Changing up the Hollywood business model

31Oct11

An article from Time discusses the somewhat unconventional, new release of the independent financial drama Margin Call.  Last weekend, the film was released at 56 movie theaters across the country and simultaneously made available via video on demand.  This method of movie distribution, same day release in theaters as well as video on demand, is a new concept to me – however, it is becoming more familiar across the film industry.

After the release of Margin Call, the box office results exceeded expectations.  “Between 56 theaters, [the movie] grossed a total of $561,904; on average, that adds up to a whopping $10,034 per screen (any movie that registers $5,000 per screen is generally considered to be a smash hit)” (Time).  This is surprising, considering that the cost of viewing the film on demand was almost 40% cheaper than going to a theater.  However, this is good news for movie theaters. Many theater owners may be worried about more and more films being released via multiple avenues will mean less business for them.  The success of Margin Call seems to indicate that this isn’t the case.  Alternative ways to view a film may not mean less business at the theater.

An entertainment researcher, Jeff Bock, observes that “the video on demand component may have simply increased awareness and exposure for the film.”  He finds the success of Margin Call to prove that filmgoing continues to be a social activity.  Despite box office attendance having been sluggish in recent years (also a trend in many other areas of the performing arts), there is still a large audience who wants to go to movies in the theater. The article’s author believes that moviegoers have divided into two camps: those who rush out to movies opening weekend, and those who are content to wait around for the DVD or video on demand.  Thus, a simultaneous release of a film may not hurt overall box office numbers.  Instead, increased exposure may add to the profits.

This discussion leads us to wonder if the same type of success would be true if expanded from indie movies to big Hollywood blockbusters.  Would theater and video on demand same day releases lead to greater exposure to a wider audience? Additionally, how would the standard “Hollywood business model” regarding film distribution be affected if more and more movies utilized the same day release?

View the trailer for Margin Call.

-Sarah D.

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