Recent VoD releases in the US have underlined the potential of shrinking release windows for independent distributors. Geoffrey Macnab explores the UK market, where excitement about multiplatform releasing is tempered by a wariness of alienating exhibitors.
This August, independent distributors around the world were given an enticing glimpse of a multiplatform future when Radius-TWC, the Weinstein Company’s multi-platform label, released raucous comedy Bachelorette on video-on-demand (VoD) a month ahead of its theatrical release on September 7. The film did roaring business, claiming the number one spot on the iTunes movie chart and earning more than $4m on VoD by the time it reached theatres (it had grossed around $418,000 theatrically from around 50 sites in the US by September 23). That was followed in September by the simultaneous release of Roadside Attractions/Lionsgate’s thriller Arbitrage, which hit number two on the iTunes movie chart, and earned $2.1m theatrically from 197 sites in its first weekend.
These releases are the latest examples of independent US distributors utilising digital platforms alongside theatrical. Last autumn, Lars von Trier’s Melancholia made around $2m on VoD in the US after being made available by Magnolia Pictures in October - a month before it hit cinemas - where it took around $3m.
In the UK, independent distributors look at these results and scratch their heads. In the new era of VoD, UK independents could argue the release window - the standard 17-week holdback between theatrical and DVD/VoD release - is old-fashioned or even absurd. But at present there is little indication the bigger exhibitors have any intention of allowing the window to shrink. Speak to specialist UK distributors and they make clear both their wariness about alienating exhibitors and their excitement about a multiplatform future.
“It is definitely something that could work in the UK, and that will work,” suggests Justin Marciano, CEO of Revolver Entertainment, of the Radius-TWC/Magnolia example. “In the US they have an advantage over us in terms of scale on the VoD side. They are more advanced than we are thanks to their cable systems.”
Marciano notes that 100 million homes in the US have access to VoD. The UK lags behind, though Screen Digest research recently revealed that around 53% of UK households can now access an on-demand pay-TV platform.
There are other issues beyond this. Robert Beeson of UK arthouse distributor New Wave Films points out that if his titles went out on VoD prior to theatrical release, they would not be reviewed in the national press. For specialist UK distributors, critical support is vital.
‘The US has an advantage over us in terms of scale on the VoD side. They are much more advanced than we are’
Justin Marciano, Revolver Entertainment
“Our most successful films are invariably those that have been theatrical,” says Anna Godas, CEO of UK independent distributor Dogwoof. “Theatrical is vital. It is a showcase for our type of films and has a massive impact on any sales on any windows afterwards.” Ask if it is important for Dogwoof to have a window between theatrical and other windows, and Godas replies: “It is only important if I can’t get a theatrical release because of it.”
Alex Agran, director of Arrow Films, a leading multiplatform UK distributor which recently took UK rights to Thomas Vinterberg’s The Hunt and Susanne Bier’s Love Is All You Need, makes a similar point about not wanting to risk antagonising exhibitors: “It is a little bit [a case] of do as we’re told. You tend to feel there is a bit of a pecking order when it comes to these things.
“As a lot of our films play on the arthouse circuit, often where it is very, very competitive, we have a little more flexibility than a company that is releasing in multiplexes.” Though Arrow does “honour” the holdback in most cases, there are instances on some smaller titles when the company has collapsed the windows. For example, on recent sports documentary Salute, about the black power salute at the 1968 Mexico Olympics, the theatrical release and the DVD release (a fortnight later) took place around the time of the London Olympics. “If we had had to observe a holdback, we’d have scrapped the whole idea,” Agran says.
Large exhibitors do not want to see the theatrical experience weakened by shrinking the theatrical window, and that includes VoD. When StudioCanal released Cockneys Vs Zombies in the UK on August 31, a Twitter exchange revealed some of the issues: “hey @cineworld are you getting any prints of Cockneys VS Zombies in London - it’s not on the website…” asked one fan via Twitter. The Cineworld response came back: “Cockneys vs Zombies is out on DVD in October so not many distributors will be screening it including us I’m afraid.”
At the same time, independent UK distributors are very conscious of how tough it can be to secure screens and how quickly films can be taken off those screens. In such a competitive sector, they are eager to explore alternative ways of reaching their audiences.
In recent months in the UK, Curzon Artificial Eye has made arthouse titles such as Le Havre and Berberian Sound Studio available on pay-per-view at the same time as they first hit cinemas. Though the company will not divulge results, CEO Philip Knatchbull insists that releasing simultaneously across different platforms has not hurt the theatrical performance of these films. “We are also an exhibitor, so why on earth would we cannibalise our business?” (He also acknowledges that VoD is “still small numbers”, albeit increasing steadily.)
Curzon Artificial Eye is an integrated company with its own cinemas. Unlike many of its rivals, it is not dependent on exhibitors for access to screens.
