Tags: sony | the | interview | pay | per | view

Pay-Per-View Economics May Not Add Up for Sony's 'The Interview'

Friday, 26 Dec 2014 06:20 PM

The economics of pay-per-view suggest Sony Pictures will have a hard time generating enough revenue to recoup the estimated $80 million it has spent so far making and marketing “The Interview.”

The movie opened in 331 theaters on Christmas day, taking in more than $1 million in ticket sales, according to Rentrak Corp. It also topped the charts of two online marketplaces, Microsoft Corp.’s Xbox video store and YouTube’s movie store.

A family of five could watch “The Interview” at home for the $5.99 online rental price at YouTube Movies, compared with the $50 or more they would pay in a theater. The Seth Rogen film, a fictional comedy about a plot to kill North Korean leader Kim Jong Un, prompted a cyber-attack that the FBI linked to that country’s government and led Sony to shelve the release.

“There’s a reason why the industry has its typical release pattern, with the theatrical first,” said Paul Dergarabedian, senior media analyst at Rentrak Corp.

One potential benefit is that studios keep a larger share of revenue from typical video-on-demand deals, as much as 70 percent, according to Rich Greenfield, an analyst at BTIG LLC. The split with cinema owners is about 50-50. Sony declined to comment on possible terms.

Screenings in 300 theaters won’t add a lot compared with what the studio planned previously. It represents fraction of the 3,000 or more locations that typically constitute what the industry calls a wide release for a film such as “The Interview.”

Digital Distribution

Digital distribution of entertainment has been growing. Online sales of films and TV shows increased 47 percent last year to $1.2 billion, while rentals rose 5 percent to $2 billion, according to the Los Angeles-based Digital Entertainment Group, a studio-led consortium.

Because of the controversy and weeks of international media coverage, “The Interview” could see much more traffic online than is typical for films that are released simultaneously on the Internet and in theaters.

Without knowing how many households will pay to see the film online or what the split is with the distributors, it’s difficult to estimate how much Sony Corp.’s entertainment division will recoup from “The Interview,” according to Eric Wold, an analyst at B. Riley & Co. in San Francisco.

“I don’t think they end up getting back all of their costs,” Wold said.

 

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The economics of pay-per-view suggest Sony Pictures will have a hard time generating enough revenue to recoup the estimated $80 million it has spent so far making and marketing "The Interview."The movie opened in 331 theaters on Christmas day, taking in more than $1 million...
sony, the, interview, pay, per, view
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2014-20-26
Friday, 26 Dec 2014 06:20 PM
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