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Video-on-demand success of ‘Interview’ could make online film releases more common

James Franco, left, and Seth Rogen star in the rauncy comedy “The Interview.”
James Franco, left, and Seth Rogen star in the rauncy comedy “The Interview.” Courtesy of Columbia Pictures

“The Interview” wasn’t supposed to change the way Hollywood movies are released. But perhaps the most lasting effect of the raunchy comedy could be in the way Americans go to the movies – or don’t.

The farce at the center of a crippling cyberattack on Sony Pictures Entertainment unwittingly became the highest-profile example of a film debuting online at the same time it hits theaters.

Benefiting from unprecedented publicity, “The Interview” took in an eye-catching $15 million in its first four days of online sales and rentals, more than five times its box-office tally over the holiday weekend.

That makes “The Interview” one of the most successful online releases ever for a Hollywood movie – and could accelerate the film industry’s transition to a future in which moviegoers choose whether they want to see the latest films at the multiplex, or from their sofas.

“The old chestnut was that you needed a theatrical release to establish legitimacy,” said consultant and former Columbia Pictures executive Peter Sealey. “That old chestnut is dead now.”

The advent of high-speed streaming services and wide-screen, high-definition televisions has created a ready market for so-called day-and-date releases, or making films available for home viewing at the same time as theaters.

Lionsgate’s 2012 day-and-date movie “Arbitrage” generated about $14 million in revenue from video on demand. Other films have done well with similar release patterns, including this summer’s dystopian thriller “Snowpiercer,” which generated $8.3 million in video-on-demand sales.

But industry executives could not recall a mass-market comedy such as “The Interview” ever released on VOD so close to the beginning of its theatrical run.

Sony cobbled together its experimental unveiling after most theater chains declined to show the movie in the face of threats of terror attacks on theaters from a group calling itself Guardians of Peace, which claimed credit for the cyberattack on the studio. Federal officials have linked the cyberattack to North Korea, angered over the film’s fictional assassination of leader Kim Jong Un, but authorities have said the terror threats were not credible.

For the studios, the chance to release films simultaneously in theaters and through video on demand is an opportunity to reach younger tech-savvy audiences, and offset declines in the once-lucrative DVD business.

The economics of digital distribution work well for studios, which get to keep a bigger portion of the sales from video on demand. Movie studios keep 70 to 80 percent of the VOD revenue, whereas theater companies get roughly half of the money generated from ticket sales.

Theater chains see things differently. They have resisted efforts to shorten the window between theatrical and home release, which is currently about 120 days, down from 150 a decade ago, according to the National Assn. of Theatre Owners. They fear that showing movies in the home close to when they arrive in theaters will keep consumers away from the big screen.

Theaters still generate the biggest bang for studios, though. The $15 million that “The Interview” generated from digital sales and rentals over the Christmas weekend might have equated to about $25 million if the film had been released on 3,000 screens, as Sony originally planned.

The movie, which cost $44 million to make, ended up in 331 theaters and pulled in $2.8 million in ticket sales in its opening weeekend.

“The Interview” was streamed or downloaded more than 2 million times over the holiday weekend after it was released on Google Play, YouTube Movies, Microsoft’s Xbox Video and a stand-alone website on Christmas Eve, the day before it hit theaters. The film cost $5.99 to rent and $14.99 to buy.

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