Tuesday, March 13, 2007

New Study on Film Release

The University of Missouri-Columbia, together with research partners in the United Kingdom and Germany, distributed a press release on 2/28/07 with respect to a global study about the heated debate between movie studios and theater owners.

The study, titled "The Last Picture Show? Timing and Order of Movie Distribution Channels," is scheduled to be published in the October issue of the Journal of Marketing.

The researchers focused on four key channels of movie distribution: theaters, DVD rental, retail DVD and video-on-demand (VOD). Through a sophisticated experimental approach, they looked at distribution and revenue changes by analyzing data from 1,770 consumers in the United States, Japan and Germany. Collectively, the three countries represent 56 percent of the global film market.

I've published on this subject a half dozen times before. If you're interested in the background, read my post of 10/30/05 here or my post of 1/28/06 here or my post of 9/24/06 here.

Among the findings:

Film studios in the U.S. could increase revenues by 16% if films were simultaneously released in theaters, rental DVDs and video-on-demand (VOD), leaving a three-month window to DVD retail. However, such a move would cause a 40% drop in theater revenues and might lead to the closing of some theaters.

In order to create a win-win situation for both the studios and the theater owners, the researchers suggested leaving a three-month theatrical-to-video retail window, offering slightly higher DVD prices and THEN follow up with rental and VOD releases another three months later.

The study also warned that studios needed to be careful not to alienate theater owners in order to avoid financial losses and "public goodwill."

My interest in this subject is not purely academic. Compare this to the possibility that books would be released simultaneously in physical form (hardback or softback) and in virtual form (e-books). A number of publishers are already releasing books in physical form and in audiobooks at the same time.

At a time when bookstores' margins have been cut to the bone, this possibility might have enormous consequences for the book retail industry. Releasing the audiobook at the same time as the physical book still means customers must go to the bookstore to make a purchase. Releasing the e-book at that same time would permit customers to bypass the retail store altogether.

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