How ‘The Interview’s’ VOD grosses could change the game

LOS ANGELES — Sony appears to have a win-win with “The Interview.” Not only did the studio score a moral victory by releasing the film in the face of hacker threats, the movie made at least $15 million from more than 2 million digital rentals and purchases in its first four days.

On Friday, it seemed unlikely we’d ever know if the simultaneous — or “day and date” — strategy paid off. Now, it’s tempting to suggest this may be the start of a brave new world of distribution. Add in the $2.8 million from “The Interview’s” limited theatrical release and things aren’t looking so bleak for the Seth Rogen-James Franco R-rated comedy.

But the story is far from over and many are divided about its outcome. For some, “The Interview’s” impressive video-on-demand (VOD) performance is an anomaly. For others, it signals a revolution.

“It’s a huge number and it’s one that is probably making the other studios salivate,” said Jeff Bock, a senior box office analyst for Exhibitor Relations. “Now there is something to put on the bulletin board that says, ‘Yes, VOD is definitely a viable option.’”

But one might also post on the bulletin board that it’s standard industry practice not to release VOD figures. That’s why the public only hears about them when they’re good. For instance, 2011’s “Bridesmaids,” which had already been released theatrically, made $24 million from VOD in four months, allowing Universal to declare it the most popular VOD release of all time. But how many VOD bombs have there been?

Also, if Sony hadn’t been hacked and this film wasn’t pushed to the centre of a national conversation, it could have easily made $20 million to $25 million on opening weekend — not unlike “Pineapple Express,” a similarly raunchy R-rated comedy starring Rogen and Franco. This would have come far closer than VOD did to paying off “The Interview’s” $40 million production budget and roughly $10 million marketing cost.

Historically, the movies that have prospered with a simultaneous theatrical and VOD release have been the ones with the smaller budgets, destined for art houses and independent theatre chains.

For example, J.C. Chandor’s Wall Street thriller “Margin Call,” a $3.5 million movie that Lionsgate and Roadside Attractions acquired for $1 million, was released in theatres and on demand in the fall of 2011 and picked up around $5.4 million from theatrical and another $5 million from VOD. Magnolia, IFC and Radius-TWC have all had similar success stories.

On the other hand, the major studios haven’t had the option to even test day-and-date strategies because it would jeopardize the 90-day release window required by big exhibitor chains. In 2011, Universal tried to release their Ben Stiller comedy “Tower Heist” on VOD for $59.99 just three weeks after its theatrical opening, but theatre owners balked and chains like Cinemark threatened to cancel their showings. Universal ended up scrapping the plan.

Sony, meanwhile, only started pursuing digital options after the major theatre chains dropped the film following hacker threats to blow up theatres.

In addition, many exceptional conditions factored into “The Interview’s” first weekend. It became an unlikely event movie, and seeing “The Interview” was akin to asserting one’s freedom of speech. That’s buzz you can’t buy.

“We don’t want to be told what we can and cannot watch,” said Rentrak’s senior media analyst Paul Dergarabedian.

That also applies to underage teen audiences, who were suddenly able to easily and affordably access an R-rated movie.

Bock thinks that even when the extraordinary, awareness-boosting events surrounding “The Interview” are taken into account, the film’s hybrid opening still has the potential to change everything, even if it takes years.

“The truth is, the VOD obliterated the theatrical,” said Bock. “When you think about what the real future of distributing films is, it’s got to be as easy as one click. If that’s as quickly as you can get money from people, well, the studios are going to listen. It’s just economics.”

Others, like Dergarabedian, believe the old model will prevail, but with VOD growth.

“I think 2015 is going to be the biggest box office year ever in theatres and that’ll have a ripple effect in VOD. The VOD space benefits from movies doing well in the theatres,” he said.

But years down the line, this case will not be forgotten, especially if Sony continues releasing its digital numbers, including “The Interview’s” second-week performance. While it’s unlikely that we’ll ever get a day-and-date release of a Marvel blockbuster, a $25 million comedy, drama or rom-com could now become fair game, no matter how uncomfortable it may be for theatre owners.