With DVD sales sliding and digital distribution becoming more popular, film studios are increasingly experimenting with their movies’ release windows across each distribution channel, perhaps eventually moving toward a universal day-and-date release strategy. How will a simultaneous release window likely affect existing consumer audiences for each distribution outlet?
DIGITAL MEDIA Simultaneous Release: Can Movie Studios Offer Films Across Distribution Channels at the Same Time Without Cannibalizing Audiences? Lead Analyst Kristin Knox Contributing Analyst Michael Gartenberg An Interpret Syndicated Research Service subscription is $10,000 per year and includes twelve research reports and unlimited analyst inquiry. For subscription inquiries, email firstname.lastname@example.org or call (310) 255-0590. Reproduction by any method or unauthorized circulation is strictly prohibited. Interpret’s syndicated research reports are intended for the sole use of clients. All opinions and projections are based on Interpret’s judgment at the time of publication and are subject to change. Published November 2009. © 2009 Interpret, LLC Simultaneous Release: Can Movie Studios Offer Films Across Distribution Channels at the Same Time Without Cannibalizing Audiences? Catalyst: With DVD sales sliding and digital distribution becoming more popular, film studios are increasingly experimenting with their movies’ release windows across each distribution channel, perhaps eventually moving toward a universal day-and-date release strategy. How will a simultaneous release window likely affect existing consumer audiences for each distribution outlet? Core Questions: 1. How have the exclusive release windows for feature films been eroding over time? 2. How will consumers likely be affected by the ultimate in release window collapse: the simultaneous release of a title across all distribution channels? 3. How can studios and other content owners take advantage of a simultaneous release for maximum profitability without cannibalizing existing audiences of any one distribution channel? Interpret Insight: There are many benefits to a simultaneous release strategy, including the possibility of increasing the audience for a particular film by offering additional viewing options and catering to eager movie viewers’ growing expectations that they be able to watch content ‘anytime, anyplace, anywhere’. As long as each distribution channel finds a way to differentiate itself and create its own niche in the movie universe, theaters, DVD/Blu-ray, VOD, streaming, and downloading will all most likely be able to co- exist. Shrinking Windows Among Different Distribution Channels Historically, a movie release in Hollywood followed a particular pathway through the different modes of distribution, moving from one outlet to the next as if following a line of stepping stones. First, a film hit theaters; four to five months later, it made its debut on home video, both for purchase and rental, after which Video-on-Demand and Pay-per-View services followed suit, along with hospitality distributors (hotels and airplanes). Lastly, the movie moved to television, first appearing on premium subscription networks such as HBO, and, eventually, migrating to cable and broadcast TV a few years after the initial theatrical run. Each of these distribution channels possessed its own timed release window with guaranteed exclusivity in order to protect its unique revenue and prevent consumer cannibalism by other venues. This stepping-stone release pattern worked well when there was enormous revenue to be made from the home video market in the late 1990s and early 2000s, as consumers converted their film libraries from VHS to DVD and sales of the new format soared. During this period of transition, studios maintained strict release windows in order to funnel consumers to each movie outlet in turn and to protect robust DVD sales by eliminating competition from theaters and television. In the past few years, however, DVD sales have been sliding as the format has neared its saturation point, and new distribution channels -- including downloading, streaming, and Video-on-Demand -- have emerged to challenge Blu-ray, DVD’s anointed home video successor. While physical disc sales still net formidable revenue for movie studios, the rise of digital forms of film distribution and the realignment of consumers’ expectations around ‘anytime, anyplace, anywhere’ content consumption are forcing filmmakers to reconsider old models for release windows. In an attempt to keep up with consumer trends, the major film studios have recently been experimenting with the traditional stepping-stone release pattern, shrinking and shaping the windows of exclusivity for different distribution channels and observing the outcome. Sony, for example, is providing recent hit Cloudy with a Chance of Meatballs to owners of its Internet-connected Bravia HDTVs and Blu-ray players for digital rental one month before the title is available on home video in stores. Paramount has released GI Joe: The Rise of Cobra on DVD and Blu-ray only 88 days after its theatrical debut, shortening the usual window by more than a month, and Warner Bros. has been offering many of its titles, including Gran Torino and My Sister’s Keeper, on VOD day-and-date with their DVD appearances. As traditional release windows shrink and disappear, the possibility exists that movie releases will one day be day-and-date across all possible distribution outlets. Ins
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