Wonderland: The cinema/DVD lifecycle

A report in The Times explains how filmgoers will have less time to wait for films to come out on DVD after Disney won a decisive battle in Britain over release dates for Alice in Wonderland. Two of Britain’s biggest cinema chains had threatened to boycott the film because of Disney’s wish to bring it out on DVD 12 weeks after its cinema release rather than the customary 17.

Vue has been talked out of the boycott, but Odeon, which owns a quarter of British cinema screens has said that it will not screen the movie, making Disney lose several million pounds as a result.

The window between cinema and home video release fell from six months to four months about five years ago and is now likely to be three months for a significant number of films as studios work out how to revive the ailing DVD market and learn how to make money from video downloads and streaming. Studios make more money from DVD sales than at the box office because cinemas take a cut of up to 60 per cent of every ticket.

The strategies of the studios and the cinemas are clearly in conflict. And economies of scale seem to be a crucial component in understanding the problem. The larger chains have both technical and bargaining economies.

Odeon has spent large sums of money on 3-D equipment to show films such as Alice on the understanding that the current business model would not change. According to a spokesman: “The proposed reduction in the window on a high-profile 3-D title like Alice in Wonderland undermines the investment made [in 3-D technology] and will inevitably set a new benchmark, leading to a 12-week window becoming rapidly standard in the UK for the majority of film titles. The negative impact on cinema attendance that such a reduction in the window will have will threaten the continued existence of many cinemas, especially the smaller and medium sized cinemas, which are often important parts of the fabric of communities across the country.”

Smaller cinemas, which do not have the bargaining power of larger chains, have all accepted Disney’s terms.