David Canton – for the London Free Press – April 25, 2006
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Director Steven Soderbergh recently decided to release his latest movie, Bubble, simultaneously in theatres and on DVD.
His intention was to see if audiences would be receptive to the choice between seeing a film in the theatre or buying it for home viewing.
Unfortunately, the experiment never got off the ground. Major North American theatre chains decided to boycott Soderbergh’s film. Their rationale was that if the film was released to DVD alongside its theatre release, no one would go to the theatre to see it.
This is an example of the interplay between new “disruptive technology” and established business practices.
This tension is nothing new. The VCR was seen as a threat to the movie industry. Recently, online file-sharing has been seen as a threat to the music, software, film and video-game industries.
There is some rationale for this reaction. No company with a successful business model wants to see it disrupted. In nearly every situation described above, disruptive technology has made an aspect of an industry redundant. Only those that adapted have survived.
Theatre owners say that simultaneous DVD release is such a threat, it could lead to the end of their industry.
It wasn’t that many years ago that the movie industry tried to kill the VCR. The reality is that VHS and DVD movies have made the industry huge amounts of money, in addition to — not at the expense of — theatre sales.
Some smaller theatres reacted to Soderbergh’s new film by adapting their approach. Some decided to sell the DVD at the theatre, while others offered a package deal combining the DVD with the admission ticket.
Mark Cuban, owner of the Dallas Mavericks, says people still go to sport events when they can watch them on TV, still go to restaurants when they can cook at home and still go to stores when they can buy online.
“The business of the Mavericks was not selling basketball, it was selling a fun night out and creating a favourable brand identification with our team and our players, with the hope that people would be excited to buy merchandise, products and services from us.”
In other words, movie theatres, like any industry facing disruptive technology, will be most successful in the long run if they embrace new technology and give people the experience they want.
In the movie-theatre example, the successful ones will think beyond the traditional approach of one price per person per movie, along with expensive snacks. All business has to adapt to survive and think out of the box — or in this case, out of the multiplex.