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What Would a Major Studio Video on Demand Release Look Like?

It took a terrorist threat from hackers to push a major studio to finally release a movie online.

by Adrianne Jeffries
Dec 24 2014, 4:50pm

​Image: Sony

This morning, Sony Pictures Entertainment confi​rmed that the controversial comedy The Interview will be available to rent online through YouTube and other online platforms in addition to ​around 200 independent theaters. If that happens, this could be the largest experiment yet with a so-called "video on demand" release.

George Lucas and Steven Spielberg have said that video on demand is t​he future. "What used to be the movie business… will be internet television," Lucas said at a panel last year. But even though internet distribution could replace fading DVD sales, tap into new audiences, and potentially head off piracy, movie studios have resisted the move. No major studio has been willing to try releasing a film simultaneously in theaters and online.

That's no surprise: It's common knowledge that Hollywood is extremely ri​sk-averse, and right now there is very little data to predict things like how much money an online release would bring in and whether it would cannibalize theater ticket sales. Sony is only releasing the film this way because major theater chains ​dropped the movie after hackers ​threatened a terrorist attack.

There have been a few experiments with video on demand, however. Earlier this year, the dystopian drama Snowpiercer was distributed online two weeks after its theatrical release. The result? The movie made more money in two weeks online than it did after five weeks in​ theaters.

Critics scoffed that the tactic only works for arthouse films that appeal to a niche audience. "It's really just the indies that are doing it," market researcher Tom Adams told Variety.

After about a month in theaters, the plotless abstract film Upstream Color was released through the movie's website as well as iTunes and Amazon Instant Video. The film grossed less than $500,000 at the box office, a success for what Motherboard's Jason Koebler described as "the only movie where I understood the plot even less after I read 15 articles about it," but a flop by major studio standards. The distribution strategy got a ton of press. However, the video on demand revenues were never released publicly, and Upstream Color failed to sta​rt a trend.

Indie films smaller than Upstream Color have experimented with video on demand, but there still isn't enough data to know whether it's viable for small films, let alone big ones. (Perhaps most encouraging: Keanu Reeves's Man of Tai Chi ma​de $1.5 million through a video on demand release before even opening in theaters.) "Any statements about the independent-film business can only be expressed in anecdotes and generalities," writes Scott Tobias at Dissolve.

In other words, Sony releasing The Interview—a movie which is supposed to be ​terrible but still stars two A-list actors and is owned by one of the "Big Eight" major studios—is a huge deal. Not only will the release raise awareness of the exist​ence of YouTube's movie rental site, we will finally have a good case study for releasing a mainstream film simultaneously online and in theaters.

It's probably too soon to call this "a groundbreaking moment for the movie industry," in the wo​rds of CNN's Brian Stelter, who broke the news about the online distribution. The Interview is an anomaly: another movie in the future may get a publicity boost from hackers claiming to be from North Korea, but it seems unlikely. For that reason, cautious studios will probably continue hemming and hawing even if the movie sets a record for revenues from a video on demand release, which it easily could. It's a step, not a leap, toward a new distribution model.

Industry pundits had forecast $90 million for The Interview at the box office. We'll see if a video on demand release can come close.