Battle escalates over the speedy debut of DVDs

A battle has raged for years between movie studios and theater owners, although it’s a fight of which most consumers have not been aware.

The most recent flare-up boiled down to a matter of three months and three days -- the gap, or window, in industry parlance, between the theatrical debut of Taylor Hackford’s “Ray” and the date it appeared in video stores. Less than the average of four months, 10 days. And shorter by a third than the six-month, 23-day span of a decade ago.

Anticipating a critical mass of public awareness, executives at Universal Pictures opted for a Feb. 1 DVD release in the 13th week of “Ray’s” waning theatrical run. The home video launch, they hoped, would get a boost from black history month, tributes to Ray Charles at the Super Bowl and the Grammy Awards and, of course, its Oscar nominations.

The only best picture nominee available on DVD at the time, the movie flew off the shelves. The potential theatrical payoff from Jamie Foxx’s best actor honors was significantly diluted for exhibitors.

Of course, the window between a movie’s premiere and its DVD release has shrunk, conceded John Fithian, president of the National Assn. of Theatre Owners, which has 700 members operating 29,000 screens nationwide.

Pictures open bigger and play for shorter periods of time. But because a movie’s DVD debut affects theater admissions, his members are on guard.

“Lost in Translation” performed well simultaneously in home video and theaters, industry analysts say, but that was an exception. More often it’s an either-or proposition. Depending on the title, an average 70% of those who buy a movie on DVD have never seen it on screen, preferring to save money and microwave popcorn in the comfort of their homes.

“Releasing a DVD when a movie is still in theaters is our primary concern,” said Fithian. “A shortened window makes it hard for a picture to grow slowly in theaters -- like ‘My Big Fat Greek Wedding’ did. And it’s particularly ominous for discount theaters and small venues that play a movie [many weeks] after its release.

“The theater business is a fairly marginal one,” he continued. “If we lose a couple of percentage points because of an early DVD announcement, it can make a profitable operation unprofitable. We’re watching the situation very closely.”

While his studio is sensitive to the needs of exhibitors, said Universal Pictures Vice Chairman Marc Shmuger, their agendas occasionally “collide.”

Announcing the home video release 25 days after “Ray” debuted in cinemas, caused “understandable consternation,” he said, but exhibitors played the film even so.

After the nominations, the number of locations was upped from 293 to 526 to give moviegoers a last shot at viewing it on the big screen, which added $2.3 million to its domestic theatrical total of $75.3 million.

“We’re committed to preserving the theatrical experience,” Shmuger said. “It’s the big bang that creates word of mouth -- and the universe a movie inhabits for years to come. Still, there’s market pressure for a faster release. Public demand for information and content has increased exponentially. Home video is now the richest revenue stream -- nearly three times that of box office. We have to be careful not to cannibalize any of the windows,” which include pay-per-view, cable and broadcast TV, “but I think we made the right decision.”

“Ray” was salt in the wound for exhibitors -- bringing into sharp focus the curtailed timeframe during which they have a movie to themselves. DreamWorks and, some observers say, Sony in particular are fastest off the mark with their DVD launches, followed by MGM, 20th Century Fox, Buena Vista (Disney), Warner Bros., Universal and Paramount.

Though anti-trust regulations prohibit an organized response, studio track records (meticulously recorded by NATO) are factored in to movie booking decisions. Exhibitors are considering further action, and negotiations with distributors are ongoing.

Vigilance is the best course of action, agreed Michael Campbell, CEO of Regal Entertainment Theatre Group. “Although it is difficult to quantify any negative impact on theaters today,” he said through a spokesman, “my concern is that if it does happen, it’s too late to reverse course.”

Though theatrical performance usually determines the value of video release and other ancillary markets, theater owners don’t get the proper respect, suggested Jerry Pokorski, executive vice president and head film buyer for Pacific Theatres, Los Angeles. That may stem from the fact that they’ve been “ ‘loss leaders’ for a very long time,” he said.

“When the DVD comes out, it’s pretty much over, so we want to know the window beforehand,” he said. “If some of the studios had their own way, they’d like it to be simultaneous. God forbid they don’t get enough money. Direct-to-video product is especially alarming -- DVDs like ‘Lion King 2’ bypass us entirely.”

Exhibitors’ worst fears were realized with last year’s release of “Noel,” a small holiday film starring Susan Sarandon and Penelope Cruz. To recoup their investment fast, the producers -- the Atlanta-based Convex -- cut unorthodox deals with regional theater divisions of major chains. The film was to open on the same day a self-destructing DVD came out -- and a week before it ran on cable.

Because of pressure from corporate higher-ups, only 20 theaters played the movie. Still, the episode reinforced fears that quicker video play is also in the wings.

Another holiday movie, “Surviving Christmas,” was equally troubling. Because of its seasonality and poor box office performance, DreamWorks sent it to video in a mere one month, 29 days. Take that title out of their limited lineup and their stats in favor of theaters improve considerably, company executives said.

“Rather than employing a window strategy, we treat every movie differently -- factoring in competition and consumer mind-set -- dads and grads days and the like,” said Kelley Avery, head of worldwide home video for DreamWorks. “We sent out our $100-million-plus ‘Collateral’ in December after its August release because we wanted it out for the holidays. In the end, it’s about selling movies -- and retail is our theater.”

Marketing is another factor in the shortened window, said Bob Chapek, president of Buena Vista Home Entertainment. Studios may move up a DVD release to dovetail with its theatrical promotion.

“I compare a movie to a melting ice cube,” he said. “The longer it sits, the smaller it becomes. Still, I don’t foresee much further shrinkage of the window between theatrical and home video. Preparing bonus material, duplicating 20 million discs and marketing take time. The realities of production preclude going faster than four months.”

Maybe so. But there are obvious exceptions. Disney’s “Miracle,” Paramount’s “The SpongeBob SquarePants Movie” and MGM’s “Hotel Rwanda” each hit the stores in well under four months. Fox’s “Flight of the Phoenix,” for its part, was on sale in two and a half.

Sony Pictures Entertainment Vice Chairman Jeff Blake makes no apologies for sending out hits such as “The Grudge,” “Hellboy” and “White Chicks” to home video well ahead of the norm. A DVD release within 100 or 120 days of release, he said, doesn’t strike him as inappropriate because they made their money fast.

Exhibitors and distributors have mutual interests, the former distribution executive said. And DVDs aren’t the “bad guys.”

For starters, they fuel the moviegoing habit. Home video revenues also make it possible to make and market more pictures that benefit studios, consumers and retailers -- and exhibitors as well.

“I don’t see a future in which theaters don’t play an important part,” Blake said. “We’ll listen when they say we’re going too quickly, and I hope they listen when we ask them to enforce laws against recording in theaters. Piracy is a key factor in the shortening window. Retailers see a piece of their business going out the window with illegal DVDs and are anxious to get legal ones into the market.”

Ticket sales declined 2% last year, Fithian noted. Still, theaters aren’t an endangered species. More than 1.5 billion tickets were sold in each of the last three years, the most since 1959. Since 1970, admissions have increased faster than the population and, though DVDs are flooding the market, revenues continue to rise.

“Taking a stand on the shortening window isn’t desperation,” he said. “Just nipping it in the bud.”