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

20 Jan 2015 | Author: | No comments yet »

Amazon Is Going to Produce Original Movies for the Theater That Quickly Get to Prime.

After winning acclaim for one of its original television productions, Amazon announced Monday that it would produce and acquire films for theatrical release and early distribution on its Prime Instant Video service. 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.Amazon.com Inc is getting into the movie business, building on some early successes in TV productions, the latest sign of the Internet retailer’s eagerness to build itself into a major Hollywood player.

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 has been quietly trying to get original movies off the ground since late 2010, when it launched studios.amazon.com, a place where anyone could submit scripts for films and television.

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. The move aims to capitalize on the company’s recent success in producing television shows, help filmmakers who might otherwise struggle to produce their work, and possibly shake up the timing of how movies are distributed to theaters and other outlets.

It also signals both companies’ broader ambitions to revolutionize the so-called windowing system for TV and movies in the traditional entertainment industry. While that’s modest compared with Hollywood blockbusters, it will add further to spending at Amazon, potentially unnerving investors concerned about the company’s lack of profitability and skimpy disclosure of its spending.

In the fall, Netflix announced movie deals with the comedian Adam Sandler and also 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.

Amazon did not announce any forthcoming titles — nor did it disclose how it might go about putting its movies into theaters, which could be its most daunting obstacle. 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. 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.

Amazon said it was seeking to create 12 movies a year that “focus on unique stories, voices, and characters from top and up-and-coming creators.” Production will start later this year. If a film is to show up on Amazon Prime 30 days after it hits theaters, the only theaters willing to cooperate will be small, independent cinemas — roughly the same rabble that agreed to show The Interview on Christmas Day despite Sony’s VOD release the night before.

In an email, Roy Price, vice president of Amazon Studios, described the projects as “indie” movies, with budgets between $5 million and $25 million. 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. 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. Last week, the production studio said it signed filmmaker Woody Allen to write and direct his first television series, and it announced a new slate of 13 pilot episodes for subscribers to watch. 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.

More likely is that Amazon films will get a short run in a handful of theaters for the purpose of marketing, including the ability to call them “new release” movies in its Prime queue. More from WSJ.D: And make sure to visit WSJ.D for all of our news, personal tech coverage, analysis and more, and add our XML feed to your favorite reader. Monday’s news comes one week after 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.

While Hope is known for making independent movies rather than big-budget Hollywood blockbusters, Amazon Studios has succeeded in the world of television in part by aligning itself with directors like Allen and Steven Soderbergh of “Ocean’s Eleven” fame. The company spent an estimated US$2 billion on content in 2014 with about US$200 million of that used to develop original shows, according to Wedbush Securities analysts.

You can’t expect things to stay like they did 10 years ago at the height of the DVD business.” Amazon is clearly looking to make its Amazon Prime business more attractive to consumers. At $99 a year, the service offers up two-day shipping and unlimited streaming of movies and TV shows on more than 600 devices on which the Amazon Prime app is available. The subscriber wars are just getting started — with the rise of standalone premium services, it’ll now cost something like $125 to get all the “must-see” and awards-worthy TV that’s out there nowadays — and Amazon knows it’s going to need more than Transparent and Woody Allen for customers to pony up $99 per year for Prime. As for Hollywood, another entrant into the film space can only be good news; especially for the low- to mid-budget “prestige” films that it intends to make.

Price said in the email. “There is still a robust audience, certainly on Amazon, for interesting films.” To lead production in its original movies group, Amazon has hired Ted Hope. Golden Globe-winner “Transparent” brought instant visibility to its content offerings — the same way “House of Cards” boosted the profile of Netflix. But none of this is going to be easy, especially when it comes time to get those films into theaters with enough marketing behind them to attract an audience. 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.

Amazon is riding high on its Golden Globe wins for Transparent, but the studio threw several pots of spaghetti to get there: it took 47 pilots over more than four years to make a show that anyone outside the bubble had heard of. 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. Clearly Amazon is in this for the long haul, content for Amazon Studios will be a loss-leader for now, with the eventual payoff being more subscribers to Prime — which then feeds into its goods and services business, since customers will have already paid for free deliveries. 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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