Yesterday I kept seeing the same article popping up on movie news-based websites all over the place. All of them talking about how Co-Chairman of Sony Pictures Entertainment, Inc., Amy Pascal, alluded to the idea Spider-Man 4 “could be” released in 3-D. Want to see what they are taking this information from? Here’s the exchange without any paraphrasing from the Forbes.com article headlined “Sony’s Chiefs On What’s Next For Movies“:
Are you considering doing any live action movies in 3-D? What about Spider-Man 4?
Pascal: Could be.
Lynton: People are paying a premium to see movies in 3-D and that’s a very big deal. It’s never been done before that someone says you have to pay more to see Spider-Man than a romantic comedy.
“Could be.” That’s it, there’s your news folks… Get excited!!! Oh, but wait, how about we read a little further, “People are paying a premium to see movies in 3-D and that’s a very big deal. It’s never been done before that someone says you have to pay more to see Spider-Man than a romantic comedy.” That comes from Sony’s other co-chair, Michael Lynton, and it isn’t the only thing he said in the Forbes interview that alluded to consumer price gouging. Let’s talk about the real news in this piece and see how much you care about Spider-Man 4 coming at you in the third dimension once we are done.
Before we address the fact a studio head has finally been honest about the reasoning behind why they are supporting this latest wave of 3-D films let’s look at a few of the other statements from the interview such as when Amy Pascal says theatrical returns are still holding up, but DVD is not: “The problem is the DVD market is down from where it was before,” she says. “Since we are very dependent on that as a studio, that is a problem for us.”
Pascal’s approach to the DVD problem is understandable, but Lynton takes it much further once Blu-ray is brought up:
Do you think DVD sales are down for good?
Lynton: What you see happening is that every time a new technology or means of distribution show up, about every decade or so, there’s an enormous growth in the business because there’s another way to exploit the library. We just went through one with DVD. Now we need the next one. I don’t mean to sound Pollyannaish but there’s always a next one.
There are a lot of concerns that if the next big thing is distribution over the Internet it will hurt revenue.
Lynton: I think DVD has been a real gold mine for a lot of reasons. You were selling a packaged good in a big mass market so you could make it huge. You were selling or renting a thing that people didn’t consume. You go to Blockbuster, rent five movies and only watch two. That’s a good business to be in. The potential problem with the Internet is that people are going to buy only what they watch and we are going to get paid only for what they watch. It may be a smaller window from a financial standpoint but it will be incremental to the windows we already have.
Do you think Blu-ray will make up for lost DVD revenue?
Lynton: That’s the hope, but I’m a little skeptical. The question is whether people will really replace their libraries. Plus it would appear there’s already price erosion in Blu-ray, so we’re not making the price point we originally hoped for. The entertainment industry at large has pretty much given away high definition to consumers. They haven’t really charged a premium for it on television. That makes consumers more likely to buy Blu-ray but less likely to pay a premium for it.
I don’t know how you feel when you read those three responses, but it really gets to me. Not because this is any kind of new information, but the fact what we already knew has now been confirmed and in such a brazenly candid way so as to say flat out, “We will exploit consumers any way we possibly can and get as much money as we feel they are willing to pay.” We all know this is how it works, but to see it in black-and-white and direct from the horse’s mouth cuts a little close.
EXPLOITATION:
Let’s look at the first response when asked if Lynton thought DVD sales were down for good. He replies by noting how new advances in technology are not a way to bring a better product to consumers, but yet another way to “exploit” their library, which really means another way of getting people to pay for something a second time, but it gets even better with a quote I could hardly believe when I read it, “The potential problem with the Internet is that people are going to buy only what they watch and we are going to get paid only for what they watch.”
Yup, Lynton considers it a “problem” for people to only pay for what they watch. How dare you not pay for more than you actually wanted to watch. This is the reason I believe Netflix is soon going to run into trouble with their Instant Play feature as cable providers won’t enjoy losing ground to a service in which you simply have access to a library of entertainment at your fingertips. I heard Netflix was trying to (or may have already secured) a deal with HBO where Instant Play subscribers could pay an additional fee and add HBO programming to their list of options. Isn’t this what all cable subscribers have been asking for for years? The ability to pay for only the channels they watch as opposed to hundreds of channels they will never even tune to?
DVD VS. BLU-RAY — WILL YOU PAY?:
Lynton next explores the “problem” with Blu-ray, which is people have become so used to getting high-definition along with standard definition television for no extra cost that they aren’t willing to pay more for it on Blu-ray even though they will buy Blu-ray as long as it is the same price as DVDs. “That makes consumers more likely to buy Blu-ray but less likely to pay a premium for it,” he says.
