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Sony Corporation impacts the Film Industry model

January 7, 2015
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Sony Corporation Produced movie, “The Interview”, starring James Franco and Seth Rogen has become an industry game-changer, while it really shouldn't have been.

This movie is a ridiculous comedy, no way meant to be taken seriously, but ended up rewriting box office rules and, at every step of the way, ticking off a variety of groups in various ways. Initially Sony decided against the movie release but in the end, Sony opted to release the film through different mediums, making things more complicated. That's not to say Sony Corporation was wrong. They were right in releasing the movie, but the implications of the way they did it are going to be a case study for years to come. Let's have a look at how it impacts the major players in the media industry.

Sony Corporation:

Initial reaction of Sony Corporation is what's going to be remembered first. The studio had just had a huge hacking attack and in spite of what the executives said they essentially bowed to the demands of the hackers before either Hollywood or even President Obama got involved.

Sony Corporation would have had to bear huge financial loss if they are not releasing the film, it was in its best interest to get the film out there even if through non-traditional ways and Sony Corporation did achieve fascinating results, as the movie earned nearly $3 million from the 300+ independent theatres that pledged support. Then it scored another $15 million from streaming sales, which put the total around $18 million. That amount is just $2 million short of the lower end estimates had the movie received a wide release.

Of course it also ticked off theatre owners in the process.

The Movie Theatres

Obviously (and Sony Corporation was aware of this) the movie will make less because of how it was distributed, but that type of haul for that type of method is unprecedented. And that scares theatres. The film industry has been facing many challenges in the last few years and theatre owners have tried to combat them in various ways. Yet the rise of streaming media is an issue that just won't go away and one that is going to haunt them if they keep trying to ignore the problem.

Following threats to the safety of the movie-going public Sony gave theatres (including AMC, Carmike, Cinemark and Regal to name a few) the option to opt out of their commitments to screen the controversial film. Now as much as Sony Corporation wants to pass the blame to theatres and paint them as the bad guys for taking them up on the deal, you can't blame the theatres’ owners for shying away given the risk to its consumers. However, it is true that ultimately it was their decision not to screen the film and, as such, they have no grounds to complain.

It can be argued that when Sony Corporation went back to theatre groups after reversing course on cancelling the movie, the theatres had made other commitments that they realistically couldn't (and shouldn't) welch on and that left them in a bind. Although in actuality how many were really going to take them up on the offer had they had an opening? The pushback originally was so strong that chains couldn't bail out fast enough. The fact is they got a second chance to make a move and they didn't bite.

The Industry Model

Now that you've seen both sides, let's look at the full picture. It all boils down to the need of Sony Corporation to release the film to save face and major theatre chains got upset that they were bypassed.

Regardless how much Sony Corporation made, this is the very definition of a special circumstance. The theatre model is still the most effective way to make money for now and studios aren't ready to rock that boat just yet. But what The Interview proved is that it won't always be that way. If Sony can make $15 million off this type of comedy, imagine what it could do with the next Bond movie or inevitable Spider-Man reboot.

Once Sony decided to release it, online was always the most viable option, but it didn't have to be as this was a chance for the majority of chains to break out of their ruts and try to take a little bit of power away from their rivals. Yes, the danger to consumers was still there, but the FBI had said realistically there was little chance of anything happening and in terms of space, it had to have be possible to free up a few screens at a minimum.

The theatres continue to bury their head in the sand and think their enhanced theatres and subsequent upcharges are going to save the day. It won't … if anything it will make the situation worse. Going to the movies is a still experience (and an enjoyable one at that), but if it's more cost efficient and easier to stay home and watch the same film that scenario will win out.

The major theatres and Sony both had a unique opportunity to change the model and work together to make it mutually beneficial. In the end, only Sony made a bold move and that was only because it was pushed. The theatres didn't make a move at all and as a result accidentally gave investors a look into what could be the future of the industry and they may just regret it.


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