Two weeks since taking The Interview to online platforms in the US, Sony reported over $31 million in consumer revenues from its digital distribution (over 4.3m downloads) and $5m in cinema distribution.
Major US cinema chains like AMC and Regal decided not to screen the controversial movie on its original Christmas Day release date due to threats released by hackers. The Interview was released into 331 independently owned movie theatres on its first day, expanding to 361 on day two, onto 581 for the second week and back down to 492 for the third week.
After the major chains opted out of showing the film, Sony took the movie to the online video platforms, making online the main channel of distribution. The Interview became available to download in the US, as planned, on Christmas Day via YouTube, Google Play, Microsoft Xbox Video Store, and via a dedicated website supported by Kernel. The movie was priced at $5.99 for rental and $14.99 for retail (price does not depend on whether user choose SD or HD). The Interview had 2 million rental and retail transactions and $15million in consumer revenues in the first four days after the release, significantly higher than normal releases.
Additional platforms were added a week after. They included online stores (Amazon Instant Video store, Apple iTunes Store, PlayStation Store, and Vudu) and pay TV VOD stores by Comcast, TWC, DirectTV and Verizon. The Interview has become Sony Pictures’ top online movie of all time.
The film reportedly cost $44 million to make, with a similar marketing budget on top of this, and with total gross takings so far over $36 million (sales tax, the cinema’s share and the VOD platform cut needs to be deducted from this), Sony is partially on its way to recouping its initial investment in the movie but the results are far less than would be expected had the film had a normal theatrical release.
Sony had initially decided to cancel The Interview’s release entirely, but, after being heavily criticised in the media and by numerous public figures, the company reversed this decision. Due to the major cinema chains refusing to show the feature Sony decided to release the movie via independent cinemas and non-traditional distribution methods online; even launching a proprietary website to sell the film. The success of the online premiere of The Interview – over $15 million in the first four days and over $36 million in the first two full weeks - can be almost fully allocated to the hype in the media and word of mouth. IHS does not expect that the success of the online premiere of The Interview is a seismic shift in consumers’ consumption patterns of movies, rather a one-off event driven occurrence. The normal VOD figure for a similar release would be around $8-10m, which does at least prove that marketing and greater awareness do work in boosting revenues.
Based on released consumption data for the first four days, users preferred the rental business model over retail: 17% of transactions (336,000) were retail and 83% (1.64m) transactions were rental. IHS assumes that there are 1.7 people accessing a piece of content per 1 online transaction, which give us an audience of 3.4 million viewing The Interview in the first four days. The film opened in 331 cinemas and earned $1m on its first day, according to box office mojo. In its first full week, the film earned $2.8m, coming in 17th for the week. In its second full week, the film expanded into 561 theatres and earned a further $1.5m for a $5.6m gross in the first two weeks. The first week screen average was $7,726, which is at the lower end. The film has been compared to Team America in its subject matter, and that film earned $32.8m in cinemas back in 2004. The comedy pairing behind The Interview (Seth Rogan and James Franco) were more recently in Pineapple Express, which grossed $87.3m in 2008. The production budgets were fairly similar (around the $30m dollar mark for the two films compared to $44m for The Interview). The film could have been expected to match or exceed Pineapple Express’ box office gross in cinemas, which puts the $36m earned overall into some context.
The Top 100 films took an average of 89.6% of US box office revenues between 2008 and 2012, and the Top 50 took an average of 69%, and this is where the focus of attention is for cinema exhibitors. The films that lie outside this are earning very little at the box office, and may well be making most of their money in the VOD, streaming or home entertainment streams. The highest grossing films are the ones that cinemas are very keen to keep within the window, not to lose revenues to the drip feed of online streaming. Cinemas are investing significant amounts of money into new technologies and more attractive environments, specifically to play the types of tent pole films that fall within the Top 50 (hopefully at a premium), and the thought of losing revenues to VOD platforms and streaming services is an unwelcome one for exhibitors. However, the studios are aiming to maximise revenues over the lifetime of a title’s release and these two interests have seemed to be diverging in recent years. Exhibitors hope the added investment will convince studios that they remain the best place to launch a film.
The online release of The Interview is still limited to US and Canada but it is scheduled to be released in the UK and Ireland in early February. Sony is not currently planning to employ the same non-traditional distribution strategy in these countries and the movie will most probably reach online platforms following the normal windowing structure, 3 months after theatrical release.
The film is another example of a twin strategy of simultaneous online and cinema release, albeit a forced one, of which there are now a fair number. However, as with other examples, the exceptional nature of the film’s release and the advance publicity that it would be online mean that it cannot really serve as a true guide to the effects of collapsing windows. Other examples are often of very small films that are artificially bumped up by the publicity given to a simultaneous VOD release. If every film went to such a joint release in VOD and cinemas, this would be the norm and a title would receive no publicity for this fact alone.