Category Archives: Distributors

Sony Hackers Crossed A Line By Threatening Movie Theatres

The Interview Premiere

Though most of the entertainment industry and business world has been riveted to every breaking development of the Sony Pictures hack, we have purposely refrained from writing anything about it. That was until the perpetrators of the cybercrime threatened movie theatres showing an upcoming Sony film release with terrorist acts.

Yesterday morning, in what has become an almost daily ritual since news of the Sony hack first surfaced the group taking responsibility for the cyber attack, who call themselves the Guardians of Peace, sent an email which threatened:

“We will clearly show it to you at the very time and places “The Interview” be shown, including the premiere, how bitter fate those who seek fun in terror should be doomed to.”

The email went on to state that “The world will be full of fear” and referenced the 9/11 terrorist attacks in New York and Washington D.C. It suggested, in no uncertain terms, that moviegoers should stay away from movie theatres screening “The Interview” and those that live near such cinemas should evacuate their homes. No specific reason was given, however since the hack against Sony Pictures first occurred it has been widely speculated that North Korea might be responsible for the attack in retaliation for “The Interview”, a film Sony had scheduled to open Christmas day. The comedy featuring Seth Rogen and James Franco centers around a plan to assassinate North Korean leader Kim Jong-un.

As a media outlet focused on the motion picture exhibition and distribution industries we were among those who received the hacker’s daily emails. Over the past few weeks we could have used this site to dissect the notes of countless DCI meetings from the past ten years or even highlight the terms of Sony’s various virtual print fee (VPF) agreements, details of which were contained in the staggered distribution of Sony’s data. However, there is a reason such information was meant to be kept confidential and its publication serves no greater public need. As well, the commercial matters being discussed within such documents is ancient history and any interest in them would be purely academic at best. That our silence came with the advantage of not publicizing the hackers or their crime was an added bonus.

But when the perpetrators took aim at the general public, threatening innocent people in a venue this particular media outlet considers a place of secular worship, they crossed a line that even the most malicious hackers know to avoid. Virtual thievery in the anonymity of cyberspace gives victims the false sense they are not in direct danger of physical harm. Threatening terrorist acts upon specific people or places in a world still smarting from an endless string of such events panics a public with feelings of immediate personal danger. That’s what makes such threats so affective and why the Sony hackers’ intimidation of movie theatres is far more damaging than any of the data they leaked.

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Why We’ll Miss Nikki Rocco When She Retires As Universal’s Head of Distribution

Nikki Rocco

Nikki Rocco, President, of Domestic Distribution, Universal Pictures

Arriving at McCarran International Airport in Las Vegas for my return flight from CinemaCon last month I was greeted at the gate by a potpourri of industry professionals, as was to be expected. There were engineers and sales reps from manufactures such as QSC and Volfoni, studio distribution executives from the likes of Twentieth Century Fox and film buyers from exhibition chains both large and small.

Among this assemblage was Nikki Rocco, the president of domestic distribution at Universal Pictures, who at the time was using an iPad to work on something I could only assume must be very important. Earlier today Universal announced Rocco will retire at the end of 2014 after spending 47 years with the company, the last 18 as the first woman ever to head up distribution at a major studio.

Just three days before I watched Rocco walk CinemaCon attendees through Universal’s summer slate during the studio’s annual presentation of its upcoming releases. As I listened to Rocco skillfully introduce titles such as the raunchy comedy, “Neighbors”, Seth MacFarlane‘s “A Million Ways to Die in the West” and the James Brown biopic “Get On Up”, I was once again reminded just how talented and special she is as a person and an executive.

If spending nearly five decades at a single company wasn’t evidence enough to demonstrate just how special Rocco is, consider for a moment that the company at which she has spent her entire professional career is a movie studio. How many studio executives in senior management roles make it past the decade mark at just one company? Not very many. Especially ones that joined their studios as paid interns in 1967.

On top of that, Rocco has been able to survive as the head of distribution during several ownership and leadership changes at Universal. Seagrams purchased the studio the year before Rocco was named the head of distribution in 1996. This was after five trying years under the ownership of Matsushita Electric. In 2000 Universal was sold to Vivendi, a french water utility, transforming into Vivendi Universal. By 2004 Universal was sold again, this time to GE, which already owned NBC, the broadcast television network, thus creating NBCUniversal. Cable operator Comcast then bought a controlling share of NBCUniversal in 2011 and acquired the company outright in 2013.

