Paramount Pictures has reached an agreement with two theaters chains that will let the studio break an age-old ban on the early release of movies for home entertainment.
Under the deal with AMC Entertainment Holdings and Cineplex, two 2015 films will be available for online purchase 17 days after their distribution drops below 300 domestic theaters, Viacom's Paramount division said.
The accord seeks to address growing tension between film studios and theaters, which insist on an exclusive window of up to four months on average for showing new releases. With DVD sales in decline, Hollywood is eager to exploit internet spending on movies and streaming services such as Netflix, particularly by younger viewers.
"There is definitely a cultural dynamic with millennials," Rob Moore, Paramount's vice chairman, said in an interview. "The younger audiences tend to consume things quickly."
The two movies under the new distribution plan are horror films, which typically attract younger audiences and generate a majority of their ticket sales in the first four weeks of release. "Paranormal Activity: The Ghost Dimension" is set for release in theaters on Oct. 23 and "Scouts Guide to the Zombie Apocalypse" is out a week later.
Such films are ideal candidates for early home-video release, unlike blockbusters that continue to generate box-office revenue weeks after they open.
"The big tentpoles and family movies, they have a big theatrical release, there is never a moment when 'Mission Impossible' isn't available for sale," Mr. Moore said. "On a film like 'Paranormal Activity,' it does its $100 million in four weeks. For nine weeks there is no legitimate way to sell it."
Under the deal, the two cinema chains will get a share of the digital sales generated during the first 90 days of a theatrical run, proportional to their box-office shares. Films generate only about 1% of their box office when the screen-count falls below 300, Moore said. New movies can typically debut in 3,000 to 4,000 locations.
"We are pleased to be part of this effort to test an innovative film distribution model -– one that recognizes and entrenches the value of theatrical exhibition for all, while providing distributors the flexibility to tailor digital release plans to individual films," Ellis Jacob, CEO of Toronto-based Cineplex, said in the statement.
Patrick Corcoran, a spokesman for the National Association of Theatre Owners, said it will be up to other exhibitors to decide if they wanted to participate in the plan, which he called an "experiment."
Paramount is talking to other chains and is considering expanding the strategy to similar films it plans to release, Mr. Moore said.
The idea came from the studio's experience on "Hot Tub Time Machine 2," Moore said. The film was in theaters for five weeks.
~ Bloomberg News ~