Bursting Hollywood's 'Bubble'

Q: A movie you want to see is releasing today in simultaneous formats. Would you rather:

1. See it in your living room, where it will air on pay-per-view cable TV at 9 p.m. and 11 p.m.?
2. Go to a theater and see it on a big screen?
3. Wait four days, when it comes out on DVD, and buy and see it then?
Today, the movie industry will have America's answer to this question.

It's the first time a high-profile director will be releasing his film in theaters, on DVD and on cable television simultaneously. And it might mean big changes in the way Hollywood does business over the next decade -- much the way downloaded music has changed the way the music industry operates.

The groundbreaking film in question is called "Bubble," and the director is Steven Soderbergh, who helmed such greats as "sex, lies and videotape," "Traffic," "Erin Brockovich" and "Che." Critics have called the movie "too indie" and "the weirdest goddamn movie ever released by a major American filmmaker," but the plotline seems fairly standard: A love triangle develops between workers at a doll factory in a small Midwestern town. A murder occurs. Mayhem ensues. Soderbergh used mostly nonprofessional actors from the West Virginia and Ohio locales where he shot the film and spent a mere $1.7 million making it. He had no script, instead teaching the actors to improvise scenes based on a screenwriter's outline, and the movie is a mere 73 minutes long.

Nothing too out of the ordinary so far. But it's the marketing strategy that has given the movie enormous buzz. It will be shown in theaters across the country and aired on HDNET movies on Friday at 9:00 p.m. and 11:00 p.m. EST. The following Tuesday, Magnolia Home Entertainment will release the DVD for sale. Typically, movies have a few months' lag time between theatrical and DVD release. After the theater, studios will release them on pay per view, then DVD, then cable networks, and eventually on broadcast TV, to capitalize on the profits of each phase's sales. Typically, a movie makes about 50 percent of its revenue on home video, and about 25 percent from theaters. The rest comes from selling its TV and other rights.

But Soderbergh and his backers, internet billionaires Todd Wagner and Mark Cuban, say this new simultaneous release strategy, dubbed the "day-and-date model," is a way to get the upper hand on a trend that's already begun.

"Name any big-title movie that's come out in the last four years," Soderbergh said in a recent interview. "It has been available in all formats on the day of release. It's called piracy. Simultaneous release is already here. We're just trying to gain control over it."

It's well-known that theaters have been hit hard by the recent slump in box office sales. Ticket sales in 2005 continued their four-year downward spiral, going down 7 percent from 2004, according to box-office tracker Exhibitor Relations. A number of factors have been cited: online piracy, counterfeit DVD sales, thanks to DVD-burning technology, increased theater ticket prices and pre-movie ads, and the plethora of big-screen TVs and home entertainment systems. People aren't as willing to shell out $20 for a ticket and concessions unless the movie is a big-screen blockbuster like "King Kong."

Soderbergh says the independent film industry has been hit particularly hard by this trend. Fewer theaters will show indie films, which typically draw smaller crowds. Through simultaneous release, he says he's allowing his audience to choose for itself how it wants to see the movie. The new strategy would also let studios leverage the millions of dollars they spend marketing new movies. To compensate for lost ticket sales, the initial DVD sale price of "Bubble" will include a $10 premium, and 1 percent of sales will be given to theaters that show the movie.

But theater owners aren't fans of the simultaneous-release strategy. They worry that if adopted more widely, it could bankrupt cinema chains, regardless of the premium. So far, the only chain that's signed on is Cuban's Landmark Theaters, which will show the film in about 20 of its theaters. The film will additionally be shown in about 15 art house theaters nationwide

"It's the biggest threat to the viability of the cinema industry today," John Fithian, president of the National Association of Theater Owners, said in a recent interview about the release strategy.

The problem of creative distribution is one that every segment of the entertainment industry is currently grappling with. Take music: CD sales took a huge hit in the wake of illegal online music downloads, and music companies eventually responded with their own legal pay-per-song online stores. Still, it's too easy to download music for free and the industry is still suffering, and critics say it's because execs didn't deal with the problem until it was too late. Television studios are trying to be more proactive, providing popular TV shows for download as they air, for a fee.

Whether "Bubble" will pave the way for major studios to release films in competing formats at once is questionable. In early January, News Corp. CEO Peter Chernin said his company planned to release their films via cable, satellite or DVD 60 days after the theatrical release. Disney's CFO also said the company was not averse to experimenting with different release models. Indie companies such as IFC have already taken the bait: IFC just announced it will release 24 of its films in theaters and on cable simultaneously this year.

But studios and big names in Hollywood have come out against the strategy. M. Night Shyamalan, of "The Sixth Sense" and "Signs" fame, told a crowd at a theater convention that it was "the worst idea I've ever heard."

"If you tell audiences there's no difference between a theatrical experience and a DVD, then that's it, game's over, and that whole art form is going to go away slowly," he told "The Hollywood Reporter" in October. "I'm going to stop making movies if they end the cinema experience."

But the studios need to address the effect of technology on their industry, pronto. At least Soderbergh's film provides an opportunity to get in front of an inescapable trend, as opposed to weakly reacting to it at a later date. Consumers are more emboldened now than ever, because they have the ability to get products sooner, legally or not, and thus to reshape industries.

"Bubble" is only the first of six films to be produced under the new partnership between Soderbergh and 2929 Entertainment, founded by Wagner and Cuban, which also own Magnolia Pictures, the movie's distributor. All six films will have a similar release strategy. Soderbergh and company see "Bubble" not as a solution, but as the first step in an experiment in giving consumers what they want while trying to maintain profits.

In the short run, the day-to-date model might be more viable for the independent film industry because its lower budgets and profits make for lower risks. But the box office slump and the talk around "Bubble" have opened up Hollywood's eyes to the fact that it needs to get serious about creating new distribution models. In the long run, that could mean more power in the hands of consumers to support the artists they love. And that's a good thing.

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