While reporting fourth quarter profits in excess of $83 million, Netflix also took the opportunity to announce the imminent streaming of controversial movie The Interview in its U.S and Canadian territories, according to KTLA 5 News. The market-leading streaming channel will make the film available from January 24 – a move which has intensified debate around film distribution and the future of traditional movie theaters. As a result, the eyes of the industry are now focused on the financial performance of The Interview after its Netflix release, amid concern that it may be a tipping point in the development of alternative distribution models.
Historically, movie theatres have insisted upon a standard 90-day release window for films, before any home viewing release occurs. That industry standard is being increasingly challenged by the upsurge in Video-On-Demand streaming services, such as Netflix, and the film The Interview is now in a position – albeit through extraordinary circumstance – to test those waters more clearly. Sony CEO Michael Lynton discussed the issue of distribution with the Associated Press, and was quoted on pro.boxoffice.com, which favors the continuation of the traditional 90 day window.
“You would never take a movie of this size and do what we did with it in the end. It’s true, it proved to be that kind of experiment, but it certainly wasn’t planned. Had it not come along the way it had, we would’ve proceeded exactly the way we planned to do it, which is to put it out on 3,500 plus screens.”
That plan changed when Sony became the target of a cyber attack that was unprecedented in scale and caused immense damage to the company, and its employees. The Interview was determined to be the motivation for the attack, being a comedy about an assassination plot against current North Korean leader Kim Jong-un, and its theatrical release was halted following terrorist threats against theaters. Ultimately, a limited theatrical release in the U.S was achieved, and earned around $6 million. The wider release was switched to streaming services – including iTunes, YouTube, GooglePlay, Amazon Instant Video, Xbox and PlayStation, among others – and it is here that Sony estimates earnings of over $40 million have been made in a month.
Speaking to the press once again, and reported in Fortune, Sony CEO Michael Lynton celebrated the online sales of The Interview.
“We always said that we would get the movie to the greatest audience possible. Achieving over $40 million in digital sales is a significant milestone.”
While $40 million sounds like a profitable movie, Fortune also reports that The Interview cost an estimated $44 million to produce, with an additional approximation of $30 million spent on marketing. Each of the VOD distributors that have already carried the film will also require a percentage of sales, depending on their individual deals with Sony. This will significantly reduce the proportion of the film’s digital earnings that will return to the studio.
That was before Netflix arrived on the scene, however. Netflix has more than 39 million subscribers in its U.S territory alone, and its impact upon the financial success of The Interview will be closely scrutinized – despite the streaming channel’s continued refusal to report ratings and viewership data. Before controversy effectively forced Sony to release The Interview online, Netflix had been making small challenges to the standard theatrical distribution model, along with The Weinstein Company.
The Weinstein Company has been exploring alternative release models through its fledgling multi-platform release division, ‘RADiUS’ – the most significant release from which has so far been Snowpiercer. That film was distributed through VOD just two weeks after its theatrical release, in an attempt to occupy the “no man’s land” that exists between the movie theater and home entertainment for smaller titles. Having seen success with Snowpiercer – to the tune of $2 million in digital sales in its first week – The Weinstein Company has partnered with Netflix to produce and release a sequel to the Academy Award winning Crouching Tiger Hidden Dragon, titled Crouching Tiger Hidden Dragon II: The Green Legend. That film – the rights to which Sony and The Weinstein Company were once at loggerheads over – will premiere simultaneously on Netflix and in IMAX theaters on August 28th 2015.
In announcing that move, Harvey Weinstein praised the evolution of the film distribution model in a statement to the press, reported by Deadline.
“The moviegoing experience is evolving quickly and profoundly, and Netflix is unquestionably at the forefront of that movement.”
Senior IMAX executive Greg Foster expanded upon the importance of the relationship between producers and distributors.
“IMAX has a terrific opportunity, via this partnership with Netflix, to release Crouching Tiger – a high quality action film that is right in our wheelhouse, at the end of the summer blockbuster season. We are particularly hopeful it will play in our highly successful China market. In territories where we simultaneously release with Netflix, we are excited to offer consumers the option of deciding how, when and where they want to view the film, and exhibitors the opportunity to participate in this alternative form of content in a new and innovative way.”
The announcement of such a radical distribution model for Crouching Tiger Hidden Dragon II prompted an angry response from many major movie theatre chains in October 2014 – significant due to the fact that IMAX only owns a small number of its own screens. The point was highlighted by AMC in a scathing and dismissive statement, reported by The Guardian.
“AMC Theatres and Wanda Cinema are the largest operators of IMAX-equipped auditoriums in the world. We license just the technology from IMAX. Only AMC and Wanda decide what programming plays in our respective theatres. No one has approached us to license this made-for-video sequel in the U.S or China, so one must assume the screens IMAX committed are in science centres and aquariums.”
Despite the vocal protestations of theatre chains, many see the depletion of the 90-day theatrical release window as inevitable – not least since Amazon announced its intention to produce its own movies for theatrical release, streaming them online just four to eight weeks later. This development of alternative film distribution models is seen as heralding a period of great change for the local movie theatre, which will need to adapt in order to survive. The Netflix performance of The Interview is expected to become a significant factor in those changes, regardless of the fact that its early digital release was initially unplanned.
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