December 19, 2014

With Crisis Comes Opportunity: Why Sony Should Use 'The Interview' to Skyrocket Digital Distribution

The Interview Sony Digital Distribution
Estimates are that Sony will lose roughly $100 Million on pulling The Interview due to a cyberattack evidently organized by North Korea. But Sony, the rest of Hollywood, and the independent film industry stand to gain a lot more if they treat this crisis as an opportunity.

Sony has the occasion to release the film digitally, as everyone from Mitt Romney to George Clooney have suggested. They could even give it away for free!  But it won’t matter, because a large part of the American audience has no idea how to watch it.

The problem isn’t technology. Cable video on-demand and digital download platforms such as iTunes, Ultraviolet, and M-Go mean that Sony could make the film available on every TV, iPad, and iPhone at the flick of a switch.

Sony needs make sure that every person who wants to watch The Interview knows how to and where to find it.

The problem is education. Nearly half of cable box users have never used their video on-demand, a technology that has been around for two decades (NFS Founder Ryan Koo chimed in about this recently as well). While digital downloads (Electronic Sell-Throughs or ESTs in Hollywood talk) skyrocketed nearly 50% in 2013, and generated more than $1 billion in revenue, they only made up only 6.5% of home video sales. In 2010, the biggest players in Hollywood banded together to launch Ultraviolet, a service for piracy protected digital downloads that the studios prefer. In three years it has attracted only 15 million users [PDF]. Therefore, it is not enough to release The Interview on digital download and VOD platforms, or even to give it away for free. Sony needs make sure that every person who wants to watch the film knows how to and where to find it. Sony — and the other studios, the MPAA, and the unions for that matter — should put big marketing dollars into a national advertising campaign across digital and television platforms to get Americans to sign up for and try out digital distribution platforms.

With an educational campaign launched in tandem with massive media attention, how many of those moviegoers could be steered towards their first interaction with Cable VOD or digital downloads?

In 2013, Hollywood sold about 45 million tickets in the week between Christmas and New Years. With an educational campaign launched in tandem with massive media attention, how many of those moviegoers could be steered towards their first interaction with Cable VOD or digital downloads? Ultraviolet could double its 15 million registrants overnight. Or even take it a step further: embrace the best practices of digital downloads pioneered by independent distributors on sites like VHX and Vimeo On Demand. Package The Interview with hours of special features, behind-the-scenes, and interviews with the cast and crew. The audience will eat this stuff up immediately after the tumultuous events of the past two weeks. Make this experience with digital download viewing so good that we come back again. And again. And again.

Hollywood’s bottom line was buoyed in the ‘80s and ‘90s by the emergence of a new market in home video. When that market lagged in the ‘00’s the studios resorted to broad big budget tentpoles that brought us back to the theaters and played well internationally. The appeal of the digital market is obvious. We are all walking around with televisions in our pockets and backpacks at all times. But getting audiences to embrace digital distribution doesn’t just mean a new market and more revenue. It means an alternative to the mega-blockbuster model.

My hope is that they come for the blockbuster, and stay for the indies.

I’m an independent documentary filmmaker which means I gave up on theatrical distribution as a primary source of revenue a long time ago. People like me have been talking for years about how digital distribution and VOD will save our industry. And it has to a certain extent, but the audience just isn’t there yet, and no amount of panel talks and workshops on savvy distribution strategies and grassroots marketing can change that. The audience will embrace digital when it becomes the place to watch films like The Interview. My hope is that they come for the blockbuster, and stay for the indies.

This is the opportunity to teach America how to watch movies in a digital world. The future of the film industry depends on it.     

Your Comment

10 Comments

But the fear of doing VOD is that these terrorists have already hacked a huge network. What if the VOD service gets hacked and all the people who paid to download it have all of their credit card info leaked? That's a far more realistic threat than the movie theater attacks that they promised.

December 19, 2014 at 1:46PM

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Jimmy
83

Large scales hacks happen and people get new cards issued and the world moves on. It's not like people stopped shopping at Target or Home Depot after those hacks.

December 19, 2014 at 3:45PM

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Those hacks were based on theft, these have a meaning behind it. To stop the movie from being released. Robbers don't attack the same place twice, these hackers will continue to attack until the movie is dropped. Besides credit cards are backed my insurance from hackers. I don't think that films have the same kind of insurance...

December 19, 2014 at 8:10PM

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Zachary Will
Cinematographer
826

Im with you Jimmy. As much as I am saddened that somebody "censored" a film via hacking I also think we have to look at the implications that film has/could have brought. Sony's employees have already had information stolen and been threatened and im sure are somewhat afraid now. The general public could have had their safety possibly threatened if the movie was released and that just seems unfair. Yes I am aware that these hackers probably wouldn't go through with much but who knows right? Im just more starting to wonder if it was ethical for Sony to create a product that they knew could potentially cause violent lash back on their employees and their customers... I dont know shouldn't we use stories to build people up and create positive change? Not start wars and threaten people's safety. I know not everyone will agree with me but... I just don't really get it.

December 20, 2014 at 12:24AM

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jacob
168

This article ignores the fact that Sony will be able to cash out heavily on their corporate insurance, meaning that they'll likely lose nearly no money. The decision to pull the film was purely financial.

December 19, 2014 at 2:19PM

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Alex Forey
Student Filmmaker
109

Maybe so but that has nothing to do with profits. Think of the marketing campaign along the lines of "The movie North Korea doesn't want you to see, see it now for (insert price) by clicking here." With all the press surrounding the film they could turn it into a very successful VOD story and like this write up points out, bring more eyes to other films which rely on the VOD platform.

December 19, 2014 at 3:11PM

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Stephen Herron
Writer/Director
1509

There really isn't any insurance to cover something like this happening, is there? Production insurance ceases to exist once the production is complete. This isn't a case of theft / leak.

December 20, 2014 at 1:59AM

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Zack Wallnau
Cinematographer & Tinkerer
630

the reason ultraviolet has done poorly is that is clunky and annoying iTunes/amazon/google play are the way to go. they are much more user friendly and already have a huge client base. who doesn't have either a iTunes or google play account. If you have a smartphone of any kind you have one of these you can then watch it on the device, on a computer, or with a cable on your tv, not to mention Apple TV roku amazon fire tv/stick google play station.

December 20, 2014 at 7:19AM

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Pigs are way more scared about digital distribution and internet piracy than any kind of terrorism.

December 21, 2014 at 7:52PM

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Terma Louis
Photographer / Cinematographer / Editor
1353

The Interview probably had the best marketing for a film to date. The hack has given the film free promotion on TV and the internet. And distribution is not a problem now that audiences worldwide can watch it on demand.

December 30, 2014 at 2:56PM, Edited December 30, 2:56PM

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Zemene Muche
Writer, Director
98

VOD is a bad idea because cinema is mainly built on the theater experience of going to the movies, which is disappointing because of home streaming. Yes, it makes it easier for indie filmmakers to release their films, but the cinema experience is more important, coming from an indie filmmaker.

January 4, 2015 at 6:10PM

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Justen Noll
Director for JN Films
74