Will ‘The Interview’ lead to change in studio distribution strategies?

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By Heather Turner, PilotTV News Follow @Heather_Turner

The debacle over The Interview‘s release has the film community discussing whether its break from tradition will have a knock-on effect on Hollywood windowing.

The rise of video-on-demand and online streaming services have been life-savers to an industry experiencing an overall decline in ticket sales and some rampant pirating. Until the Sony Pictures hack led to the release of the film starring Seth Rogen and James Franco to be indefinitely delayed, there really was no impetous for a studio to release a major film online before direct distribution to theatres.

But with Hollywood studios still largely relying on the revenue streams they generate by herding human asses into theatre seats and execs clearly asking themselves, ‘does this shit make money if we hand it to the internet to most certainly promptly rip?,’ the industry is keeping a close eye on how the controversial film fares. Sony figures so far show the film has been doing well online, pushing past $31 million from 4.3 million sales to become one of the most successful VOD films to date.

The Interview has yet to break even and there’s still a big possibility that its early success is only a blip on the radar temporarily boosted by unforseen and unintended viral marketing in which viewing the film became particularly associated with supporting freedom of speech.

After its initial release on December 24 on Youtube, Google Play, Microsoft Xbox video store, and a purpose-built Sony website (and later expanded to numerous other major digital channels), independent theatres nationwide opted to play The Interview, surpassing initial expectations to generate another $5.3 in domestic box office revenue as of this weekend.

Is The Interview a game changer?

Distribution windows for major studio films have largely remained stuck in the 90s, while audience viewing habits in the meantime have become increasingly diversified. DIY distribution methods, such as doing VOD release first, driving audiences to a purpose-built website to monetize content, or combining day-and-date windows, have typically been associated with micro budget indie productions, foreign flicks and whatever it is you get at the end of a successful Kickstarter campaign.

As Jeff Bock, senior box office analyst for Exhibitor Relations Co. points out in a recent Associated Press report, the film makes for an excellent “guinea pig for a video-on-demand release.” It is indeed much easier, even in the aftermath of the Guardians of Peace hacking, for Sony to absorb the hit if an $80 million film flops than it is for a much smaller company. Like other commentators on the subject, Bock doesn’t necessarily believe that The Interview will revolutionize digital distribution, “I can’t say that this is the future.”

It is obvious that people’s viewing habits are changing drastically, becoming personalized, more interactive, accessed in real time and on one’s own time. The Interview’s VOD release does show that audiences are willing to pay for content that bucks standard Hollywood windowing. Whether the gamble pays off enough for Sony or a competitor to repeat the experiment in the near future remains to be seen, because with 100 million pirated copies and going vs. the just over 4 million legal downloads or streams — the mathematics are kinda fucked. Venturebeat’s Chris O’Brien notes:

Obviously, sales through Sony’s website are likely lucrative for the company. But we don’t know the terms of the other deals, and without that information, it becomes impossible to draw any conclusions about the impact of the strategy. Given the rush to strike the deals, though, it’s hard to imagine Sony felt it had much leverage to maximize its split of any revenue.

In general, Sony would negotiate hard on such deals, knowing that it risks angering theater owners who expect to get such releases first and to have long windows before they are released on video. Sony still needs these theater owners to secure screens for its blockbuster releases.

For now, then, you can expect Sony and just about every other studio to keep doing business as they’ve always done and to keep fighting to keep things from changing too fast. The future of digital movie distribution will get here, eventually, but nothing that happened last week will accelerate the incremental pace of change

But if The Interview’s relative success doesn’t provoke studios to approach distribution windowing for big budget films any differently, then perhaps they will respond to the real game changer that is about to seemingly come out of nowhere: virtual reality.

James Cameron might not like or understand it, but his upcoming Avatar sequels have been shot to accomodate viewing on Oculus Rift and so will everything else once there is mass adaption of virtual reality and gesture control technologies. It’s already beginning: there is a race on between Sony and Facebook (with Microsoft dropping hints about making its own version) to produce an affordable device that will be the iPhone of virtual reality headsets.

How far away is virtual reality from creating a significant cultural digital disruption? Closer than most realize. University film students are now being taught how to adapt new technologies for filmmaking and use platforms, like Unity, to tell stories that are immersive and interactive. Both up-and-coming and established filmmakers are now actively contributing to developing new forms of content and storytelling for this emerging medium.

The world won’t be waiting until 2016, ’17 & ’18 for another three rounds of CGI’d pretty-blue-alien-cat-people ripping off Dances with Wolves and Fern Gully, (amongst others), to get a face full of possibly slightly less shitty 3D effects. No. The reality is, Hollywood studios are going to have a lot to compete with when everyone owns their own version of a holodeck, especially considering that studios are already driving their revenues with brand extensions in the gaming world — a booming industry that is increasingly focused upon delivering an individualized and rich storytelling experience.

Film studios have been slow to respond to the digital convergence of the naughty-aughties and evolving audience habits. However, sheer dollar signs will eventually motivate them to use their ability to take on greater risks than the small guys can in order to cash in on what’s coming. Some media analysts are simply unable to envision a day when major studios release films silmultaneously in theaters and on strategic digital channels as a matter of routine. It isn’t really a question of ‘if’ more traditional marketing and distribution models will cease being relevant for even the biggest studios. It is more like ‘when?’ Because the holodeck … it already exists.

The film and gaming worlds are truly combining to create an altogether novel storytelling and mass entertainment medium. The coming virtual reality revolution might just be what studios will eventually come to bank on, especially if the buzz from a major film shot for direct distribution and a release in virtual reality encourages uptake of the technology by mainstream audiences.