Tim Richards, CEO of Vue Entertainment, which has 116 cinemas across the UK and Ireland, Germany, Denmark, Portugal and Taiwan, is unapologetic about the leading exhibitors’ determination to keep the traditional 17-week window. “The whole issue and debate of theatrical windows has, for the most part, gone away,” he states. “Certainly, distribution and exhibition have recognised the value of maintaining a window.”
He suggests the smaller independents experimenting with shrinking the window are only handling films that would not warrant a multiplex release. “There have always been those movies that would go straight to DVD, that would not warrant a theatrical release. Those are the films you’re seeing smaller independents playing with.”
His theory is that instead of a theatrical window being “reduced or broken, [now] you’re seeing a DVD film that instead of going straight to DVD is breaking out the other way and trying to get a theatrical window”.
‘For certain sorts of movies there should be no theatrical window. Theatrical windows are irrelevant’
Philip Knatchbull, Curzon Artificial Eye
If a film was going to have a short theatrical window, Richards says very bluntly that Vue would simply not show it. However, the chain has made “accommodations and reached agreements” with several US studios to introduce “a limited amount of flexibility on a limited number of films”. This was prompted by the stand-off with Disney over Tim Burton’s Alice In Wonderland in 2010, when the studio tried to shrink the window to 12 weeks.
Mark Batey, chief executive of the Film Distributors’ Association, believes the holdback can safely be loosened. “If the theatrical experience genuinely is exceptional, state of the art, immersive, unique - all of these things we hope and believe it is - then the holdback doesn’t matter,” he says. “The view that if we released it earlier than 17 weeks - that people just wouldn’t come - there is just not a shred of evidence to suggest that.” Batey argues “no-one wants to harm cinema”, simply that the industry should welcome “these experiments in the digital world to try to meet consumer expectations of entertainment delivery”.
“For certain sorts of movies - and I would say the specialised independent movies to start with - there should be no theatrical window,” agrees Knatchbull. “Theatrical windows are irrelevant.”
As yet, there are few reliable figures about how multiplatform releasing has been working in the UK. Companies will not share details unless their rivals do likewise. “It is such a new world that we don’t have market data [other than the company’s own data] to draw on,” says Revolver Entertainment’s Marciano. As yet, he notes, there are no UK charts for VoD or electronic sell-through. “Until that changes, it’s difficult to get a sense of what’s working and what’s not. It’s a big experiment for everyone.”
For Knatchbull, the debate should not be about the length of the theatrical window but about the price point. The earlier you see a movie, the more you have to pay, he says. If it is a new release, whether you are watching in a cinema or at home through VoD, you should expect to be charged a premium.
Marciano makes a similar point. “The way people consume has changed hugely, beyond recognition almost. It’s just naive to believe [film releasing] can continue in the same way without consumers kicking up a fuss. We all need to be a bit less blinkered in trying to get maximum success for these films.”
The UK has a range of VoD services, several launched by distributors.
Independent UK distributors work with a huge variety of video-on-demand (VoD) platforms. Some have their own: for example, Revolver has its FindWatchShare Facebook ‘social video platform’ business, while Dogwoof offers titles to stream online.
The Curzon On Demand service currently has around 350 titles on its site. Half are ‘in-house’ films from Artificial Eye but other independent distributors also increasingly use the platform, among them Momentum Pictures, Dogwoof, Soda Pictures, BFI and Revolver. In the long run, the aim is to have 80% of titles from other distributors and 20% from Artificial Eye (the same balance as in Curzon’s cinemas). Prices range from $16 (£10) for a new release such as Berberian Sound Studio down to $3.25 (£2) for an older title. Most of the films released day and date theatrically and on VoD have come from Artificial Eye, but this is slowly changing.
One trend is the increasing prominence of big supermarkets in the VoD market. Last year, Tesco acquired 80% of online video company Blinkbox, which offers independent fare for rental or purchase. Sainsbury’s is also entering the VoD market through its deal struck this summer with Rovi. Early this year, electrical retailer Dixons launched its on-demand film service, KnowHow Movies.
Key players in the UK VoD market include iTunes, Netflix and LoveFilm and, on television, Sky, Virgin and BT Vision.
“We are happy to use anybody,” says Dogwoof’s Anna Godas, pointing out the deals with the platforms are almost always on a non-exclusive basis - so the same films can be seen across a range of platforms.
Some are now predicting consolidation and simplification of the VoD market, with consumers becoming bewildered by the sheer number of platforms currently active.
What is the biggest challenge facing UK distributors?
Screen asks a selection of UK distributors about the issues they face today.