This is where I will give Lynton some slack since I have read it costs more than double to replicate a Blu-ray disc versus a DVD even though from what I understand the cost of Blu-ray replication is coming down. However, you could probably say this wasn’t a problem if studios didn’t charge so much for their DVDs in the first place considering it costs about $0.50 per DVD compared to what I understand to be in the ballpark of $1.30 for Blu-ray. Of course, these prices all depend on the size of your order.
A brief bit of online research also leads me to believe the replication costs of Blu-ray is causing smaller houses to have to abstain from taking advantage of the high-definition format as regulations such as mandatory AACS encryption licensing are hurting the potential of Blu-ray replication from ever dipping down to DVD prices. So, the fact Blu-rays cost so much means they are lording the price over what consumers are/were obviously willing to pay for DVDs, but there does seem to be a level to the insanity as $35 for a movie in high-definition compared to its $15-20 DVD counterpart just seems a bit silly, and I can’t blame anyone for thinking that way.
When I look at the whole DVD/Blu-ray conundrum currently facing studios I can’t help but place the blame squarely on their shoulders. If DVD windows weren’t so short the demand for these movies on home video would be much higher and the likelihood of getting more people into theaters as a result would be inevitable. Some people simply see what appears to be a mediocre trailer and just say, “I’ll wait for it to come out on DVD.” When that day is likely to be only three months away who could blame them? However, what if studios reverted back to old school windows and movies weren’t seen on the shelves for six months or even a year? Hmmmm, skipping a film and waiting doesn’t seem like such a great idea anymore and once that movie finally hits shelves it has been so long since most people saw it the demand would obviously be higher.
An attempt to curb piracy is obviously one of the major factors in DVD release windows, but what the studios ultimately did was cheapen the appearance of their product. They also do the same thing with every unrated edition they release on DVD. They are saying to the consumers, “The version we showed in theaters was crap, but on home video you get the real deal.” The consumer laps it up and says, “Thank you, I’ll remember that for the next time I see a PG-13 horror come to my cineplex.” Ticket sales lost, theater owners screwed and the quality of movies dwindles as gimmicks must be employed to get people back into theaters.
3-D FOR A PRICE:
Enter 3-D. A studio manufactured excitement and everyone is eating it up. Movie news sites clamor over the useless quote at the opening of this article regarding the potential Spider-Man 4 will be released in 3-D all while dismissing the comment immediately after it basically saying, Of course we will look at 3-D, people are willing to pay more for it. This acts as evidence showing studios are considering 3-D because it’s more expensive, not because it makes a better movie.
Based on this model I am surprised NBA teams don’t charge more when Kobe or Lebron are coming to town, or pitch the idea of saying the court is now equipped with additional lighting making for a much brighter and therefore better overall fan experience. The chances Kobe or Lebron have an off game doesn’t matter in this model just like it doesn’t matter if a 3-D movie is actually any good. It’s not like theaters are reimbursing ticket prices because the movie you saw was no good just as I don’t expect the NBA to offer money back should Lebron sit out because the playoffs are just around the corner, or on the off chance adding additional lighting doesn’t in fact make for a better fan experience. Who woulda thunk it?
In an effort to create a working example, let’s say Spider-Man 3 had been released in 3-D and let’s say the ticket mark-up was something like 20% per. Spider-Man 3 made just over $336 million domestically in 2007. In 2007 there were roughly 580 screens that showed Meet the Robinsons in 3-D so I will say of the $336 million Spider-Man 3 made in 2007, about 13% of that would have come from 3-D compatible screens. (Sorry, I have no way of converting the screen number to actual theaters, but I assume this number will be close enough.) This means we take $43.68 million and turn it into $52 million with our 20% mark-up.
Okay, a little less than $9 million is added so we aren’t talking about anything major in 2007. However, consider for a moment this past March Monsters vs. Aliens opened in 4,136 theaters, which equaled approximately 7,000 screens (including IMAX) and 2,100 of those screens were equipped with 3-D technology. Suddenly that $9 million bump is looking a bit bigger and should Spider-Man 4 make its way to theaters in 3-D on May 6, 2011 I would expect the number of theaters to be even higher, along with ticket prices… Say good-bye to Titanic‘s box-office record, the studios just found a way to topple the record books and it starts by pillaging your pocket book.
So you tell me, are you still excited about a potential Spider-Man 4 in 3-D? Does it add enough to your movie-going experience to justify an additional $3.50, $5.00 or $7.00 to your ticket price?
