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Friday, November 12, 2004 6:25:36 AM
By SARAH MCBRIDE
Staff Reporter of THE WALL STREET JOURNAL
Page B1
When a movie goes direct to DVD or TV, it's often Hollywood shorthand for a film so bad it can't get onto the big screen. But today, the DVD release of a new holiday movie starring Penelope Cruz and Susan Sarandon will be part of an experiment that may provide clues about how movies will be distributed in the future.
Nov. 12 marks the release date for producer Howard Rosenman's new independent film "Noel" on about 100 movie-theater screens throughout the country. But around the same time, it also will be available on disposable DVDs sold on Amazon.com. Later, on the Sunday after Thanksgiving, "Noel" will air on Time Warner Inc.'s TNT cable channel.
The DVD release comes with a hitch: The $4.99 disc will be coated with a chemical that makes the movie unplayable 48 hours after the package has been opened.
The point of the self-destructing discs? Producers of "Noel" hope they will help whip up preliminary buzz for the film, while preserving sales of a permanent DVD that will be released later.
Walt Disney Co. is using the same technology, known as Flexplay, on a trial basis in certain markets around the country, offering disposable versions of already-released movies for consumers who don't want the hassle of returning a rental DVD.
The multipronged release strategy for "Noel" is a small-scale test of a big idea that most of the Hollywood studios are mulling. Hoping to minimize piracy and maximize revenue, the studios are contemplating ways to release movies to theaters and homes simultaneously, perhaps at different price points. Several studios have actively pondered such a strategy, though no one has yet tried an experiment. And many players in the Hollywood ecosystem, such as theater owners, are worried about such an approach.
Such a move is a far cry from the traditional setup, in which studios try to squeeze as much money as they can from theatrical releases before sending a movie to other revenue-generating "windows." Videotape and DVD comes next in line, then pay-per-view television, premium TV channels and, finally, network TV. Moviemakers have long assumed that if a film goes to DVD right away, nobody would bother going to theaters to catch it.
That logic is shifting, especially as the industry confronts a rise in bootleg DVDs and illicit online movie trading. "We are looking at ways to get content into the home much sooner," says Mitch Singer, executive vice president for the digital policy group at Sony Pictures Entertainment, a unit of Japan's Sony Corp. "When we figure out a way to get content into the home securely, we'll consider new business models."
Selling a movie into the home on a pay-per-view basis around the same time it hits theaters is the most likely first change, once studios find a piracy-proof way to do it. The idea is to appeal to those who like to see new movies but can't make it to the theaters -- say, parents with young children. To maximize revenue and avoid cannibalizing box-office sales, studios would likely sell such movies at a high price -- perhaps the cost of six to eight adult movie tickets. But at that price, the movie would need to deliver the value of a big Hollywood blockbuster like "Spider-Man," not a modest independent film such as "Noel."
However studios expand distribution, they must tread delicately so they don't anger theater owners, who are already annoyed over how quickly DVDs come out. A few years ago, videos and DVDs weren't available for six months after a movie's theatrical release; now, it's closer to four.
"Obviously, at some point a shortened video and DVD market impacts theater admissions," says John Fithian, president of the National Association of Theater Owners. "I get lots of calls from concerned members."
Not surprisingly, "Noel" will be distributed to a limited number of movie screens around the country via a company called Slowhand Cinema Releasing. Some theater owners, however, are already upset about its simultaneous airing on TNT, as well as the disposable DVD release, say people close to the project.
Mr. Rosenman (of "Buffy the Vampire Slayer" fame) says the more places he releases his movie, the more sales he can generate, across all platforms. He acknowledges the film is "schmaltzy" and may not appeal to critics. So to get families to pour into theaters -- as he thinks they will -- he needs to cut through all of the holiday movie clutter. Says he: "How is my little movie going to chug along and break through?"
Starting next month, the disposable DVD version of "Noel" will be featured on Amazon.com Inc.'s home page. And moviegoers at 500 Regal theaters around the country will get a chance for a sneak preview: Minidiscs featuring a short clip of the movie will come free with the purchase of any large drink.
"It's going to feel like 'Noel' is everywhere," says Jeffrey Arnold, chairman and chief executive officer of the Atlanta-based Convex Group, which owns the North American distribution rights to the movie. Convex also owns Flexplay, the company that makes the disposable DVDs, as well as LidRock, the company that makes the mini compact discs and places them inside the transparent lids on soft-drink cups.
The move is a gamble for Convex, which hopes to convince studios to release their Oscar screeners onto Flexplay discs next year. Screeners are movies sent to members of the Academy of Motion Picture Arts and Sciences so they can vote on awards, and Flexplay's disposable DVDs could help cut the piracy that has been traced to the screeners in the past.
If the "Noel" release is successful, it could advance Flexplay's standing in Hollywood, but it could also ruffle enough feathers to kill any Oscar deal.
Write to Sarah McBride at sarah.mcbride@wsj.com
Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.
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