DVD dilemma: When to debut

[TJL]

Here's an interesting article from today's NY Daily News.

DVD dilemma: When to debut

By GARY GENTILE
THE ASSOCIATED PRESS

Someday the phrase "Coming soon to a theater near you" could be replaced with "Coming soon to a store near you."
The tradition of major films debuting first in theaters, then across staggered release "windows," including pay-per-view, home video, cable and, finally, broadcast TV, is being openly questioned.

Robert Iger, CEO-elect of Disney, recently suggested the day could come when a DVD is released while the movie is still in theaters. The millions of dollars that studios spend marketing first-run movies would serve double duty promoting the more profitable DVDs, making for a faster and more efficient return on investment.

"Mr. Iger knows better than to tell consumers - or Wall Street analysts - that they can have it all, everywhere, at the same time," said John Fithian, president of the National Association of Theater Owners. "He knows there would be no viable movie theater industry in that new world - at least not a theater industry devoted to the entertainment products of Hollywood."

Theaters have already seen profits shrink as movies move more quickly to home video. Studios and theaters split profits in the early weeks of a movie's run, with the theater making most of its money from concessions.

The theater's split gets larger the longer the movie plays, giving studios an incentive to release films on DVD even earlier. Studios make the majority of their profits from home video sales, with theatrical runs serving largely as marketing for the DVD.

The gap between a movie's opening weekend in theaters and its debut on home video has been narrowing from about six months in 1994 to about four months in 2004.

Some studios release their DVDs even sooner. The action sequel "XXX: State of the Union," which fizzled at the box office, hit video shelves 11 weeks after its theatrical debut.

Many studios announce the release date of a movie on home video while the film is still in theaters - a practice that infuriates theater owners.

"This is something that drives us nuts," Fithian said. "When Wal-Mart starts putting up signs a month and a half or two months into the movie's run, that just kind of tells the consumer: 'Wait - it's coming.' "

But for some industry players, simultaneously releasing a movie in theaters and on DVD makes perfect sense.

"Most packaged entertainment - books, CDs, games - most all of these make their debut at retail," said Ted Sarandos, chief content officer of Netflix, which rents DVDs by mail. "It isn't that radical a proposition that movies could follow that same path."