Release Window

[Harold Hallikainen]

The release window has shown up in a lot of conversations, but I did not see a topic devoted to it. So, here it is!

It seems that content producers would distribute their product in the manner that produces the most profit for them. What is that method? We hear about large box office numbers. How much of that goes to the content producer? What costs are involved in promotion and distribution? How about streaming? How much revenue can be attributed to a particular film? What costs are involved? How does adjusting the release window affect all these variables? What is the optimum release window for the content producers? Ideally, cinemas add value to content producers.

Harold

[Martin McCaffery]

Hollywood Bookkeeping being what it is, the answer is, of course, who the hell knows? Remember, these are the people who said a movie that made $288 million in revenues failed to turn a profit:

Plaintiffs have challenged as unconscionable a number of provisions of Paramount's net profit formula. The challenged provisions include: 15 percent overhead on Murphy and Landis participation; 15 percent overhead on Eddie Murphy Productions operational allowance; 10 percent advertising overhead; 15 percent overhead; interest on negative cost balance without credit for distribution fees; interest on overhead; interest on profit participation payments; the interest rate not being in proportion to actual cost of funds; exclusion of 80 percent of video cassette receipts from gross receipts; distribution fee on video royalties; charging as distribution costs residuals on 20 percent video royalties; charges for services and facilities in excess of actual costs; no credit to production cost for reusable items retained or sold; charging taxes offset by income tax credit; charging interest in addition to distribution fees; 15 percent overhead in addition to distribution fees; and 10 percent advertising overhead in addition to distribution fees.

https://en.wikipedia.org/wiki/Buchwald_v._Paramount

I used to say theatrical releases are just advertisements for the DVD, now they seem to exist to push streaming services (and we have no idea how those services actually make money).

[Steve Guttag]

Streaming services make money by subscriptions. The purpose of content is to get and keep subscriptions. They don't care if you watch anything (except from an advertiser standpoint).

What I don't think the studios have grasped yet is that there is zero rush to get content to streaming services. If they close the window, they actually shrink their pie by crushing the theatrical release. They didn't gain anything (didn't increase their market). Anyone that is going to watch a movie in 2021 will watch it in 2022. What's worse, once you put it on the home streaming system, you just put your shiny new movie right next to the ENTIRE INVENTORY OF STREAMING MOVIES. It is but one of 1000+ movies someone may watch at that moment. It really gets devalued once it hits the home. It becomes stale, almost instantly. By definition, while a movie is on a theatrical exclusive release, there are a finite amount of content to chose from, for those going out (those that don't want to go out and put the convenience/preference of their home set up, still have 1000+ movies to choose from, on any given day).

With small release windows, you then create the situation where people decide if a movie is theatrical worthy or not or if they'll just catch it in a month (or half a month) at home. It sounds enticing even fi they don't get around to it for many months because...what's the rush? They've already lost the sub-run market, for all intents and purposes. If the window was closer to 6-months or more, there would be a sub-run market for those that want to go out but want to also be "thrifty" or casual about it. That money, at the moment is just a complete loss.

All I see in day-and-date and small window releases are a faster return for a smaller pie.

Movies don't become state while they are in the cinema, they only become stale once they go home.

[Harold Hallikainen]

Any idea how an independent streaming service pays a producer for content? Maybe annual fee plus per view? How much money does a content producer make in one year for licensing to Netflix vs their share of box office?

And, if streaming is delayed by the cinema release window, does that decrease the streaming license fee, or, perhaps increase it?

[Bobby Henderson]

What I don't think the studios have grasped yet is that there is zero rush to get content to streaming services. If they close the window, they actually shrink their pie by crushing the theatrical release. They didn't gain anything (didn't increase their market). Anyone that is going to watch a movie in 2021 will watch it in 2022. What's worse, once you put it on the home streaming system, you just put your shiny new movie right next to the ENTIRE INVENTORY OF STREAMING MOVIES. It is but one of 1000+ movies someone may watch at that moment. It really gets devalued once it hits the home. It becomes stale, almost instantly. By definition, while a movie is on a theatrical exclusive release, there are a finite amount of content to chose from, for those going out (those that don't want to go out and put the convenience/preference of their home set up, still have 1000+ movies to choose from, on any given day).

Exactly.

It's obvious many of the suits and bean counters running the movie industry and the larger global media industry are really deficient in their understanding of retail marketing.

The movie industry and its product has to be visible in order to sell. I know this from working in the sign industry. I think movie industry executives understood this very well in the past when it was important to do things like buy big newspaper ads, ads on billboards, bus benches, subway platforms, etc. It was important when retail movie and music stores were thriving as well as video rental stores.

20 years ago it was easy to tell what the hot movie was to rent just from walking down the aisles of a brick and mortar video store. The new releases were separate from all the older stuff. And there was a shit ton of copies to rent of the biggest, newest titles. Very easy visual difference for anyone to understand. And it was easy to tell the difference between real movies that played in theaters versus some crappy movie that went straight to video. There is NONE of that visual separation with streaming platforms. Every title new and old is all in one big random pile.

Not only is a movie new to streaming merely thrown into a pile with all the other existing movies, but every damned streaming platform out there has the most asinine of user interfaces. It's all just row after row of random shit. Even movies and TV series are thrown together in the same rows. No physical retail stores are this disorganized. The UI is dumbed down to a rudimentary level to work with four arrow keys and an enter button. It's easy to waste a lot of time just trying to find something good to watch. Most of the time when I want to watch something on Netflix, Prime Video or HBO I look online via a web page (and a computer keyboard) to figure out what to watch before wading into the stupid apps. Hell, one of the very least, most obvious things they could do is enable viewer to look through content by year, or most recently released and going backward in time. They can't even do that.