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Disney To Release Sing-Along Version of “Frozen” In Theatres

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Walt Disney Studios may have struck upon an inventive way to squeeze more revenue from moviegoers who have already seen their latest animated feature, “Frozen”. Hoping to get fans of “Frozen” back into theatres for some repeat business, Disney is releasing a sing-along version of the film on 2,000 screens in North America on January 31st.

Select showings of “Frozen” will include a snowflake that bounces across on-screen lyrics, encouraging audiences to belt out some of the movie’s many songs. Disney’s latest animated film has already grossed USD $773 million dollars globally, and the “Frozen” soundtrack has occupied the number one spot on the Billboard 200 chart for three nonconsecutive weeks in January.

The sing-along concept seems like a natural extension of the “Frozen” release strategy. The music and songs for the film were written by Kristen Anderson-Lopez and Bobby Lopez, the husband and wife team behind such Broadway hits as “Avenue Q” and “The Book of Mormon”. The pair just earned a Best Original Song Oscar nomination for “Let It Go” one of the songs that appears in “Frozen”. Tunes from the movie have proven so popular that fans have flooded the Internet with videos featuring cover versions.

Every studio hopes for repeat viewings of their blockbuster films, however these days most movies don’t stick around as long as “Frozen” has to offer up such opportunities. I remember working as an intern in the public department of Twentieth Century Fox when “Home Alone” was released in 1990. It was a surprise hit and topped the box office for 12 straight weeks thanks to children who saw the movie multiple times. In the midst of its run Fox eve produced a television spot which featured moviegoers bragging about how many times they’d seen “Home Alone”.

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Paramount Reportedly Stops Delivery of Film Prints

35mm Film Platter

Well, it may finally have happened. Everyone working in any capacity of the motion picture industry knew the day would come when Hollywood studios would stop distributing their releases on 35-millimeter film prints. If Saturday’s story in the Los Angeles Times is to be believed, that day may finally have come.

More precisely, it came and went. According to the Times, who relied on anonymous sources identified as “theater industry executives”, Paramount Picture’s Oscar-nominated release “The Wolf of Wall Street” was distributed in North America solely in digital format, i.e. without the use of 35mm film prints.

That should finally answer the longstanding question which arises at every industry standards meeting or trade conference; Has any studio released a title in digital-only and, if not, what will be the first title for which no 35mm prints are distributed? That the answer should be “Wolf of Wall Street” is an irony likely not to be overlooked by many.

The movie is helmed by Martin Scorsese, a director who has been a longstanding advocate for the preservation of film. Arguably a poster child for film historians, Scorsese is often credited with having an encyclopedic knowledge of the medium. His 2011 film, “Hugo”, was an ode to F. W. Murnau and the early days of cinema.

Paramount’s move toward all-digital wide releases seems to have only affected the distribution of titles in the North American market. According to the Times, the studio will still be sending out film prints in international territories such as Europe and Latin America, where the conversion rates for digital cinema are not as high.

The National Association of Theatre Owners (NATO) estimates that over 90% of the 40,000+ screens in the United States have converted to digital. This is especially true of the big exhibition chains which were able to finance large scale, expensive digital cinema deployments over the last five to ten years.

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Universal Cancels “Tower Heist” Premium-VOD Test

Tower Heist Cast

Ben Stiller and Eddie Murphy Star In "Tower Heist"

Well that didn’t take long. Facing stiff opposition from exhibitors Universal Pictures has decided to scrap its plan of releasing “Tower Heist” on premium-video-on-demand three weeks after its November 4th release. The move comes a week after the studio originally announced its intentions to run a PVOD test in Atlanta and Portland which would make the film available to about 500,000 cable subscribers for USD$59.99.

No doubt the number of exhibitors willing to boycott the film outright had a great deal to do with the decision. Previously Cinemark, Emagine Theatres, Galaxy Theatres, Regency Theatres and an additional 50 screens owned by independent operators all publicly stated they would not be booking the film if Universal went ahead with the premium-VOD test. Then today National Amusements joined the list of exhibitors opting not to show “Tower Heist”. With 950 screens worldwide, National Amusements is one of the largest chains in the United. States. Bloomberg reported that of the 39,000 screens in the U.S., 12% were participating in the boycott.

