La grande illusion

DB - LA GRANDE ILLUSION (720x334)

Nedenstående indlæg er blevet bragt i det amerikanske filmmagasin BoxOfficePro:

By Kim Pedersen, President, Danish Cinema Exhibitors’ Association

As in Jean Renoir’s “La grande illusion” from 1937, when Lieutenant Maréchal in the person of Jean Gabin, notes; “Le théâtre est trop profond pour moi. Je prefere le vélo”, brings risk to many of the people who advocate for movies to be released simultaneously in both theaters and on DVD/VoD, soon to be referred to a bike instead of their employment in the film industry.

In an article in the Los Angeles Times, November 1st 2012, the paper celebrates examples of simultaneous releases of movies in high notes.

Link to the artikle: http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-arbitrage-vod-20121102,0,6330523.story

The article highlights three US films; “Arbitrage”, “Margin Call” and “Bachelorette” as successful examples of simultaneous releases of movies.

It should be noted that the only U.S. cinemas that showcase these films, all are owned by VoD-providers and that one of these VoD-providers have put their cinema chain, “Clearview Cinemas”, up for sale, because it was unprofitable.

The article revealed for the first time revenues from platforms such as iTunes, Amazon.com and pay-per-view.

In a spin to show it advantageous for simultaneous release of movies, the film companies have started to publish VoD sales figures. “Arbitrage” is expected to gross $12 million on VoD, while “Margin Call” generated $6.0 million and “Bachelorette” $ 5.5 million.

The article also mentions cinema grosses of the three films in the US, respectively. $7.5 million, $5.6 million. and $448,000, -. The article mentions a wrong figure for “Margin Call”, the correct gross in cinemas is $5,354,039.

And immediately the people behind the movies go into a rush of joy and try to convince each other that VoD has now surpassed cinema grosses and the new business model is a success.

Nothing could be more wrong.

If we benchmark “Arbitrage” and “Margin Call” up against the Spanish market, which has not released these films simultaneously, but maintained the normal 4-month theatrical window, the Spanish cinema gross on these two films, show some interesting differences in relation to films which has maintained the conventional window in both the U.S. and Spain.

The Spanish cinema grosses of the two films are absolutely amazing compared to the U.S. figures. But it’s not the Spanish cinemas, which have done well, it’s the American cinemas, which has done, to say the least, miserable.

With great joy the film company behind “Arbitrage” publish studies showing that 90% of the audience in the United States were not aware of “Arbitrage” was available on VoD as an argument why VoD does not harm cinema grosses.

Because the films were simultaneously released both in theaters and on VOD, the movies were saved in the layer below the major U.S. studios’ movies. Cinemagoers therefore could not know that the film was also available on the home altar. Many have historically broken their neck by considering consumers as stupid, but if there is one thing consumers are good at, it’s ‘adopt, adapt, improve’. Interestingly, the film company did not take the opportunity to ask VoD customers, whether they were aware of “Arbitrage” were also in theaters, and whether they would have seen it on the big screen, if it had not been available on VoD. But it is of course for some good reasons; the film companies will of course not publish studies, that debunks their own agenda.

A representative of the film company, which has launched the experiment both with “Margin Call” and “Arbitrage”, Howard Cohen, co-president of Roadside Attractions, says in the article; “This is the model we’ve been working on – to get both cinemas and VoD to work side by side. This is the way independent films really can be economically profitable and maximize their potential.”

Revenues between U.S. cinemas and distributors are split 50/50, while revenues from VoD is split 30/70 in the distributor’s favor.

Let’s make a calculation that shows the differences in income in theaters and on VOD, in two scenarios: one is the factual, the other is if the films had maintained a normal 4-month theatrical window in the USA, benchmarking the grosses to the Spanish gross on “Arbitrage” and “Margin Call”.

”Arbitrage” simultaneous released in the US:

Gross on VoD:               $12.0 mill. / distributor share: 70% =   $  8,40 mill.

Gross in cinemas:           $  7.5 mill. / distributor share  50% = $  3,75 mill.

_                              ___                                                                      $12,15 mill.

“Arbitrage” has given the distributor an income of $12.15 million. in the context of simultaneous release of the film.

“Arbitrage” had a proportionately split USA/Spain of 66/34, when U.S. release simultaneously and Spain emitting conventional. If we make the same calculation, taking into account that “Arbitrage” was released with 4 month window in the United States, and taking into account the normal split between the Spanish and American grosses when both countries release films conventionally. The normal split USA/Spain were for another financial thriller “Wall Street 2: Money Never Sleeps”, which was conventionally release in both countries, 89/11. It is assumed that VoD would be the same as the simultaneous release of film. The following calculations show, however, that even if the income from VoD completely disappeared, it would still be a better deal to release the film conventionally.

”Arbitrage” conventional released in the US:

Gross on VoD:               $12.0 mill. / distributor share: 70% =   $  8,40 mill.

Gross in cinemas:           $31,5 mill. / distributor share: 50% = $15,75 mill.

________                                                                                         $24,15 mill.

In other words, the simultaneous release of “Arbitrage” in the US, has halved the income for the distributor. Even if the unthinkable were to happen; cinema releaset would destroy VoD revenue, it would still be better business, to release the film with a 4-month theatrical window.

The same calculation as above covering “Margin Call”:

”Margin Call” simultaneous released in the US:

Gross on VoD:               $6,0 mill. / distributor share: 70% =    $4,20 mill.

Gross in cinemas:           $5,3 mill. / distributor share: 50% = $2,65 mill.

________                                                                                       $6,86 mill. 

”Margin Call” conventional released in the US:

Gross on VoD:               $  6,0 mill. / distributor share: 70% =    $  4,2 mill.

Gross in cinemas:           $19,4 mill. / distributor share: 50% = $  9,7 mill.

_________                                                                                       $13,9 mill.

Exactly the same result as in the case of “Arbitrage”.

For fun’s sake, we can also take on “Bachelorette”, which is showing some extreme figures.

The film was released simultaneously in the U.S. and conventional in France. The US cinema gross was $448,000, the French $1,192,880. The French gross was actually twice as much as the American. That has never happened before. At least, not on an all-American film, resulting in a split in gross of 27/73 to French advantage. The split was for “Bridesmaids”, released conventionally in both countries, 97/3 to U.S. advantage.

”Bachelorette” simultaneous released in the US:

Gross on VoD:               $5,500.000 / distributor share: 70% =   $3,850.000

Gross in cinemas:           $   448.000 / distributor share: 50% = $   224.000

_________                                                                                         $4.074.000

”Bachelorette” conventional released in the US:

Gross on VoD:               $  5,500.000 / distributor share: 70% =      $ 3,850.000

Gross in cinemas:           $38.700.000 / distributor share: 50% = $19.350.000

__________                                                                                          $23,200.000

Simultaneous release of films risk being the film industry’s Waterloo, and guaranteed the cinemas’. If you close your eyes to this, you close your eyes to fact.

Simultaneous release of film is not a success – it is a failure of unprecedented scale.