You've probably heard by now: AMC Theatres is threatening to boycott Disney's Alice in Wonderland. Earlier in the week, some European theater chains made similar threats. Why? Because Disney is planning to shorten the theatrical-to-DVD release window from 17 weeks to 12 weeks, which would mean that the movie will hit DVD around June 1st. Why does AMC care, given that none of its theaters are likely to actually keep the movie for 12 weeks? Well, presumably if people know that a movie is going to be available for home viewing in just a little while, they're less likely to invest in a trip to the theater. If you assume -- rationally -- that a given movie will ultimately make only a certain amount of money, shortening the DVD window decreases distributors' slice of the pie -- or so the theater owners argue.

This isn't the first time that disputes over revenue sharing have spilled over and threatened to affect moviegoers. Back in 2001, Regal refused to show Rush Hour 2 because New Line wouldn't budge on contract terms. The movie opened to $67 million anyway, and Regal was seen as having blundered. A couple years ago, British cinemas pulled the plug on Night at the Museum in the middle of its release when Fox decided to put the movie on DVD just over 12 weeks after release. More recently, Regal balked at having to foot the bill for 3D glasses and threatened to show Ice Age 3 in 2D only, but that turned out to be a bluff (possibly because Fox had Avatar in the pipeline).

This is ultimately a Prisoner's Dilemma for exhibitors -- they need to present a united front to have any real chance of hurting a major blockbuster's box office chances, but are disincentivized from doing so since one major chain's decision to boycott a movie like Alice is a major boon for the other theater owners, who will have taken one of their competitors out of the market. (See Rush Hour 2.) For that reason, it seems unlikely that AMC will be going it alone in this battle. Also, theatrical-to-home-video windows have been steadily shortening for years, and theatrical revenues -- despite lots of hysterical yelling about a "slump" -- have remained robust. Technological improvements seem to have breathed new life into the theatrical experience. (See Avatar.) Theater owners making a stand on the issue now just seems like a strategic mistake.

On the other hand, I think folks are justified in wondering what the endgame is here. As theatrical windows continue to shorten, indie distributors are already regularly releasing movies day-and-date in theaters and "On Demand" on cable and satellite. 3D -- which can't yet be effectively replicated at home, though that's likely just a matter of time -- seems to be becoming mandatory for tentpole releases. Presumably that is, at least in part, serving the function of distinguishing a trip to the theater from a night in front of the flat-screen. Everyone sane agrees that crowing about the "death of theatrical" is, well, insane. But what will it look like in 10 years?

For more on this story, check out John Gholson's recent insights right here.
categories Movies, Cinematical