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Page last updated at 22:37 GMT, Friday, 1 July 2011 23:37 UK

Is cinema facing its final curtain?

By Alex Hudson
BBC News

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Click's Richard Taylor looks at how to watch a brand new film at home

With fewer people going to the cinema than 10 years ago and people increasingly watching content online, will closing the gap between cinematic and home release rejuvenate the rental industry or destroy the cinemas it is trying to protect?

The film industry is worried.

Despite box office revenues growing, fewer people are going to the cinema.

In the US - since a peak in 2002 when 1.58 billion tickets were sold - numbers have fallen to a projected 1.22 billion for 2011, a drop of more than 20% according to market analyst The Numbers.

Hollywood's cash cow - and often its safety net - over recent years has been the DVD. Avatar alone sold four million DVDs in the first four days of its release. Before the digital transition, VHS provided healthy incomes, but streaming services seem to be changing everything.

FROM THE OPEN LETTER FROM THE CREATIVE COMMUNITY...
New Zealand director Peter Jackson accepts the award for best director for his work on The Lord of the Rings
Some theatres will close.

The competition for those screens that remain will become that much more intense, foreclosing all but the most commercial movies from theatrical release.

Specialty films whose success depends on platform releases that slowly build in awareness would be severely threatened under this new model.

Careers that are built on the risks that can be taken with lower budget films may never have the chance to blossom under this cut-throat new model.

Electronics retailer Pixmania placed DVD players at the top of its "2010's most endangered technologies" list, ahead of fax machines and analogue TV.

Blu-ray was meant to be the natural progression from the DVD but all has not gone smoothly, with DVD still taking around 75% of the market share, though figures for DVDs have been in decline for the last four years.

In the first quarter of 2011, physical sales in the DVD market dropped by 19%, and high-street rental fell by 36% year-on-year.

But the film industry is keen to hang on to the physical product. Selling a disc - which regularly cost over £15 only a few years ago - is significantly more lucrative for studios than streaming services.

Meanwhile, the price of online content has fallen dramatically for the consumer, with a Netflix subscription allowing unlimited streaming for $7.99 (£5) a month. In Europe, Lovefilm offers a similar service for £9.99 ($16), though this includes physical DVD rentals as well.

And with more than 23.5 million subscribed to Netflix, and 1.5 million subscribed to Lovefilm, this market is still in a period of significant growth as more people turn to streaming services.

To halt the decline, studios have begun looking for a premium product to fill the disc-shaped hole at the heart of the cinema industry. And some think closing the gap between cinematic and home release could be the way to do it.

Bel-Air Circuit

The size of this "theatrical window" has already fallen in the UK from around 27 weeks in 1999 to a current average of 17 weeks, according to the Cinema Exhibitors' Association.

Members of staff at Windmill Road hold up various articles from their archives
The format that films are available on has changed dramatically over time

There has been a Bel-Air Circuit in Los Angeles for decades. They are an elite group of home theatre owners who, because of their contacts in the industry, have access to the latest releases.

Now this service is being extended to the masses. Well, the extremely rich masses.

Prima Cinema is one of a few companies offering those willing to pay a $20,000 setup fee - plus $500 per film - movies to watch in their own home on the day of cinematic release.

"Based on what is being spent in the industry of private home theatre, it's absolutely within the boundaries of what consumers will pay," said Jason Pang, founder of Prima Cinema.

"Quite frankly, it does cost that much simply because of the security. Every part of the hardware is custom developed to ensure security," he added.

This technology has been supported by most studios as it does not really affect revenues at the box office, appealing as it does to the richest of the rich. But a new pilot scheme from DirecTV could be changing that.

The theatre business is a fairly marginal business so a few percentage points loss in admissions will end up closing some theatres
Patrick Corcoran, The National Association of Theatre Owners

Users in the US pay a premium of $30 (£19) per film in exchange for watching the film only eight weeks after cinematic release. Though it currently offers a very limited selection, other satellite providers are looking to add the service soon.

But critics believe that this is not the solution, concluding that it will cost the industry hundreds of millions of dollars in annual revenue, bringing the whole industry model into doubt.

An open letter from leading lights in the movie industry said: "The problem of declining revenue in home video will not be solved by importing into the theatrical window a distribution model that cannibalises theatrical ticket sales."

'Death knell' of cinema

But people have been saying that cinema is about to die for almost as long as it has existed.

Canadian actress Mary Pickford talked in 1959 about television causing the death of her beloved medium.

"Certainly, the motion picture will always be there, but I believe when paid TV comes in, and I'm sure it'll be less expensive than going to the theatre, that it'll be the real death knell of motion pictures," she said.

Clark Gable as Rhett Butler embraces Vivien Leigh as Scarlett OHara in the film Gone With The Wind
Worries over the future of the cinema were even around in Clark Gable's day

Later on, in a 1982 hearing in US Congress, then president of the Motion Picture Association of America Jack Valenti said the VCR was to cause "devastation in this marketplace [of movies]" and that video "is to the American film producer and the American public as the Boston strangler is to the woman home alone".

And the BBC reported on worries that "the digital revolution will destroy the magic of the cinema" as far back as 1999.

But the worry is that the film industry is, for the first time, beginning to compete with itself by releasing things on different formats at the same time.

"Our concern is people won't go for this eight-week window," says Patrick Corcoran, California operations chief of the National Association of Theatre Owners.

"If [studios] are really intent on making this sort of thing work, they have two options: one is to shorten the window, the other is to put it at a lower price, or both.

"The closer it gets to the theatrical release and the lower price it gets, you start to get into this self-competition market that already affects the home entertainment market.

"The theatre business is a fairly marginal business so a few percentage points loss in admissions will end up closing some theatres.

"And if film companies do focus on [home entertainment more], they won't be able to justify current budgets so you will just end up with a lesser film."



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