Philip Knatchbull CEO Curzon Artificial Eye
“The distribution landscape is permanently changing, with the DVD market gradually reducing, and video-on-demand (VoD) emerging as the future. With the immediacy of the online world, customers want more choice in terms of how and when they watch films. The industry is evolving beyond enforced theatrical windows - and it is the challenge of the distributor to embrace this.
“The task for Curzon Artificial Eye is to build our home cinema and physical cinema venues into a nationwide brand, increasingly offering exclusive simultaneous releases of the very best in cinema, with clever use of media partners and our in-house marketing expertise.”
Andy Whittaker Founder and chairman Dogwoof
“The biggest challenge is always finding and acquiring the best films each year, but that’s the same for everyone. Our biggest challenge is digital. At Dogwoof, we’ve always been innovative and embraced digital. But the number of new technologies and rate of change in the digital space is phenomenal. It’s exciting but we need to ensure we are leading edge not bleeding edge.
“Today it’s online, tomorrow it’s mobile and social, and next week it’s transmedia or another buzzword. To manage this, we have a holistic approach which has the customer at the centre of everything we do, and then work with the technologies that enable that. In the end, content is still king.”
Zygi Kamasa CEO Lionsgate UK
“There are several issues that will erode our revenues as we go forward. Piracy is still a problem, of course - broadband expansion has made it easier for people to download illegally - and we need to account for the shortfall in revenues caused by declining physical product.
“In the UK, the VoD and digital space is growing but isn’t replacing the decline in DVD revenues we’ve seen in the last three years. The UK continues to be an expensive, competitive market, there is a lack of flexibility regarding windows and getting screen space for smaller films can be a problem. Overall, there are a number of smaller concerns, rather than one overriding problem.”
Cameron McCracken Managing director Pathé UK
“The biggest challenge for UK distributors is the same it ever was and ever will be - making the right decision as to what story matches what audience and ensuring the spend on acquiring and advertising that film is commensurate.
“Beyond that is the challenge of technology - theatrical revenues are holding up and the arrival of Netflix alongside LoveFilm has broken the Sky monopoly, providing a great boost to the indies in particular. But sliding DVD revenues will not be compensated for by increased VoD income until a killer app arrives to stream immediate, high-quality VoD direct to the sitting room TV.
“Notwithstanding the challenges, the UK market remains hugely competitive - some may say overheated. Consolidation seems inevitable, failing which, UK distributors will increasingly look to work with producers to develop and control their own material.”
Danny Perkins CEO StudioCanal UK
“The main challenge is the decline in the DVD market, resulting in a decline in home-entertainment revenues. We’ve seen a large shift in the retail landscape, which over the past 10 years has been the big driver in all of our businesses. It’s important not to see online as an additional revenue. It represents an adjustment in the business and a different business.”
Laurence Gornall CEO The Works Film Group
“The biggest challenge facing independent theatrical distributors in the UK remains the introduction of the VPF [virtual print fee], both in how it is being applied and how it is affecting release patterns.”
Rupert Preston Co-CEO Vertigo Films
“The biggest challenge facing distributors in the UK is piracy. The piracy figures can be staggering. For example, in a six-month period in 2011, there were 1.1 million attempts to download Horrid Henry: The Movie in the UK alone. The music industry has been decimated by generations of people who no longer expect to pay for music. The film industry cannot go the same way. Rigorous laws need to be put in place with internet providers, and the younger generation need to be educated in a non-patronising way about the effect of piracy.”
Navraj Panesar Manager, marketing & distribution Yash Raj Films
“Perhaps the most crucial challenge is that the flow of product is so great it doesn’t allow a film to have the chance to grow and become a sleeper hit anymore. Everything is contingent on the opening day figures. There are many films that are perhaps deserving and would have been great successes, if we could just hold them over while the word of mouth builds.”
Robert Beeson Joint head New Wave Films
“In our very small part of the sector some of the challenges are: encouraging audiences to go very quickly beyond their comfort zones, as there is virtually no room for slow build now; how to advertise and publicise effectively for films without in-built audiences, when people are buying less newspapers; and seeing how long it takes for a VoD system to get established that non-technical people can use as easily as a TV.”
Eve Gabereau and Edward Fletcher Co-founders and managing directors Soda Pictures
“The main challenges for us as an independent distributor in a competitive and expensive territory such as the UK is to acquire the right films in the first place, then find their place in the market on a balanced spend and allow them to build an audience and bring in a return.
“With the shifting of the cultural goalposts of what mainstream, indie or arthouse cinema is, and the competition for screen space for our films against other films and alternative content, as well as competing for people’s time against other leisure activities, there is more emphasis on maximising ancillary values. VoD, for example, presents a great opportunity in the future but at present we’re still working out how best to position a film in terms of release across all rights and managing the constraints of set windows. Foreseeing new platforms and viewing patterns is the ultimate challenge.”