One of the great sacred cows of the movie business has been the theatrical release window. First a movie is only in theatrical release. Then there may be a period where it is only on DVD. And finally it may be everywhere including various online options. Over the years the theatrical release window has compressed as described for instance in this 2009 Wharton piece. But it still exists and I believe is a major contributor to piracy. Maintaining a theatrical release window is really the perfect example of imposing artificial scarcity.
So can we imagine a movie business where movies are available simultaneously with the theatrical release as high quality streaming and download options? Can studios make enough money to finance the films? And, can movie theaters make enough money to cover their fixed overhead?
There really seem to be only arguments for why this won’t ever work. First, is the claim that as soon as high quality digital options become available illegal downloads really increase. Second, is the notion that people will prefer to see movies at home over coming to the theater. But there are a great many arguments as to why this won’t be the end of the world. Here are just some that I can think of from the top of my head:
The current degree of illegal downloading is higher than it would be if legal copies were readily accessible at a reasonable price. Eliminating the theatrical release window would likely reduce not increase illegal downloads.
Revenues from product placement and merchandising are becoming much more important and increase with reach. Simultaneous digital availability will increase reach.
Digital availability increases discovery and exposure which may result in people seeing the movie in a movie theater who would not otherwise have done so.
In theater can offer things that will never be available at home. That can mean gigantic screens and extraordinary sound (e.g. IMAX) for some kinds of movies. But it can also mean enjoying a movie together with others.
Eliminating the theatrical release window will force movie theaters to compete on the quality of the experience. This will mean better food, reserved seating and other service innovation – for instance, stick around to discuss the movie.
With digital availability we might also see innovation in who operates movie theaters to begin with and how they operate. Showing a larger variety of movies and balancing screens based on actual demand becomes much easier in that world. This might actually reverse the Gigaplex trend and make smaller theaters competitive again.
Altogether I am convinced that doing away with release windows would actually result in a net improvement across the board. I suspect the pattern here will be similar to what we have experienced with previous technology-driven changes in the movie industry which went from being feared to being celebrated.
P.S. The arguments above are happily devoid of data. First, it’s hard to find relevant data as much of it is closely guarded by the movie industry. Second, estimating where a new equilibrium might be based on data from the current situation is likely to be impossible. This is a case where we won’t truly know until we get there.
