Hollywood rethinks distribution

This story was delivered to BI Intelligence "Digital Media Briefing" subscribers. To learn more and subscribe, please click here.Hollywood studios may be shortening film release schedules by half, allowing DVD and digital versions to be purchased after 45 days in theaters versus the 90 days that is currently the industry standard, according to the Wall Street Journal.The move comes as video-on-demand (VOD) services become more popular, providing consumers with a multitude of video content at the touch of their fingers.One of the challenges, however, will be to negotiate terms that keep theater owners happy, as shorter theatrical runs can negatively affect revenue from ticket sales. Digital pure plays like Netflix and Amazon are spending aggressively on rights to feature-length films, and Hollywood studios want to keep pace by providing consumers with timely digital versions of their films.The shrinking home release window. In 2005, the average number of days between a film's theatrical release and home release was 135 days. In 2016, that number shrank by almost 25% to 102 days.Studios take a majority of theater ticket sales. For many Hollywood releases, studios can rake in 70%-90% of the first weeks box office sales, according to HowStuffWorks. Typically, the studio's share of box office revenue declines each week the film remains in theaters. This is why revenue from concessions like popcorn and candy, as well as local advertising, is critical for theaters to stay in business.Theaters could get a slice of VOD revenue. To appease backlash from theaters due to potential lost box office sales, studios may share 10-20% of profits generated through VOD platforms. One challenge here is negotiating how long theaters will be able to participate in VOD revenue sharing.Challenge of creating an industry standard. Due to antitrust laws, studios are not permitted to discuss strategic initiatives, including how to work with theaters to reduce the home release window.To receive stories like this one directly to your inbox every morning, sign up for the Digital Media Briefing newsletter.Click here to learn more about how you can gain risk-free access today.Join the conversation about this story
Click here to read full news..