Lesson 7 Lecture & Discussion
Off the Set

Delivering the Product: Exploitation Windows

When television, the first challenge to movies, arrived in the early 1950s, the studio moguls of the Golden Age—many of whom had started as exhibitors—rebelled. None of them saw that TV was just another potentially profitable means of distribution for the product their studios produced. Therefore, outsiders who did understand this soon took control of the classic Hollywood studios.

When VHS videotape recorders became accessible in the late 1970s and early 1980s, corporate Hollywood’s reaction was almost as fearful. The studios sued Sony (and lost). But, at the same time, they began releasing videotapes of new and classic films from their libraries. They priced them so high, however, that the video industry developed as a rental system.

By the time the DVD-Video standard was being discussed in the mid-1990s, Hollywood was a lot smarter about media. They were painfully aware at that time that more than half their revenue was coming not from movie theater ticket sales but from tape rentals. They lobbied the DVD companies (Sony, Philips, Toshiba, and others) to include copy protection and region coding in the DVD specification, and succeeded. They also decided to price DVDs low enough to create a "sell-through" market in which more of the revenue flowed to them, not to the retailers.

It had taken Hollywood businesspeople only 40 years to figure out that they were not in the exhibition business, but in the business of selling a product―by any means possible! Better late than never.

Hollywood’s theatrical admissions peaked in 1946, just before television hit the scene. For almost 60 years, this colorful, vibrant industry has been relying on technologies developed entirely outside of Hollywood for a significant portion of its revenue. It seems the studios should be paying Sony and Philips an annual homage fee in the neighborhood of $1 billion. Where would feature films be without the new technologies?

IFC Films' My Big Fat Greek Wedding and Disney/Pixar's Finding Nemo are two movies that found massive success through two entirely different routes of promtion and distribution.

In the old days, once a Paramount film was finished and ready to go out, it was scheduled for Paramount theaters. The most difficult question the distributing staff had to answer was what the second feature on the double-feature bill would be. That all changed with the consent decree of 1948, divorcing the exhibition chains from their studio parents.

Today, distribution scheduling is a highly refined craft, comparable to network television programming. The first question when deciding to release a film is what season to choose. Films aimed at the adolescent target audience are focused on the summer, Christmas, and spring break, in that order. During the holes in the rest of the year, you have a chance with an adult film.

The second question is what are other studios doing? It is crucial not to compete with too strong an entry. During the last 20 years, as box-office grosses have become featured on television and in newspapers, the opening weekend number can be a make-or-break report. If you aren’t the winner this weekend, your only hope is building word of mouth. That, and hoping that exhibitors don’t oust you immediately with their Next Big Thing.

Thirty years ago, films were much more likely to be introduced slowly, with an initial showing in major cities, followed by expanded showings in other cities. Word of mouth had time to develop. Occasionally, this approach is still effective, as in the case of My Big Fat Greek Wedding (2002), a small film that turned into a word-of-mouth-driven juggernaut. Generally, though, when a studio commits a gazillion dollars to a national television advertising budget, the film had best be available in every possible city, on every possible screen (which also means a lot more money spent on prints). The current game is make-or-break.

But even so, film studios shouldn’t worry too much. Provided they haven’t overspent on production, even if the film tanks in the domestic box office, it may still break even with foreign sales, VHS and DVD sales, and cable and broadcast television deals. These are the major distribution windows. Fifty years ago, a film made what it made at the box office. Today, it has five other chances to make a buck. And, as time goes on, those other distribution windows become more and more significant. It is possible there will come a time when certain films will earn out simply from DVD sales, avoiding the theatrical box office entirely. That would be an interesting turn of events.


Please post your responses to the following questions on the class message board.

  1. Do you have a favorite recent special effect? Please describe it.
  2. Clearly, movie theaters have been losing market share for 50 years. What do you think exhibitors could do to reverse that trend?