NATO rejects Iger's call for squeezed windows
NATO chief rejects Iger's call for squeezed windows
Aug 19, 2005
In a direct rebuke to Robert Iger, who is about to take over as CEO of the Walt Disney Co., National Association of Theatre Owners president John Fithian said Thursday that compressing theatrical and home video windows is no solution to the current theatrical slump. Instead, he blamed movies that have been "not so good" as last year's for this year's perceived problems at the boxoffice.
Fithian's fiery broadside referred to remarks that Iger made this month during the firm's third-quarter conference call. Speaking to analysts and the media, Iger said the recent weakened performances in the theatrical and DVD windows should be seen as a "wake-up call" and that the industry should consider compressing windows, moving closer to the simultaneous release of theatrical films and videos.
Speaking for many theater owners who are tired of shouldering some of the blame for the boxoffice malaise, Fithian said that compressing windows "to placate this instant-everywhere appetite" would result in a world with "no viable movie theater industry ... at least not a theater industry devoted to the entertainment products of Hollywood.
"(Iger) should know that Hollywood studios would be merely one shriveled vendor among many in that new world of movies-as-commodities-only," he added.
The exhibition industry has been under attack this year for contributing to the decline in movie attendance. Pundits have cited exhibitors' pumped-up onscreen advertising, rising ticket prices and rude patrons as primary reasons moviegoers are staying home. Tired of being the brunt of such criticism, Fithian, speaking for the theater owners he represents, said: "I'm not sure who was asleep, but it wasn't the exhibition industry. Here's what we know about 2005: The movies are not as good. They're not terrible; they're just not as good. And so the industry has experienced a temporary drop-off compared to 2004, the biggest boxoffice year in movie history."
Neither Iger nor Disney chose to respond to Fithian's comments.
"Windows in general need to change," said Iger, Disney's CEO-elect, during the earnings call. "They need to compress. I don't think it's out of the question that a DVD can be released in effect in the same window as a theatrical release. Although I'm sure we will get a fair amount of push-back on this from the industry, it's not out of the question. I think that all the old rules should be called into question because the rules in terms of consumption have changed so dramatically."
It's not yet clear whether Iger, who formally takes over as Disney CEO on Sept. 30, will lead the company in that direction. To date, Disney has not taken any steps toward pursuing such a radical shift in business plans. In fact, the company holds steady with window averages that closely match industry averages. In 2004, the Burbank-based entity held to a four-month, 19-day average between its theatrical and DVD releases. The industry average for 2004 was four months, 16 days.
While no major exhibitor has suggested taking aggressive action against Disney based on Iger's comments, theater owners in the past have shown tremendous resistance to anyone who advocates a compressed windows strategy.
Mark Cuban and Todd Wagner's 2929 Entertainment has faced a serious backlash from the exhibition community since it said in April that it would produce and release six Steven Soderbergh films simultaneously across the theatrical, home video and cable platforms. Top exhibitors including Regal Entertainment Group, AMC Theatres, Loews Cineplex and Cinemark USA have declined to play films with simultaneous release in the home market (HR 5/27).
But no major studio has yet to introduce such an initiative, though many in the industry believe it's just a matter of time until a major attempts such an experiment with the hopes that launching simultaneously will reduce marketing costs and maximize profits across the various platforms.
Fithian questions the premise.
"DVDs that sell well benefit enormously from the advertising platform and national conversation generated by theatrical release," he said. "Does it really make good business sense to plunder that $25 billion-plus worldwide theatrical window without a very solid assurance that even more DVD sales will make up for the lost theatrical revenue?"
Fithian questioned whether those who support such a strategy have taken into account that consumers' DVD libraries might in fact be reaching the saturation point and that consumers' interest in purchasing DVDs at such a speedy clip will decline. In recent weeks, DreamWorks and Pixar have reported lower earnings based on weaker-than-expected DVD sales.
Fithian even questioned the entire notion of the boxoffice slump. "Factor out last year's big-grossing specialty surprises 'The Passion of the Christ' and 'Fahrenheit 9/11' and add in the fact that there are fewer wide general releases this year and the alleged industry 'slump' disappears," he said.
In terms of wide releases -- films released in more than 1,000 theaters -- this year has seen four fewer than were distributed at this point in 2004.
