By Meyer Shwarzstein
Many people ask: “Why can’t all movies be available everywhere at the same time?” They believe that if that were the case, there’d be no issues with piracy. Theoretically, people could see movies in a theater, online, on television, or however and whenever they wanted to see them.
Unfortunately, without windows, independent film distribution would die. And you may ask, “Who cares?” Well, because independent films provide a diversity of voices and opinions not generally seen in large, big budget releases.
In its earliest years, the film business was vertically integrated and did not offer the kind of diversity we have today. The large studios (the Big Five, as they were called) created movies in their entirety – the writers, directors, producers, and actors were all on staff. The studio owned the film processing labs, they created the prints, and they distributed the finished films through the theaters that they also owned. These practices ended when the US Supreme Court deemed them to be illegal in 1948.
Shortly thereafter, television stations and networks launched and by the late 1970s network television, broadcast syndication, pay television, pay-per-view, and home video brought the promise of new revenue streams for films. It was at this time that the sequence of distribution, or the concept of “windows,” was established by the studios.
The rationale was simple: whoever pays the most for a film gets to see it first. If, for example, you paid $10 at a movie theater, then you were paying for the privilege of seeing it before the film was made available for $5 at the video store. Pay TV services, like HBO or Showtime, only allocated 10 or 20 cents for each subscriber for big studio movies. That’s why the films were made available to these subscribers after they were made available to video renters. Later, the films were sponsored by commercials and made available for free. In this medium, the studios may have collected less than a penny per viewer.
So, what happens if we make films available all at once? Would someone be willing to pay $10 for a movie if it is available at the same time via a service to which they already subscribe? If the answer is “no,” then a studio is no longer getting the $10 or $5 per person they may be getting from the other services. They’d be getting a fraction of the amount on a per viewer basis.
Why does that matter? Because there is meaningful revenue from the other media and that money goes towards the cost of making the film.
Increasingly, the bigger subscription buyers, like Netflix or HBO, are willing to pay a price that may compensate filmmakers for not releasing their films in theaters.
Some view this as a positive, but let’s argue that HBO, Netflix, Hulu, Showtime and Amazon are willing to make up the amount lost from theatrical releases. There are two problems with this:
- We’d limit the kinds of films we see. Theatrical release increases the awareness and, as such, the value of a given movie. Nowhere is this more evident than with foreign language films. These require marketing, promotion, and good old-fashioned word of mouth to reach their audiences. They must earn their audience. Distributors, theaters, and the press collectively add value to specialized films.
- We’d limit the number of companies who will bring us films. By allowing for more windows, we allow for more income to distributors and from a variety of sources. If we only care about one source of revenue, then there is no need for a distributor. The companies will all buy directly from the filmmakers. We may be returning to a time when those who make the films are also responsible for bringing them to us – a concept that the US Supreme Court shut down in the aforementioned case in 1948.
Do we need independent distributors? In 1948, the US Government became concerned that there was too much power in too few people’s hands. Once the chain of distribution was broken, more voices found their way into the marketplace and more talent was developed. And while this benefited viewers by bringing them more, diverse content, it also benefited the studios that are continually looking for emerging talent.
Audiences have traditionally been willing to pay a price to see a film at the time and in the manner they want. Will some try to see it earlier for free? Absolutely. But, in the end, it won’t be to society’s benefit for us to make everything available all at once.
The film business, a producer of one of America’s most visible exports, needs windows in order to make financial sense of the films audiences love to watch. The independent film business, which does so much to give voice to those who are often marginalized, needs windows to simply exist. Although some larger players in the business have begun to experiment with changing the traditional windowing structure, in a business that is so fraught with risk, windows provide a safety net that makes the plunge of investing in a film, especially an independent, one just a little less crazy.