Nontheatrical Distribution and Exhibition in the Motion Picture Industry

windows the series of exhibition points for audiovisual products through which revenues are generated

Theatrical distribution is the pad that launches a film toward many other exhibition locations. As we have noted in earlier chapters, different types of exhibition points are known as windows. The importance of theaters as a movie's first window explains why distributors pay a lot of attention to marketing movies when they are first released to theaters, and why distribution executives must maintain good relationships with their counterparts in the theater business. When it comes to making money off the movies, though, a number of other windows are terribly important. They include video stores and television exhibition of different sorts.

Traditional and Online Video Stores

sell-through outlets stores in which consumers buy the videos rather than just renting them

rental outlets companies that purchase releases from film distributors and then rent them on a pay-per-day basis to individual customers

During the course of a single year, the money that movie distributors receive from the sale of home videocassettes (VHS) and DVDs of their movies exceeds the revenues they receive from theatrical showings. Videocassettes are actually a dying medium from the standpoint of commercial sales. Consider that in 2003 Americans spent about $4 billion on VHS rentals and $6.2 billion on VHS sales; in 2008 the amounts were $21 million and $45 million, respectively. DVDs are taking the place of VHS, With digital downloads of films beginning to pick up steam. In 2008, Americans spent $8.1 billion on DVD rentals and $15.8 billion on purchases.

Generally, the movies that have done well in theaters are also the ones that do well in video and DVD. There are important exceptions, though. Children's films and some types of horror films may have lackluster theatrical distribution but bring in enough money in video and DVD to justify the production. Revenues from home video come from two sources: sell-through outlets and rental outlets.

Sell-through outlets are stores in which consumers buy the videos rather than just renting them. Some stores such as Blockbuster, Target, and Wal-Mart sell videos in physical locations as well as online. Amazon (http://www.amazon.com) is an example of an online-only video store.

Rental outlets are companies that purchase releases from movie distributors and then rent them to individual customers on a pay-per-day basis. The traditional way to carry this out is to go to a physical (“brick-and-mortar”) store such as one in the Blockbuster chain and pay to take out the film for a number of days; bringing it back late means paying for the extra days. In recent years, the rental business has seen the growth of subscription services, in which a person pays to be a member and then gets to take out a certain number of DVDs for any length of time. There are no late fees, but subscribers can only take out more DVDs if they return the ones they Ve currently checked out. In the model popularized by Netflix, a person signs up online and both receives and returns the DVDs by mail, with Netflix paying the postage. Seeing a competitive threat, Blockbuster went a step further. It allows subscription customers to return the DVDs either by mail or to its stores. An even newer model, threatening both Netflix and Blockbuster, has been pioneered by Rebox. That com­pany has made deals with stores such as 7-Eleven, McDonald's, and Barnes & Noble to place vending machines in or near the stores so that you can rent a DVD directly from the machine using a credit card. If you are looking for a particular film, you can go online to find out which redbox machine in your area (if any) has it, and you can reserve it. After viewing, you can return the DVD to any redbox.

The growth of broadband internet in American homes led some online firms to offer downloadable or streaming movies for rent. (You get to keep movies you download; streaming movies disappear after viewing.) They do it with the permission of the distributors and with digital rights management (DRM) software to prevent wholesale copying. Sites that allow one form or another of downloading include biggies iTunes, Amazon, and Netflix, but also smaller players such as CinemaNow, Vongo, ifilm, Movielink, Movieflix, and AtomFilms. Those who pay for the films can watch them on computers, on TV sets that can be connected to the internet, or even on so-called smartphones such as the iPhone.

CULTURE TODAY AVATAR AND SMOKE-FREE MOVIES

James Cameron’s recent blockbuster mega-hit, Avatar, has suffered from no shortage of media attention. The film was the highest-grossing film of all time in North America, raking in more than $2 billion at the box office. Avatar also received wide critical acclaim, garnering Academy Award nominations for Best Picture and Best Director, among others.

Not all reaction has been positive, however, as some critics have voiced concern over whether the film had anti-American, anti-capitalist, anti-monotheistic, or antimilitary themes. Others have questioned the film’s depiction of environmental, racial, and indigenous issues. The element of the film that perhaps generated the most controversy, however, was a seemingly throwaway line in the film, when Sigourney Weaver’s Dr. Grace Augustine asks, “Where’s my damn cigarette?”

The Smoke-Free Movies campaign condemned the line and the portrayal of Weaver’s character as a smok­er, stating that the line acted as nearly $50 million in free advertising for the tobacco industry. According to Smoke-Free Movies, the portrayal of Weaver’s character as a smoker should warrant the film an R rating by the Motion Picture Association of America, as opposed to the PG-13 it received.

The attack is part of an overall push by Smoke-Free Movies to require almost all movies depicting smoking to garner at least an R rating. Though the MPAA currently takes into account use of tobacco and other drugs in determining a film’s ratings—as well as sex, violence, and profanity—tobacco use does not automatically garner a film an R rating. Citing evidence suggesting that smoking among adolescents is greatly influenced by depictions in film, Smoke-Free Movies argues that the use of a drug responsible for the deaths of nearly half a million Americans a year should have more bearing on a film’s ratings than the level of profanity, for instance.

Behind the debate lies the question of what role the MPAA should have in American society. In deter­mining what distinguishes a PG-13 film from an R film, the MPAA is determining what adolescents should be shielded from. Although the dangers of smoking are undeniable, is an automatic R rating for movies portraying tobacco use the appropriate mode of recourse? New York Times columnist A. O. Scott asks, what’s next? “What about guns? What about trans fats? What about beer and Styrofoam and high-fructose corn syrup?” What can be certain is that, as social norms evolve, the MPAA must be ready to evolve with them.

Sources: “‘Avatar’ Sinks ‘Titanic’ Record,” Newsday, February 4, 2010; Michael Cieply, “Ads to Protest Smoking in ‘Avatar’,” The New York Times, January 11, 2010; Michael Cieply, “Oscar Race: More Films, a Few Surprises,” The New York Times, February 3,2010; Dave Itzkoff, “ ‘Avatar’ Has a Little Something for Everyone with an Axe to Grind,” The International Herald Tribune, January 21, 2010; A. O. Scott, “This Article Is Not Yet Rated,” The New York Times, January 24,2010.