NATO’s John Fithian on why theatrical distribution windows should be maintained

29 August, 2011 by Brendan Swift

John Fithian is the president and chief executive officer of the National Association of Theatre Owners (NATO) USA. Prior to attending this year's Australian International Movie Convention, where he was a special guest speaker, he answered a series of questions from IF Magazine about potential changes to theatrical distribution windows.

The average theatrical window in the US is 90 days but 120 days in Australia. Why should it be maintained at this level in Australia?

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The average theatrical window in the US is actually about 130 days. Some individual movie windows go as short as 90 days, but some go much longer, with the average being roughly similar to that in Australia and in other developed territories such as Europe. (All US movie windows, along with averages and individual studio performance, can be found at our website at www.natoonline.org.) And this four-month window has been very stable for more than five years. The current experiment in the US at 60 days for premium VOD thus stands as a radical departure from recent history.

Is holding the theatrical window at 120 days a losing battle given rising consumer appetite for multi-platform consumption (and rising piracy)?

The current theatrical window works very well by allowing movies to establish themselves in the theatrical market. Cinema owners support consumers' desire for access to movies in multiple platforms because research demonstrates that people who love movies in the home also love them in the cinema. The cinema industry supports the efforts of studios to release movies to all possible home platforms.

When the studios do well they can invest more in future movie production. The current debate is not about the platforms of delivery but the timing of the availability of movies in each of the platforms. It isn't a question of "if" but "when". Also, to be blunt, if the movie industry gave consumers exactly what they wanted – movies for free everywhere at the same time – there would be no movie business and thus no movies.

As for piracy, the studios really can't compete with "free" by accelerating their home releases. Enforcement of laws and education of the public about those laws is the only way to defeat piracy. Indeed, ironically, the studios risk making piracy worse by offering accelerated digital delivery to the home in the form of early VOD. Accelerated delivery simply gives the pirates a pristine digital copy of the movie much earlier than they would have had it. This is a primary reason why Paramount Studios opposes early VOD releases.

What is the downside to premium VOD?

Early VOD releases will likely lose more money than they produce. First, the earlier the release, the greater chance that cinema ticket sales will be impacted.

Second, as described above, early digital releases could also exacerbate movie theft. And the money made in early VOD sales likely will not make up for those losses (and if the early tests in the States are indicative, consumers aren't very interested in paying a premium for early VOD anyway).

Many US indie films and Australian films (like X) are being distributed through a mixed model in theatres and on-demand. Why wouldn’t this work in Australia? Why should US audiences have greater choice to consume Australian films that are largely funded by Australian taxpayers? X will almost certainly be distributed here in limited theatres followed by a 120-day wait before the DVD release.

It is true that some indie films are distributed simultaneously to the cinema and the home. But those examples are very small releases that typically only play in a handful of cinemas. For those concerned about indie films, premium VOD should be considered a substantial threat. With early home releases, cinema owners will have to dedicate even more screens to the big blockbusters, to make as much money on them as quickly as possible.

Many smaller pictures will be forced off of our screens. Also, with a consuming public accustomed to early home releases, independent movies will not have the necessary time to grow in the cinema run. Many Oscar contenders this past year (Black Swan, The King’s Speech, True Grit, The Fighter) had very long runs in the cinema. That would be unlikely in a world of short windows.

Most Australian films are shown on less than 20 screens, followed by a delay of 120 days before the DVD release. Would it represent a genuine danger to cinema owners (ie audience attendances) if this window was contracted given the current distribution is so minimal? Is there an opportunity for a tighter window for limited releases? Could there be a hybrid model where exhibitors take a share of the distributor cut from this channel for a limited period?

The previous answer explains why shorter windows would be very dangerous for independent movies.

Cinema owners are expanding into alternative content such as screenings of opera, ballet etc. This takes away screen time from the major studio distributors, who have not received any flexibility in return regarding windows, given that the home entertainment market is contracting sharply. Is this a fair situation?

Cinema owners exhibit alternative content with careful timing and screen allocations so as not to detract from movie ticket sales. We typically show alternative product during non-peak movies times and on screens where movies are selling virtually no tickets. The movie business will always be essential to the cinema business, so cinema operators will respect the time and space movies need.

Check out the current issue of IF Magazine (#142 August-September 2011) for an in-depth report on theatrical distribution windows.


John Fithian (far right) at the AIMC 2011 with (from left) Peter Beattie (NACO independent chairman), Michael Hawkins (NACO exec director), Thomas Molter (Warner Bros) and industry veteran Terry Jackman.

 

 

 

 

 

 

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