Amazon dives into film — and you’ll see it soon

20 Jan 2015 | Author: | No comments yet »

Amazon Movies May Crack Theatrical Windows, But It Won’t Break Them.

Jeffrey Tambor stars in the Amazon comedy ‘Transparent,’ in which a father reveals to his grown children that he is exploring a transgender lifestyle.(Photo: Amazon) The Seattle-based Amazon took on its streaming competitor when it announced Monday that it will produce and purchase original movies for theatrical release that will arrive a month or two later on its Amazon Prime Instant Video subscription service. “It’s aimed at Netflix — these are the two big guns in streaming right now,” says Jason Del Rey, editor at Re/code.com, who covers Amazon. “Both sides are heavily investing in original programming which they see as differentiators in the years to come, while this is also about increasing the value of Amazon Prime networks.” Amazon Studios vice president Roy Price said in a statement: “We look forward to expanding our production efforts. …(Reuters) – Amazon.com Inc is making a high-stakes foray into the challenging realm of independent movies, the latest step in its attempt to move beyond simply distributing digital entertainment content to creating it.Amazon has taken a big step forward into the world of Hollywood, with plans to create 12 feature films a year that will be released first in movie theaters and then, weeks later, streamed to customers online.Amazon Studios is the latest digital player that aims to upend the film distribution business by releasing films in theaters and on digital platforms earlier than its big studio rivals.

Our goal is to create close to 12 movies a year with production starting later this year.” Price added that the move will not only be beneficial for Amazon customers, “but we hope this program will also benefit filmmakers, who too often struggle to mount fresh and daring stories that deserve an audience.” The studio, which launched in 2010, has become known for original TV series such as Transparent, Tumble Leaf, Mozart in the Jungle and Alpha House. Amazon original movies will be available for streaming in the United States four to eight weeks after they make their debut in theaters, a significant reduction of the window of 39 to 52 weeks that films normally play in theaters before becoming available for streaming. Amazon Studios is fresh off the success of series “Transparent” at the Golden Globes, winning best comedy, and its deal with Woody Allen to produce a new streaming series — accomplishments that have drawn comparisons to online giant Netflix. Amazon expects to focus on “indie” movies with budgets of between $5 million (3.3 million pounds) and $25 million (16.5 million pounds), spokeswoman Sally Fouts said. The development is another step in Amazon’s ambitious plan to increase its entertainment offering to consumers, and an escalation in Amazon’s rivalry with Netflix.

It also signals both companies’ broader ambitions to revolutionize the so-called windowing system for television and movies in the traditional entertainment industry. Both online firms have become stronger rivals to Hollywood studios and television networks, with their growth in subscribers and ability to fund dozens of new projects. Such films have proved challenging even for major Hollywood studios such as Paramount and Warner Brothers, which have bowed out of the business in recent years, said Jeff Bock, Box office analyst at Exhibitor Relations. “It’s a tough, tough racket to play consistently,” he said, pointing to the difficulty of getting good content and the competition for quality productions at festivals like Sundance. In the fall, Netflix announced movie deals with the comedian Adam Sandler and said it would release a sequel to the movie “Crouching Tiger, Hidden Dragon” simultaneously across the globe and in a select number of Imax theaters. But Amazon’s entry into feature films is unlikely to convince studios to try earlier windows, despite the $30 million Sony’s “The Interview” made in its fire-sale release.

Major theater chains remain adamant that they will not show films that premiere simultaneously in the home or that ignore a 90-day delay between a theatrical premiere and a home entertainment debut. Unlike rival Netflix Inc, a standalone Internet TV service, Amazon’s Prime video service comes bundled with the Internet retailer’s two-day delivery for items purchased on the site, which costs $99 a year, a key driver of revenue for the company. It makes the earlier distribution on Amazon’s home delivery service, opposed by theater owners, “an easier pill to swallow,” he says. “Maybe this is the way to bridge this distribution gap,” says Bock. “It will be interesting to see how this plays out. It remains unclear whether Amazon believes the movie business can make money on its own, but most of its other ventures are ultimately aimed at bolstering its underlying retail business.

