The Interview And The Demand For On Demand

When Seth Rogen first pitched The Interview to his buddy and future executive producer , he likely didn’t expect the film to eventually become a powder keg that would shake both the film industry and the American government. With its now infamous plot—Rogen and Franco assassinate a fictional depiction of North Korean dictator Kim Jong-un—The Interview managed to rile one of the world’s most unstable, unpredictable powers and led to the protest of Sony Pictures’ release of the movie. Sony was then hacked by a group widely believed to be backed by North Korea, releasing confidential data and emails that revealed a diverse array of Hollywood’s dirty laundry and offering lay people a fascinating glimpse into the inner workings of the studio system.

When physical threats were made to the cineplexes and theatergoers planning to see The Interview, however, the danger of the situation became impossible to ignore. Most theaters pulled the film entirely before its December release, robbing viewers of a chance to see Rogen and Franco make dick jokes—but controversially—and robbing Sony of millions of potential box-office dollars.

And, suddenly, Video on Demand became relevant again.

Not that VOD hasn’t been relevant, but the so-called challenger to theater-released blockbuster movies has been a virtual nonfactor for so long that it had become more of an afterthought to most average consumers. While VOD and streaming has largely replaced post-release home rentals and the straight-to-video tactic B-movies and indie films have used for decades, the technology has rarely been used for brand spanking new releases of A-list Hollywood movies—movies that most believe would make much more money on the big screen.

Occasionally, smaller films by bigger names, like Steven Soderbergh, or buzzy cult flicks like 2014’s Snowpiercer, are released on video the same date it’s put out in theaters—giving audiences a choice to go out and see it or stay home and sit back on the sofa. If anything, they proved that some audiences would still choose to pay extra for the experience of seeing a movie in the theater. The general theory, though, is that studios will make more money restricting that choice, forcing viewers who want to see the movie first, as soon as its released, in the theaters. Since the Golden Era of VHS, contracts have been fought over by teams of lawyers to determine when a film can finally be released on video after its initial theatrical release. The time period in between used to be several months, though as clunky VCRs were replaced by DVDs and DVDs by Blu-Ray and Blu-Ray by Netflix and other streaming sites, the gap between theatrical and home release can be as little as a few weeks.

Studios, making more money from the more expensive tickets of theaters, have been reluctant to shrink the gap any smaller. If audiences realize they have the purchasing power to dictate how they receive their entertainment, they will in theory start demanding their On Demand. Between a recession that refuses to go away and a culture increasingly glued to smaller screens they have more control of, this fear of the studios is very much rooted in reality. They’ve seen what happened to the broadcast networks and what is happening to cable companies. Choice is winning the consumer war. Rather than fight it, major industry players are trying to figure out how to profit from it.

Unfortunately, the massively influential theater owners of America complicate this. As rapid and overwhelming as the streaming revolution has been, people still go to the movies and buy tubs of popcorn bigger than their heads, and theatrical releases still take in billions of dollars every year. Theater owners have the infrastructure the studios don’t, and control what goes out and to whom. They also arguably have the most to lose as consumers become more homebound, and have been fighting On Demand tooth-and-nail. When studios have brandied the notion of releasing major motion pictures On Demand before or concurrently with their theatrical releases, theater owners threatened to pull the film in question—as well as other movies in the future—threatening, basically, to take millions in profit from the studios. The theater owners, scared and desperate, have taken an Us or Them stance, leaving studios, their films, and audiences, in the middle.

Which is where The Interview comes in. Because of vague threats of physical violence to the theaters and theatergoers who would see The Interview, the major chains decided to pull the film. In other words, in the middle of their battle of Us or Them, theaters took out the Us.

Sony, despite reeling from its hack attack, had two problems with The Interview being pulled. For one, it was very bad publicity. Many people found the withdrawal of the film a political misstep, a “letting the terrorists win” scenario. Even President Obama publicly decried the decision. And it was Sony’s name everyone remembered, not the vague bureaucratic union of theater owners. Secondly, Sony now had a big-budget comedy starring two of Hollywood’s biggest stars, a movie that was garnering unprecedented free publicity from the media, a movie that out of sheer curiosity the entire nation wanted to see—and no way to make any money off it. With the theater owners taking themselves out of the equation, Sony was free to release The Interview On Demand.

The Interview was now the most high-profile Hollywood film to get the small-screen treatment before a major theatrical release. It was also surrounded by an unheard of level of buzz. And with HDTVs and high-speed Internet finally the norm for most of the country, this was, in essence, Video on Demand’s moment to shine.

So did VOD shine? Short answer: Yes. Long answer: Probably.

In its first weekend On Demand, through YouTube, Google Play, Xbox Video and a website dedicated solely to streaming the film, The Interview made $15 million, an incredibly high amount for an online release. It was undoubtedly a win for the digital medium. Now that it’s proven itself and broken a cultural and mental barrier that “real” movies come out in theaters first, the industry is wondering whether this will become the new normal. As of now, most signs point to…. not yet.

Studios actually make a lot more money through VOD per viewing, as the infrastructure is considerably cheaper and they share a lot less of the profits with theater owners, which can take up to half. However, theatrical releases traditionally make more for studios in that audiences have to pay once to see it on the big screen, then again when renting it for home, then again through TV or cable or in-flight screenings on airplanes, etc. But the culture is changing—millennials in particular are driving subscription-based entertainment. Flat fees are becoming the norm even for computer programs like Photoshop, and perhaps presciently, eBooks. Audiences are becoming repulsed by the idea of paying for something more than once, and studios are realizing it.

But going to the movies is a tradition that’s been entrenched in our culture for decades, and it will most likely be a while before it’s routed out. And while The Interview is a high-profile comedy with big movie stars and a ton of buzz, it isn’t Avengers 2. It’s hard to imagine a megahit spectacle like that getting a same-day release on VOD anytime soon, unless audiences do radically shift their behavior and theaters consequently lose their bargaining power.

Maybe that would be for the best. There will always be a place for movie theaters—they replicate an experience that isn’t quite possible in the average living room, even with bigger and cheaper and better technology. But maybe theaters will need to find a new identity. Become an experience worth leaving the house for. IMAX and table service and vibrating chairs have been steps toward a direction like that, but something as simple as enforcing no-texting rules and cleaning the sticky off their floors could go a long way for fickle consumers. Movies as a Good Time seems like a marketable niche—Alamo Drafthouse has made a name for itself in this vein.

For now, though, movie theaters are content with handing out some recyclable 3D glasses and audiences are content on waiting in line for overpriced tickets in a crowded, sticky theater. VOD is still considered its own medium as opposed to an alternate to the multiplex. But after The Interview, the seeds of change have been planted in everyone’s minds from Us to Them and everyone in between. Right now it’s hard to see audiences turning their backs on the big screen once and for all, but then who would’ve thought ten years ago that those silly red Netflix envelopes were going to totally transform the industry? Who would’ve thought that North Korea would draw the line at Seth Rogen? Just like the movies—anything can happen.

Learn more about producing for film, television, and media at the New York Film Academy.

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