Edictive Film Production and filmmaking

Today, movie theaters face many high-tech threats to their audience base. Netflix, the Red Box vending machines, and even the video stores that are still left siphon away potential viewers, who end up catching flicks and popping popcorn at home rather than in the theaters.

Several of the movie studios are trying to carve out a new piece of the couch-potato pie. Last year, Fox, Sony, Universal and Warner Bros. announced plans for a new video-on-demand service called Home Premiere. A major selling point is that viewers can watch new films at home months earlier than on Netflix or through vending machines and shops. Home Premiere viewers get films beamed into their homes through satellite or cable — current films that are still in the theaters.

The studios anticipate that Home Premiere will woo away viewers from Netflix and other services, while drawing only 5% of viewers from the movie theaters. It seems like a good bet. But some wonder if this new service isn’t just another step along the road away from seeing movies in the theater altogether.

Modern theaters make the majority of their profit from concessions sales, and have fixed overhead. Some industry observers say that even a small decline in theater attendance could cause many American cineplexes to close. One former studio executive stated that a 3 to 5% drop in ticket sales in 2000-2002 led to nearly half of the theaters in the United States filing for bankruptcy. If sales dropped 10%, he speculated, more than two-thirds of American theaters could be shuttered.

So it seems that Home Premiere is more of a risky business than a gold mine. If new films are available in the home, where people can eat their own food and don’t need to hire a babysitter, the idea of driving to the cineplex may begin to seem less and less appealing to viewers, even if this means the end of the theater-going experience.

The issue of theaters aside, movie studios are also trying to stay relevant by seeking out more of the digital market. Disney’s ABC network recently teamed up with Apple to make it possible for iTunes users to download and view TV shows for $1.99 per episode. Other networks are selling their programs for viewing through cable and satellite. An episode sold at 99 cents makes money fast when cable has an audience of more than 30 million.

Shouldn’t networks worry that they’re drawing away their own regular viewers from watching TV (commercials and all)? Their hope is that the regular TV viewers would rather keep watching for free.

The truly optimistic vision for Hollywood studios is the viewing audience that will download movies from studio libraries instead of buying DVDs. The cost of transmission would be covered by the cable operator or by iTunes, and studios wouldn’t have to pay warehousing and other costs required to store films on physical discs.

The question, again, is how studios can better tap into this market without harming their existing DVD market. Hollywood execs are still trying to puzzle this one out. One possibility is to offer the download of a movie later than its DVD release.

Whatever the studios choose, making a choice seems inevitable as more and more people buy DVRs, video iPods and other devices that the march of technology continues to provide.