Friday, January 27, 2006

Mark Cuban, Steven Soderbergh and Bubble

Today is the BIG day. And not just because I have two blogs today.

Today is the day Hollywood has been waiting for. The day when the film "Bubble" is released.

What's the big deal? Steven Soderbergh's "Bubble" will be released to movie theatres, HD Net television and DVD--all within four days.

It's called a day-and-date release, and I've blogged about it before (see 10/30, 1/2 and 1/6). In the past week, there have been interviews on NPR and reports on television about it. Last night even Nightline did a segment on it.

So, why are so many people interested in the release of one little film? Because it is going against the business model by which Hollywood has been operating for years.

The model currently in place has a fixed order: Film is released, film is later released overseas, several months later the DVD is released and, a couple of months after that, the film goes to cable television.

In recent years, the "window" between each step has been shrinking. Theatre revenues were down 5% last year. Movie studios' worries about pirating have led to them releasing films at home and abroad at almost the same time. DVDs are coming out more rapidly as well. However, the basic business model has remained stable.

Mark Cuban, owner of the Dallas Mavericks basketball team, is overturning that business model starting today. In addition to his sports franchise, Cuban is also very involved in the film/television business. He is co-owner of the Landmark Theatre chain; a film production company, Magnolia Pictures; and HD Net television. He was the executive producer of the film "Good Night, and Good Luck." TV watchers may remember his short-lived reality show, "The Benefactor."

Of course, since Cuban owns the production company/theatres/cable station, he will benefit no matter how the money shifts along his revenue chain. If his theatres lose money on the release, his DVD company and cable station stand to gain money. This would not be be case for most studios and theatre chains.

Everyone toward the top of the food chain is screaming. Theatre owners everywhere are beside themselves, envisioning lower ticket sales (and, more importantly, lower concession stand sales). Regal, the country's largest theatre chain, has made it clear they will NOT carry the film because of the day-and-date model for the DVD release. Why should a consumer go to the theatre if they can stay at home and watch it from the comfort of their home theatre?

Stores selling DVDs are not happy with the day-and-date release to cable television. Why should a consumer buy the DVD when they can see and copy it off their television?

Cuban believes that the theatres should share in the profits of the DVD and cable stations. For him, that's easy. He owns all the parts of the chain. That might not be so easy for other companies.

Meanwhile, another company--IFC--is also planning to experiment with day-and-date release.

Remember what I've been preaching. It's the consumer who matters. Consumer choice is the ultimate goal. Service delivery models need to change to accommodate that goal. Whether we are talking films or books, the same theory applies.

More to come . . .

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