And, yeah, once the movie is on a streaming service I'll only watch the movie when I get around to watching it, that is IF I ever get around to watching it. Sometimes I wonder why I still have a Netflix subscription. I mainly use my Prime account to listen to music at work on my headphones rather than watch movies or TV shows at home. HBO is one of the few things where I go out of my way to watch content.

[Steve Guttag]

I recall hearing huge numbers for Netflix having "Friends" in their line up and they did it one more year but dropped it after that due to cost. Again, the cost is all about getting and keeping subscribers. Netflix original content, series often don't get past the 3rd season too. They have their own formula for what they think will be the best bang for their buck.

Now Disney, since they have much of the kid/family films in their vault...also they have the Fox film library too...they have a huge collection...built in. Disney is particularly poised to have a successful streaming market. Still, their new content would benefit from exclusive theatrical though Disney, being Disney, charged their customers that paid for streaming, to see their 1st run stuff day-and-date

[Mark Gulbrandsen]

The money flows to whom ever is specified in the original production contract. Distribution is an entirely separate thing that also gets a small percentage of the revenue to cover their costs.. But, the first to get paid back are the production costs. If those are not recouped relatively quickly then there will probably be no sequels and the release may be left running with a loss and no one gets completely paid back. I personally don't see how productions can expect to recoup the costs as quickly via streaming. Streaming quality, in general, literally sucks. Theatrical distribution often recoups large production costs in as little as a couple of weeks to a month.

[Steve Guttag]

Streaming to guarantee a recouped production cost. If selling to a 3rd party, you get it on the deal, up front. If selling to oneself, you take it out of your left pocket and put it in your right. That could be an attractive angle to streaming day-and-date, for production. Now, if the streamers (even in-house) don't keep up subscriptions, that division will lose money.

It is more-risky to do a day-and-date release on streaming because you have zero idea how popular a piece of content may be...well not zero but there are terrific flops for movies. If the window were closer to a year out, you'd know what you were buying/selling and its popularity. Plus, it would be far enough away from the theatrical run that you could capture some of the subsequent viewings when it hits the home along with the people that are just going to stream rather than go out. Either way, the pie is larger this way and the pricing of content would be more realistic of value.

I could also see a floating window scenario for under-performing titles to allow a faster home release to recoup what value may be in an under-performing title faster...sort of like the junk mortgages and package them with the tent poles.

I just think that the studios are enamored with getting what money they are going to get sooner, even if it is notably less.

[Martin McCaffery]

..sort of like the junk mortgages and package them with the tent poles.

So, a return to block booking, except this time the streaming service is stuck with it?

[Harold Hallikainen]

Sell it (or license it) to a streamer when a week's box office receipts drop to 10% of the highest week's box office? Or some other percentage? I still wonder how streamers pay for content they did not produce. Since stuff is dropped, I guess there may be a fixed fee for a license for a period plus, perhaps, a cost per view. If there are not a lot of people watching something on Netflix, they drop it to avoid the annual fee. But I notice Amazon does charge a per view fee on much of their content. If the licenses did not include a fixed fee but, instead, just included a per view fee, streamers could keep content forever without losing money on it.

Back to a question I previously posted, does a theatrical run with delayed streaming start increase or decrease the streaming revenue? If it increases or at least does not decrease the streaming revenue, revenue from the theatrical run is "free money" that would not be received in a streaming only release.

Harold

[Marcel Birgelen]

Sell it (or license it) to a streamer when a week's box office receipts drop to 10% of the highest week's box office? Or some other percentage? I still wonder how streamers pay for content they did not produce. Since stuff is dropped, I guess there may be a fixed fee for a license for a period plus, perhaps, a cost per view. If there are not a lot of people watching something on Netflix, they drop it to avoid the annual fee. But I notice Amazon does charge a per view fee on much of their content. If the licenses did not include a fixed fee but, instead, just included a per view fee, streamers could keep content forever without losing money on it.

Back in the day (like 15 years ago) when I worked for a company that was rolling out streaming services over the first residential fiber networks that popped up in the Netherlands, those content owners only wanted to license their content for a "Pay per view" model. Only the very old stuff could be had for a "fixed fee" as a kind of filler. I remember that we wanted to offer a handful of movies "for free", just to get a "taste" of the new experience, but it was like we were asking for their body and their soul... In the end, they either didn't want to commit to the service, since they were afraid of piracy (while their stuff was already out there, for anybody to download) or their fees were so horrendous, only giving the freeloader pirates a reason not to watch any movies via this service...

Things obviously have changed, but they obviously still want top money for all the "hot ticket items". I guess that's why Netflix, who doesn't seem to buy into this pay-per-view model, doesn't carry a lot of externally produced content that's really hot.

[Steve Guttag]

Sell it (or license it) to a streamer when a week's box office receipts drop to 10% of the highest week's box office? Or some other percentage? I still wonder how streamers pay for content they did not produce. Since stuff is dropped, I guess there may be a fixed fee for a license for a period plus, perhaps, a cost per view.

I'm sure these deals are mostly kept secret but here is an article on Netflix and when they carried "Friends" (a sitcom). It cost Netflix $100M to carry it for 1-year:

https://www.whats-on-netflix.com/new...further%20year.

That is for an old (but still watched) sitcom. I can imagine things being more aggressive for a new release that just cost a studio hundreds of millions to make.