marketing costs but risking to leave money on the table by killing the theatrical run too soon.

'Paranormal Activity 6' home video release will happen only 17 days after the theatrical run.

‘Paranormal Activity 6’ home video release will happen only 17 days after the theatrical run.

With new OTT channels popping up, it is increasingly important for the industry to ensure measurability and for content companies to utilize smart rights management systems to maximize the profit potential of their libraries.

Satisfying the request of consumers for accessibility and the need of digital businesses for a bigger market is the rationale behind the EU’s digital single market plan, but many argue that would hurt the typical territory-by-territory financing scheme of independent films.

As OTT improve their offerings and cord-cutting progresses, more young viewers are forgoing live TV to watch shows later, as shown by the Fall season ratings dropoff in 18- to 34-year-old audience.

As studios are producing bigger budget movies and spending more money for global marketing campaigns, release dates are being locked years in advance for maximizing cross-promotional synergies and powerful licensing deals and to scare away competition while reassuring investors.

With $390 million, 'Furious 7' had the highest box office in China in 2014.

With $390 million, ‘Furious 7’ had the highest box office in China in 2014.

The focus on tentpoles and franchise releases has improved the overall performance of film divisions of media conglomerates, while steady trimming of annual release slates and leaner operations have improved profitability. Future growth depends on digital distribution and developing countries.

Chinese box office ($4.8 billion) increased 34% in 2014, becoming the first international market to exceed $4 billion in box office but its quota system still allows only 34 foreign films to be released theatrically, with the use of overlapping dates and “blackout periods” for protecting local product.

Massive marketing budgets are being put up through tie-ins with hundreds of corporations and licensees and retail global partners. ‘Man of Steel’ had more than 100 global promotional partners and $160M in collective promotional support, with Walmart becoming the first retailer to sell tickets to an advance screening of a studio film, with the clear objective for the studio of pumping up early demand for home-video and boosting merchandising sales.

Just like Sony scooped $150M global tie-ins for 'The Smurfs 2', studio release strategies are increasingly all about creating cross-promotional value.

Just like Sony scooped $150M global tie-ins for ‘The Smurfs 2’, studio release strategies are increasingly all about creating cross-promotional value.

When an animation feature like ‘The Smurfs’ becomes an unexpected phenom, for the following installment of the franchise studios like Sony are able to attract global promotional partners like McDonald’s and Toys R Us and develop massive marketing campaigns to let consumers live the brand by using other people’s money so that they can maximize profits even when the bare box office doesn’t meet expectations.

References

Brent Lang, “How ‘Everest’ and ‘The Walk’ early Imax runs could shake up the movie business” – Variety, Sep 20, 2015

Anthony D’Alessandro, “As exhibs snub ‘Paranormal Activity 6’ & ‘Scouts Guide’, is Paramount’s early VOD experiment bad business?” – Deadline, Oct 15, 2015

Dennis Kneale, “Rights insight: Hidden Fortune” – Broadcasting & Cable, Sep 24, 2015

Thomas James, “Why film bizzers are still outraged over Europe’s digital single market plan” – Variety, May 5, 2015

Stephen Battaglio, “More young viewers forgo live TV, watch shows later” – LA Times, Oct 10, 2015

Todd Cunningham, “Distribution strategies: Studios are escalating the tentpole race, claiming the best dates into late 2018” – The Wrap, Jul 1, 2013

Cynthia Littleton, “Changes in new report on film economics” – Apr 18, 2013

Ben Fritz, “International distribution: China marketing, windowing, potential & conflict” – LA Times, Aug 28, 2012

Marc Graser, “Walmart first to offer tickets to early screenings from a major studio” – Variety, Apr 2013

Nikki Finke, “’Smurfs 2’ scoops $150M global tie-ins for Hollywood’s unexpected blue blockbuster” – Deadline, Jun 15, 2013