The year-to-date gross total for this year stands at $5.57 billion compared with the $6.05 billion that had registered at this point in 2004. But of that $6.05 billion, $489.4 million was generated by the two indie phenoms, "Passion" and "Fahrenheit 9/11." Remove those two from the 2004 totals and the comparable gross-to-date would stand at $5.6 billion, nearly identical to this year's $5.57 billion.
Fithian's fiery broadside referred to remarks that Iger made this month during the firm's third-quarter conference call. Speaking to analysts and the media, Iger said the recent weakened performances in the theatrical and DVD windows should be seen as a "wake-up call" and that the industry should consider compressing windows, moving closer to the simultaneous release of theatrical films and videos.
Speaking for many theater owners who are tired of shouldering some of the blame for the boxoffice malaise, Fithian said that compressing windows "to placate this instant-everywhere appetite" would result in a world with "no viable movie theater industry ... at least not a theater industry devoted to the entertainment products of Hollywood.
"(Iger) should know that Hollywood studios would be merely one shriveled vendor among many in that new world of movies-as-commodities-only," he added.
The exhibition industry has been under attack this year for contributing to the decline in movie attendance. Pundits have cited exhibitors' pumped-up onscreen advertising, rising ticket prices and rude patrons as primary reasons moviegoers are staying home. Tired of being the brunt of such criticism, Fithian, speaking for the theater owners he represents, said: "I'm not sure who was asleep, but it wasn't the exhibition industry. Here's what we know about 2005: The movies are not as good. They're not terrible; they're just not as good. And so the industry has experienced a temporary drop-off compared to 2004, the biggest boxoffice year in movie history."
Neither Iger nor Disney chose to respond to Fithian's comments.
"Windows in general need to change," said Iger, Disney's CEO-elect, during the earnings call. "They need to compress. I don't think it's out of the question that a DVD can be released in effect in the same window as a theatrical release. Although I'm sure we will get a fair amount of push-back on this from the industry, it's not out of the question. I think that all the old rules should be called into question because the rules in terms of consumption have changed so dramatically."
It's not yet clear whether Iger, who formally takes over as Disney CEO on Sept. 30, will lead the company in that direction. To date, Disney has not taken any steps toward pursuing such a radical shift in business plans. In fact, the company holds steady with window averages that closely match industry averages. In 2004, the Burbank-based entity held to a four-month, 19-day average between its theatrical and DVD releases. The industry average for 2004 was four months, 16 days.
While no major exhibitor has suggested taking aggressive action against Disney based on Iger's comments, theater owners in the past have shown tremendous resistance to anyone who advocates a compressed windows strategy.
Mark Cuban and Todd Wagner's 2929 Entertainment has faced a serious backlash from the exhibition community since it said in April that it would produce and release six Steven Soderbergh films simultaneously across the theatrical, home video and cable platforms. Top exhibitors including Regal Entertainment Group, AMC Theatres, Loews Cineplex and Cinemark USA have declined to play films with simultaneous release in the home market (HR 5/27).
But no major studio has yet to introduce such an initiative, though many in the industry believe it's just a matter of time until a major attempts such an experiment with the hopes that launching simultaneously will reduce marketing costs and maximize profits across the various platforms.
Fithian questions the premise.
"DVDs that sell well benefit enormously from the advertising platform and national conversation generated by theatrical release," he said. "Does it really make good business sense to plunder that $25 billion-plus worldwide theatrical window without a very solid assurance that even more DVD sales will make up for the lost theatrical revenue?"
Fithian questioned whether those who support such a strategy have taken into account that consumers' DVD libraries might in fact be reaching the saturation point and that consumers' interest in purchasing DVDs at such a speedy clip will decline. In recent weeks, DreamWorks and Pixar have reported lower earnings based on weaker-than-expected DVD sales.
Fithian even questioned the entire notion of the boxoffice slump. "Factor out last year's big-grossing specialty surprises 'The Passion of the Christ' and 'Fahrenheit 9/11' and add in the fact that there are fewer wide general releases this year and the alleged industry 'slump' disappears," he said.
In terms of wide releases -- films released in more than 1,000 theaters -- this year has seen four fewer than were distributed at this point in 2004.
The year-to-date gross total for this year stands at $5.57 billion compared with the $6.05 billion that had registered at this point in 2004. But of that $6.05 billion, $489.4 million was generated by the two indie phenoms, "Passion" and "Fahrenheit 9/11." Remove those two from the 2004 totals and the comparable gross-to-date would stand at $5.6 billion, nearly identical to this year's $5.57 billion.
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