Barring an “Interview”-style crisis, though, major studios can’t play around much with windows without risking a theatrical boycott. “You’ve seen the windows slip a little over the past several years and they may slip a little further, but it won’t be that huge a change,” said Marla Backer, an analyst with Ascendiant Capital Markets. “Studios have so much money invested in these huge films, they’re not going to play games with their smaller budgeted ones. Right now, they are another player in a tough marketplace.” The original movies initiative will be led by indie-film veteran Ted Hope, who co-founded and ran Good Machine, the production company behind Eat Drink Man Woman and Crouching Tiger. Amazon founder Jeff Bezos is known for his hunger to tackle new markets but the company has had a mixed track record, as with the recent Amazon Fire phone, whose price tag it has slashed after weak sales.

Analysts cautioned that if the films were low-budget and of low quality, it would be difficult for them to profoundly alter the conventional system for theatrical releases. Still, said Rich Greenfield, a media analyst with BTIG Research, the announcement adds to the pressure on traditional business models and gives consumers more of what they want. “In 2015, consumers don’t understand why there is an exceedingly wide gap between seeing a movie in a theater or seeing a movie at home,” he said.

A week ago, Amazon’s original series “Transparent,” a dark comedy about a family in which the father comes out as transgender, won a Golden Globe for television comedy. Sony Pictures’ recent success in releasing its comedy “The Interview” through video-on-demand services after threats from hackers was also seen as a blow to big-screen businesses. “That verbiage probably scares theatre owners,” Bock said, referring to Amazons’ plan to narrow the window between theatrical releases and streaming availability, adding that the theatre chains could take some solace in Amazon’s decision not to go for simultaneous release or just putting films straight out on video. National Association of Theater Owners Vice President Patrick Corcoran declined to comment on Amazon’s move but said the time between theatrical and home video release would play into theatres’ decision on whether to take a particular film.

Also last week, Amazon announced that it had reached a deal with the filmmaker Woody Allen, in which he would write and direct his first television series. Some theatre chains objected vociferously when Netflix said it hoped to release the “Crouching Tiger, Hidden Dragon” sequel in select IMAX theatres and its streaming service at the same time. Amazon may have decided to target theatrical releases rather than pushing movies straight to Prime because big name talent still associates paying ticketholders with prestige, said Phil Contrino, chief analyst at Boxoffice.com. “At the end of the day a theatrical release still generates a lot of publicity, it gets a movie reviewed – every person that goes to watch that movie is paying for it,” he said. The company spent an estimated $2 billion on content in 2014 with about $200 million of that used to develop original shows, according to Wedbush Securities analysts. Yet Amazon finds itself in a content war with streaming services like Netflix and Hulu, not to mention all of the other VOD offerings run by cable operators like Comcast to Walmart’s Vudu and Best Buy’s Cinema Now — each of which are selling the same movies and TV shows from Hollywood distributors.

Golden Globe-winner “Transparent” brought instant visibility to its content offerings — the same way “House of Cards” boosted the profile of Netflix. Last month, when Sony Pictures arranged for digital distribution of its controversial Seth Rogen comedy “The Interview,” some commentators predicted that it would upend the traditional distribution model. And it’s starting to attract notable filmmakers including Woody Allen, Whit Stillman, Steven Soderbergh, David Gordon Green, Paul Weitz and more to create TV shows through its Amazon Originals program. In 2010, the giant retailer created a stir in Hollywood with the start of its studio group, which solicited online submissions for full-length movies.

Amazon has the flexibility to experiment, because the kind of films it wants to make are in the $5 million to $25 million range — possibly higher budgeted than many niche films, they could be the kind of creatively fulfilling projects that can attract top talent. So if theater owners protest Amazon’s announcement it will mostly be instinct motivating their reaction, not any specific knowledge of Amazon’s likely success at picking and financing hit movies.” “Consumers don’t want and do not understand release windows,” BTIG Research analyst Rich Greenfield said. “We live in a connected world where there is no reason for a 90-day window before home video — as usual, innovation has to come from outside the traditional film industry.”

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