If that figure directly corresponds to the drop in box office Universal could expect for “Tower Heist” then that’s significant. Given that it is predicted the film will make upwards of a USD $100 million or more, that could mean foregoing USD $12 million in receipts. It’s unlikely that Universal’s PVOD test would have brought in as much, even if the studio decided to roll it out nationwide. Try explaining that to talent whose contracts are tied to theatrical box office gross.

So earlier today Universal released a prepared statement reversing their decision to test PVOD with “Tower Heist”:

“Universal Pictures today announced that in response to a request from theater owners, it has decided to delay its planned premium home video on demand (PVOD) experiment. Universal continues to believe that the theater experience and a PVOD window are business models that can coincide and thrive and we look forward to working with our partners in exhibition to find a way to experiment in this area in the future.”

Before Universal’s original plan was made public, they reached out to key theater owners to inform them of their desire to release “Tower Heist” on PVOD. I’m not sure what came of these conversations or whether they were more of a warning to exhibitors rather than a request or negotiation. Jon Fithian, head of the National Association of Theatre Owners, who had been mum on Universal’s plans until today, referenced this ongoing dialogue in his response to the studios about-face:

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Universal Hopes “Tower Heist” Will Pass The Premium-VOD Test

Tower Heist

In what the Los Angeles Times called “an audacious move” earlier this week, Universal Pictures announced earlier this week that it would allow the Eddie Murphy action comedy “Tower Heist” to be shown via premium-video-on-demand three weeks after its November 4th release date. Naturally, if Universal finds premium-VOD to be profitable without gutting their theatrical box office receipts, you can bet every other studio will follow their lead.

Of course, exhibitors aren’t big fans of premium-VOD or shortening the theatrical window from its current 90-day average in any form. Their big fear is that patrons will be accustomed to simply wait for a movie to be available at home rather than head to the theater not only lowering attendance but also permanently damaging concession sales.

The biggest downside of Universal’s plan, besides ticking off exhibitors, is the whopping USD $59.99 cost of screening “Tower Heist” in the comfort of your own home. During a time when news reports have the world headed toward another recession that kind of price might cripple sales. After all, USD $60 is roughly the price of six tickets on average at a movie theater.

However, it is tough economic times in the first place that is causing the movie industry to experiment with premium-VOD as they try to replace sagging DVD sales. But you probably already know that. In fact, you probably also know that theater owners will be just a angry about Universal’s current plans as they were this spring when the studio, along with three others, struck a deal with satellite television provider DirecTV to make a handful of titles available for premium-VOD 60 days after theatrical release for USD $29.99.

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Odeon, Italy and AMC Reach Deal With Disney On “Alice”

Alice In Wonderland - Alice.jpgExecutives at Walt Disney Studios must be breathing a huge sigh of relief having reached a deal with Odeon Cinemas in the United Kingdom and Italian exhibitors to show their upcoming tentpole release “Alice In Wonderland”. Additionally, Disney reached an accord with AMC Theatres to show the Tim Burton helmed film in North America when it is released on March 5th.

After announcing their plans to release “Alice In Wonderland” on DVD in June, just three months after its theatrical release rather than the usual four months, Odeon, the U.K.’s largest cinema chain, publicly threatened to boycott the film. So did exhibitors in Italy. AMC never made any public statements about a boycott, but delayed signing any agreement to show the film. Most of the details about the agreements were kept private by both parties, but according to a story in Variety, here is what we know:

  • In the U.K. Disney will not begin advertising the DVD until six to eight weeks after the film hits theatres.
  • In Italy, Disney will release three big movies during the summer, rather than waiting until fall. Traditionally, the summer box office grosses have been tepid compared with those in autumn. “Prince of Persia: The Sands of Time” will open on August 20th, while “Toy Story 3″ and “The Sorcerer’s Apprentice” will also open have summer playdates.
  • Disney has extended the release of “Alice In Wonderland” on DVD from 12 weeksafter its theatrical to 13.

In the U.K., assurances were given that the studio won’t begin advertising for the DVD until six or eight weeks after the theatrical bow. It’s likely that exhibs elsewhere asked for the same terms.
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A Recap Of Disney’s Adventures With “Alice”

Alice In Wonderland.jpgSurely Walt Disney Studios was hoping their upcoming release “Alice In Wonderland” would generate a lot of media attention before it hits theatres on March 5th, though they probably weren’t trying to create the kind of buzz the picture received over this past week. Theatre owners in North America and Europe protested when the studio announced it would move up the DVD release of the movie to early June, just three months after Tim Burton’s adaptation of Lewis Carroll’s classic is distributed theatrically.

