- The Washington Times - Saturday, January 21, 2006

LOS ANGELES

If you live in New Jersey, Virginia or Nevada and want to see the new Steven Soderbergh film “Bubble” in a theater, pack your bags. It won’t be showing in those or more than a dozen other states.

The country’s largest theater chains are snubbing the film because they object to its being sold on DVD and shown on cable TV the same day it debuts in a handful of theaters owned by the same company that produced the movie.

“Bubble” isn’t the first film to be released this way, but the combination of a high-profile director and the backing of maverick billionaires Todd Wagner and Mark Cuban has studios and theater owners paying close attention this time.

“It’s the biggest threat to the viability of the cinema industry today,” says John Fithian, president of the National Association of Theater Owners, about the so-called day-and-date release strategy.

The move comes as new technology is giving consumers faster access to music, movies, TV shows and other content via multiple devices, including laptop computers, portable video screens and even cell phones.

Theater owners have faced challenges from technology before, most notably television and the VCR. However, this is the first time major studios have contemplated releasing films in competing formats at the same time.

The low-budget “Bubble,” a murder mystery set in a doll factory, opens Friday and is the first of six films to be produced under a partnership between Mr. Soderbergh and 2929 Entertainment. Founded by Mr. Wagner and Mr. Cuban, the company owns Magnolia Pictures, which will distribute “Bubble” in partnership with Landmark Theaters and HDNet Movies, the cable TV channel that will air it.

All six films produced by the partnership will be released simultaneously on DVD, television and in theaters. “Bubble” will appear on DVD a few days after its theater and cable release.

Currently, studios carefully control the release of major motion pictures to maximize profits. Films are released first in theaters, then on pay-per-view, home video, pay cable networks such as HBO, and finally on broadcast TV.

The time between those windows has been shrinking, however. In 1994, the average time between a movie’s opening in theaters and its debut on home video was about six months. In 2004, that span fell to four months, with some studios releasing films on DVD even sooner.

A typical film earns about half its revenue from home video and about 25 percent from theaters. The remainder comes from selling the film to cable and broadcast TV and other sources.

Releasing DVDs sooner would let studios get more mileage from the millions of dollars spent marketing new movies.

Theater owners argue that people already are staying away from theaters because they don’t have to wait long for the DVD. Releasing discs the same day a movie debuts in megaplexes will shave theaters’ already thin profit margins, even if consumers have to pay a premium for the simultaneously released DVD.

Profit margins for theater chains generally run in the mid to low teens, according to Matthew Harrigan, an analyst with Janco Partners Inc. If studios began releasing films on DVD the same day as the theatrical release — an unlikely scenario, in his opinion — it would “completely collapse the domestic theatrical industry, and you would have a spate of bankruptcies.”

Media companies say they have to adapt to the changing demands of consumers, who have shown a desire to download entertainment from ITunes and other online services.

Some TV shows, for instance, are being sold online the day after they air. Some shows on the FX Channel are available even before broadcast.

Two weeks ago, News Corp. President and Chief Operating Officer Peter Chernin said his company would soon start releasing films in high-definition formats 60 days after theatrical release.

Speaking at the Consumer Electronics Show in Las Vegas, Mr. Chernin said News Corp.’s Twentieth Century Fox had not yet determined whether the high-definition releases would be via cable, satellite or on a disc.

Last week, Tom Staggs, chief financial officer of the Walt Disney Co., reiterated that company’s position that all options are on the table when it comes to the traditional window release strategy. However, Mr. Staggs also said Disney still respects the role of theaters.

“We’re not predicting ‘day and date’ is going to happen tomorrow for a majority of films — or even pushing for that to happen,” Mr. Staggs said during an appearance at an investment conference. “But what we will do is experiment with what works for consumers.”

Though large-event movies such as “King Kong” may work best on the big screen, simultaneous release could be beneficial for small independent films that often struggle for an audience while blockbusters hog theater screens.

Rainbow Media, a division of Cablevision, plans to release 18 to 24 films a year via video-on-demand on cable TV systems at the same time they debut in theaters.

The idea, executives say, is to create a “virtual art house” at a time when the theatrical market for smaller films is shrinking.

“For us, it’s not meant to make trouble,” says Joshua Sapan, president and CEO of Rainbow Media. “We think [the films] will do better in the theaters if there is more buzz around it, even if it’s available on television.”

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