Category Archives: Rights

Broken Windows

Fred Wilson wrote a piece on his blog today complaining about the film business’ distribution model. Fred wrote in part that:

denying customers the films they want, on the devices they want to watch them, when they want to watch them is not a great business model. . . . [Studio executives] insist that they need their windows. They argue they need to manage access to their films to extract every last dollar from the market. That just doesn’t make sense to me. If they went direct to their customers, offered their films at a reasonable price (say $5/view net to them), and if they made their films available day one everywhere in the world, I can’t see how they wouldn’t make more money.

While I have no allegiance to the current business model, I understand it. Producers of any new film hope to see it distributed in a number of distribution windows starting with an exclusive theatrical release and continuing through to wide release on multiple distribution platforms typically over the course of 12-18 months.

Wilson advocates simultaneous “streeting” across all distribution platforms. As technology improves, the lines of each traditional distribution window are blurring and will be replaced with something more akin to what Fred is advocating.

Even so, I can’t help thinking that audiences might lose something valuable in the process – maybe even movie theaters themselves. That would be ironic since movie execs sounded similar alarms when television was the disrupting technology in the 1950s. Then as now, movie theaters survived – but for how long?

What follows is most of what I wrote in response to Fred’s post with grammatical tweaking and references to other commenters omitted:

There are two . . . significant obstacles to simultaneously “streeting” movies across all distribution windows.

1. Movie theaters are a limited high-value distribution channel. There are only so many movie theaters and so many seats in those theaters. Only a small fraction of the movies produced each year get a theatrical release in the US. Foreign distributors look at a US theatrical release as a quality marker (this, despite the fact that international revenues generally account for 70% of a film’s budget). So a domestic theatrical in it of itself drives the value of foreign distribution rights up. This kicker in international revenues could not exist in its present form under a simultaneous street paradigm.

2. Allocation of marketing dollars. Movies and virtually every other product with novel elements have a distribution cycle, with demand for a well regarded/well marketed product highest at or near inception (e.g., the latest incarnation of any Apple product or Star Wars sequel). The costs of striking prints of the film – which are coming down as more theaters use digital projectors – and advertising (also called “P&A”) on a typical domestic release of a 1,000 screens or more are substantial. Studios/producers require millions in marketing dollars, sometimes in excess of the cost to make the movie, to theatrically release a movie in the United States.

The goal is to fill each and every seat of every screen in which the movie is shown to justify these marketing expenses (which, if successful, drives up the value of international revenues as noted above). That would not be possible if consumers had other, possibly more convenient choices that might dilute audience share at movie theaters. Although each exploitation window requires additional marketing spend, a successful US theatrical release can have a halo effect on subsequent windows (e.g., Titanic, the Twilight movies).

3. History of Industry Resistance to New Technologies. Lastly, the industry has always been hostile to new technologies. Silent movies were adverse to talkies which were against television which bristled to home video and so on to the present day.

The advent of on-demand viewing of movies in theatrical release is already part of an evolving theatrical release window. The industry needs time to adapt its model to the new demands of its audience. Change in the film business is inevitable even if it won’t come fast enough for the Fred Wilsons of the world.

Grass Roots Licensing Of Youtube Fare

My kids turned me on to “Charlie The Unicorn” shortly after it made its debut on youtube several years ago. Like most user generated content, Charlie, a flash animated 2D short, was made on a shoestring and the production values reflect that. Still, the work is smart, funny and quotable in the vein of Caddyshack and The Simpsons.

Charlie has been viewed over 35 million times worldwide and spawned a sequel.

Still, I wasn’t really intrigued until I visited Hot Topic, a teen-oriented store in my local mall, and spotted Charlie merchandise.

Plenty of talented (and not so talented) folks make shorts and distribute them on youtube. Far fewer generate millions of views or eyeballs; and only a handful of those successfully make the jump to ancillary exploitation.

Whether Charlie’s creator is making meaningful revenues isn’t really the point (nor is the aesthetic value of such a work).

Charlie’s transition from youtube short to retail merchandise represents nothing less than a sea change in the ability of a single content creator to leverage the internet and its potential access to millions to build a following and potentially profit from ancillary and derivative exploitation of content without the need or prohibitive expense of traditional distribution channels.

It means that self-distribution is now a meaningful and sustainable distribution alternative and will become even more so as internet based distribution (e.g., faster downloads) matures.

It means that traditional distributors better figure out how to stay relevant (hint: content marketing not content distribution) or get out of the way.

Just ask the people who (used to) work in the music business.

Lennon Reloaded

The “One Laptop per Child” Foundation released a television commercial on Christmas Day of John Lennon – almost 30 years after his assassination – pitching viewers to buy laptops for poor children.

The Foundation produced the spot using digital technology; creating an ersatz version of Lennon saying “I tried to do it through my music, but now you can do it in a very different way. You can give a child a laptop and more than imagine, you can change the world.”

Variations on the technology have been around for years. Michael Crichton predicted the advent of the technology in “Looker” in 1981. In 1995, I cited Crichton’s work when I wrote about the use of digital technology to reanimate deceased celebrities in new works – and the possible legal complications – here.

Although the ethical and business dilemmas of using digital automatons instead of real actors are still in flux, the legal issues remain the same. The commercial exploitation of dead celebrities requires the consent of the celebrity’s estate. In this case, Yoko Ono, Lennon’s widow approved the spot.

When I wrote my article in 1995, the infinite possibility of the internet was largely unknown to the public. Our understanding of its potential now combined with advances in digital reanimation technology will only bring these issues to the forefront.

You can find out more about One Laptop Per Child’s donation program here.

Required Reading


As part of my daily online read, I culled the following from the past week or so. Usually I post these links and any editorial to facebook. I am going to start posting the most significant ones – those that I think are required reading for reps (and our respective clients) – on a regular basis to dealfatigue. Please let me know what you think.

Scrabulous Facing Copyright Infringement Charges

Change in the Business Model at EA Games

In Tentative Deal, Directors Send Message To Screenwriters

Arts Council in England Taketh (and Giveth), Leaving Anger in Its Wake

Netflix lifts limits on seeing online movies Read this if you read anything today. This is where video (and TV…) are headed. Wondering if it’s possible to do a deal with Netflix and Apple directly as you can with music.

Which comes on the heels of . . .
Apple Bets on Online Movie Rentals

Oprah Winfrey getting her own TV network

TV studios cut more overall deals
Companies cite WGA strike as main cause

Steroids beyond sports
Celebrities now among those linked to drug shipments

American Library Association announces literary award winners