The announcement was made on February 8th by Disney’s CEO, Bob Iger, during an earnings call and seemed to come as a surprise to many. A surprising number of newspapers, websites and radio shows beginning running numerous stories about the dispute just two days later and through the course of last week. In fact, the Los Angeles Times managed to sum up the latest battle over movie release windows rather nicely:

The flare-up illustrates how an arcane topic once only of interest to Hollywood executives can affect moviegoers around the world.

The L.A. Times, along with The Wrap, touched on the fact that studios have been meeting with key North American exhibitors (probably Regal Cinemas, AMC Theatres and Cinemark) to negotiate a deal on shortening theatrical release windows. These meetings weren’t done surreptitiously. In January John Fithian, President of the National Association of Theatre Owners, told attendees of the International Cinema Technology Association’s tech conference that theatrical windows would be changing to help studios maximize revenues from home releases:

“As a person who represents the cinema industry I’m not going to tell you that we’re very happy that that model is going to change, but it has to. But it has to change logically and it has to change with studios and exhibitors sitting down together and analyzing the models. It’s not a great secret, this is happening. Leading studio executives, leading cinema representatives are talking about what these models should look like. The good news is we’re all at the table talking. That’s much better and much more cooperative than if studio x decided just to abandon the model and release a major picture in the cinema and in the home roughly at the same time. That’s not going to happen. What’s going to happen is some scientific thinking and some research and a deliberative process to maximize the model for the studios without killing the model for exhibition.”

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A Comprehensive Review of Paramount’s Direct-To-Exhibitor VPF Agreement

Since January 22nd, when Paramount Pictures announced their plan to offer virtual print fees directly to exhibitors, the news has been a frequent topic of conversation throughout the exhibition community.  It didn’t take long before a copy of the agreement began circulating through the industry, in large part thanks to the National Association of Theatre Owners.  With this year’s ShoWest less than a month away there is no better time to review the agreement in detail.

For those who have not seen a copy of the agreement, which is in draft form, it can be viewed on this post and downloaded here.  The first thing to take note of is that the document isn’t the size of a phonebook.  While many integrators VPF agreements can be upwards of 100 pages long, Paramount’s direct-to-exhibitor VPF is only 21 pages.  And just because the document is a draft of the agreement an exhibitor will ultimately sign doesn’t mean it’s going to expand.  After all, it’s not as if Paramount will be entering a brand new relationship with a highly leveraged third party.  The studio is entering an agreement with the same exhibitors they’ve been doing  business with for decades.

The agreement has 24 sections, one schedule and two exhibits.  Keeping in mind that I am not a lawyer, nor do I pretend to be, I’ll review each section pointing out some of the more pertinent bits and what they might mean for an exhibitor.  Some of the sections are standard boilerplate and will not be covered in as much detail.

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Lionsgate Goes Mobile With Webalo

Example of box office figures delivered via Webalo

Example of box office figures delivered via Webalo

While it may not be the Hollywood-way, I’m always glad to hear about a longtime friends’ success.  That’s one way of saying I need to offer a full disclosure for this post.  You see, Rob Edenzon has been an acquaintance for ten years now, since joining the board of directors at FilmStew, a web startup I helped found before the dot com bubble burst.  Now Rob is the vice president of sales at Webalo, a technology company that helps format and deliver software applications and enterprise business data to mobile devices.

For some time now Rob has been telling me about Webalo’s contract with specific television networks to deliver detailed overnight Nielsen rating spreadsheets to their employee’s Blackberries, while at the same time expressing a desire to offer box office grosses to studio executives on their own mobile gadgets.  Well, his wishes came true on Wedensday as Webalo announced a deal with Lionsgate to deliver “live” box office figures to the smartphones of the studio’s top executives.  What’s interesting to me is that the box office figures are coming not from aggregators such as Nielsen EDI or Rentrak, but instead from Lionsgate’s own internal SAP systems.  Though, on second thought, the press release (warning: PDF) announcing the agreement didn’t say whether the box office figures were flash grosses or audited reports and if they are the former, then I wouldn’t be shocked if they were coming from an aggregator.

It must not have been hard to convince Lionsgate to try out the technology.  Webalo’s offering is pretty much a turnkey solution with a web interface that enables IT managers to quickly reformat reports for mobile phones (mostly Blackberries) on the fly.  Read More »