Mark Cuban and Todd Wagner, partners in 2929 Entertainment LP, are rattling the traditional movie distribution windows. And their strategy of harnessing HDTV technology to a “day and date” release is leaving theater exhibitors shaken, and TV executives stirred.
In denying theaters exclusivity, the company takes an all-in-the-family approach: 2929’s distribution arm Magnolia Pictures Inc. sends feature films from production unit HDNet Films to the HDNet Movie Channel, as well as 2929’s theater chain, Landmark Theatres. The company is also expected to announce simultaneous DVD release plans soon.
“Film’s visibility and marketing value declines over time. Day-and-date release, on the other hand, allows the content to be monetized when it has its greatest value, when marketing is fresh,” says Cuban, co-owner of 2929 and co-founder, chairman and president of HDNet.
That view has been lambasted by some people in high places. In a press release, National Association of Theatre Owners president John Fithian cautioned against “plundering” the “$25 billion plus worldwide theatrical window without a very solid assurance that even more DVD sales will make up for the lost theatrical revenues.”
Sony Pictures Classics president Tom Bernard, noting that indie product needs time to build, says “collapsed windows are the worst thing that ever happened to specialized films. Polluting the theatrical window is doom.”
Bob Berney, president of Home Box Office and New Line Cinema Corp. venture, Picturehouse, says Cuban’s approach is “wildly innovative and risky.”
And Matthew Duda, executive vice president of program acquisitions, planning and distribution for Showtime Networks Inc. sees geography working in favor of the “day-and-date” strategy: “It would probably make sense if viewers have available something on TV that’s not in their nearby theaters, giving them a kind of virtual arthouse in their living rooms.”
2929 has already tried the approach with two films. Its documentary Enron: The Smartest Guys in the Room and the recent HD terrorist drama The War Within played day and date in Landmark Theatres and on HDNet Movies.
Cuban says the strategy is financially sound: “No question about it. How many movies have you said you would buy when the DVD comes out and then never did because of the time lapse? With Bubble, we’re already selling soundtracks and will add DVDs when the movie is available in our Landmark Theatres this January.”
Bubble is the first of six low-budget HD features to emerge from a pact with director Steven Soderbergh.
Simultaneous with the theatrical, Bubble will run twice on HDNet Movie on its opening Friday night and, Cuban says, “that’s it. After that, it will spend time on the shelf.”
In another innovation, Cuban says that “we’ll share a percentage of the DVD revenues of HDNet Films with theater owners, who, if they played Enron, will get kickbacks from DVD sales.”
So what did Cuban learn from last spring’s simultaneous theatrical/TV release of Enron?
“If it’s a good movie like Enron, people want to go to the theater and see it. If they can’t, they love having the option of seeing the film on HDNet Movies. HDNet subscribers gave us rave reviews.”
According to Cuban, the simultaneous TV showing of Enron boosted theater traffic. “We only aired the movie twice opening night, so [some] people missed it. But they learned from friends or family how good it was, and then went to the theater.”
Cuban, who focuses on technology and the HD broadcast channels, and Wagner, who spearheads the day-and-date program, are not exactly Davids taking on the Goliaths.
Cuban also owns the Dallas Mavericks National Basketball Association franchise. Prior to that purchase, he and Wagner co-founded Broadcast.com, which was eventually sold to Yahoo! Inc. for $5.7 billion.
Wagner is currently co-owner and CEO of 2929 and served as CEO of Broadcast.com.
Their strategy for HDNet Movies and its sibling HDNet extends beyond the idea of collapsing windows.
“The average [Internet Movie Data Base] user rating of HDNet Movies is higher than those on HBO, Showtime, Encore and The Movie Channel,” Cuban says. “That’s because we have done a great job securing great movies.”
He adds: “HDNet Movies is the only movie channel where there are zero upconverts [movies converted from tape] and no movies shot on standard-definition digital video. No other movie channel has near the quality controls that we do. HD viewers are disappointed when they find upconverted programming or movies elsewhere. That never has or will happen on HDNet or HDNet Movies.”
The channels certainly have a growing number of HD competitors: major broadcast and cable networks like CBS, HBO, Fox, Turner Network Television and Discovery already offer HD strands. Other HD services include Universal HD, In Demand LLC’s INHD2 and Rainbow Media Holding’s package of 10 Voom HD Networks, which range from MonstersHD to visual-art-focused GalleryHD.
Rainbow is also looking at day-and-date release patterns. But while 2929 focuses on HDNet Movies, Rainbow is betting on success with a release of movies into video on demand and subscription VOD, simultaneous with premieres at Rainbow’s IFC Center in New York. A launch is planned for January.
Rainbow president and CEO Joshua Sapan agrees with some of Cuban’s opinions. “We believe from the heart and the pocket book that with these smaller films in particular, the incremental marketing and promotion associated with them will actually elevate box office,” he says.
Cuban calls Sapan “smart” but “wrong on this VOD thing. VOD is a good product but it’s been very much over sold.” And he obviously is still a big believer in theaters, which “will always have a bright future. People can get a severe case of cabin fever sitting at home watching TV, so they are still going to get out of the house.”
Unless the Mavericks are playing in HD on a 60-inch-plasma screen.