Sunday, January 4, 2015

New Theatrical-To-Home Entertainment Windows Hold Steady For Third Straight Year

How do you talk, reasonably, about theatrical windows in an environment that seems hell-bent on making such “important” things largely irrelevant?   

On the surface there seems to be a certain degree of stability right now; an equilibrium.  For three years running the “window” between a “hit” film’s initial theatrical release and its subsequent debut as DVD and Blu-ray product offerings has been locked in at an average of 115.7 days.   

We finished 2014 with 115.5 days.   It was 116.1 days in 2013 and an average of 115.7 days in 2012.   Those numbers seem pretty stable.

Back when The DVD & Blu-ray Release Report was launched 17 years ago we needed to come up with a fancy term for this “window” between the theatrical market and the home entertainment arena.   The Asset Rollover Rate, or ARR, seemed like a pretty good shorthand, so that’s what it is … the ARR measures the time (in days) between when a hit film (a box office take in excess of $25 million) opens theatrically and then heads home as DVD and Blu-ray SKUs.

It is updated and monitored each week.   There’s an ARR chart in the report each week … it shows wild “seasonal” swings around a fairly stable annual trend line … at least for now.
Why $25 million?   Why that number?   There’s probably some really “smart” number out there, but this one seems to work.   To get to that level of box office performance a theatrical release needs three things.    

These are: 

1.     Sufficient screens to provide enough seats during a relatively small period of time to provide a platform for ticket sales.   A film must score reasonable numbers during the opening weekend to hold those seats … failure to do that means the film is shifted down the hall to a smaller seat venue.

2.     Sufficient theatre-goes must have a desire to see the film.   Word of mouth is a strong motivating factor.

3.     Sufficient advertising and PR support to drive consumers to their local multiplex during the opening weekend.  

It comes down to money, seats and acceptance to make a film a “hit” for the home entertainment market place.   It has nothing to do with a film’s budget.   Studio accounting is a mystery anyway … so don’t believe a word about profit and loss or critical acclaim as being the defining factors as to what makes a home entertainment release a hit.

If you look at the trend of the ARR averages over the past ten years for these “hit” theatrical releases, they have “stepped down” from 139.5 days to roughly 127 days (paused), then to 120 days (paused) and now to 115 days.  

DVD & Blu-ray Release Report, Ralph Tribbey

The ARR appears to be stable.   But, for how long will this detente last?   At what point to the studios once again squeeze the ARR down?   Is there a point where exhibitors begin to scream?   Is it 105 days?  90 days?   There must be a point where such a squeeze will start a war of survival.

Frankly, a case could be made that there is something of a death wish at play in the movie-making business these days.   The seeds being sown of shorting the ARR from over 130 days to 115 days — and perhaps to another step down ­— coupled with the steady erosion of theatre consumers (for various social and economic reasons), seems to be putting the so-called “Hollywood” studios into something of a box.   
DVD & Blu-ray Release Report, Ralph Tribbey 
The number of films generating the necessary $25 million threshold has dropped below the 100 mark for two years in a row.   Overall box office in 2014 was down sharply.   Are they letting an unreasonable love affair with the world of digital kill time-tested distributional models?   Will 2015 see more of the same; is this the so-called canary in the cage?   Cough, cough, choke … the beginning of a big, big problem?

Shorter windows and fewer hits … is there a cause and effect relationship?   If you expand viewing opportunities through various platforms — and then crush them all together into ever-shortening windows — are the studios creating an environment where consumer behavior is directed away from theatrical venues to the point where the definition of “hit” has to be completely redefined?

Theatrical hits have traditionally been the driving force of the home entertainment business.   The studios are the source for such hits.   It is their game, so let’s see how 2015 shapes up in terms of ARR averages and the total number of “hit” films.   If you look at these two components right now, the entertainment industry is teetering right on the edge.  

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