May 24, 2024

Scuffle Over On-Demand Movies Portends Battles to Come

The blow-up is between studios and theater owners over a plan to slip some movies into homes through on-demand video shortly after they arrive in theaters. For Mr. Dodd, the new chairman of the Motion Picture Association of America, it is the first industry crisis since he started in late March.

“I’m the new kid on the block,” Mr. Dodd said in an interview by phone on Friday, acknowledging that both his relative inexperience and the need to stay out of business decisions made by individual studios had kept him largely out of the battle. “Each company has to make up its own mind.”

Studios, exhibitors and filmmakers are arguing about the future of the business, and whether people in coming years will be more likely to watch movies in theaters or in increasingly sophisticated home setups mimicking the quality, immediacy and, perhaps, cost, of today’s theatrical experience.

Last week, four studios — Sony Pictures Entertainment, 20th Century Fox, Universal Pictures, and Warner Brothers — took the first step in their arrangement with DirecTV to release films two months after their theatrical release.

The first premium on-demand offering came on Thursday, as DirecTV offered Sony’s “Just Go With It,” with Jennifer Aniston and Adam Sandler, for $30. Two dozen filmmakers, including James Cameron and Peter Jackson, fired back with an open letter criticizing the experiment as a threat to theaters.

The fight separated allies who had recently joined to spend billions of dollars to upgrade theaters for digital and 3-D projection, and had used their combined political might to thwart proposed trading in a financial exchange based on box office revenue.

The rift underscores how little Mr. Dodd or anyone else can do to buffer the jolts in a film business where the greatest challenges are not the labor disputes or public policy battles that were wrangled by past Hollywood statesmen like the MCA chairman Lew R. Wasserman or the long-serving M.P.A.A. chief Jack Valenti.

Rather, the greatest challenges are philosophical and include business choices largely outside the reach of a trade association, which is limited by antitrust law from interfering in decisions that are really about business rather than public policy — hence Mr. Dodd’s unaccustomed restraint. In fact, the difficulties facing the industry are likely to become tougher as film companies feel their way toward a digital future that is only beginning to unfold.

“What’s really going on is that the architecture of the industry is changing,” said Jeff Berg, chairman of the International Creative Management agency.

Speaking by telephone last week, Mr. Berg predicted increasingly rapid waves of change that would overtake the movie business, as companies struggle to replace disappearing DVD revenue with income from both digitally enhanced theaters and new approaches, like so-called digital lockers, that will allow viewers to store films they have paid for in a pirate-proof virtual space that permits repeat viewing.

“There’s a big narrative that’s going to be very disruptive,” Mr. Berg said.

The fierce response by executives from big movie chains like Cinemark, AMC and Regal to the studios’ relatively cautious step with on-demand is clearly more about setting a line for future battles than it is about losing money from an Adam Sandler comedy that left most theaters weeks ago.

“I have not felt this level of concern about a practice of the studios among our members,” said John Fithian, president of the National Association of Theater Owners, which helped organize the filmmakers’ protest letter (in keeping with that association’s view that it can to some extent oppose the plan without violating the antitrust laws that have held back the M.P.A.A.).

Mr. Fithian, also speaking last week, said theater owners had been particularly shocked about the way they learned of the on-demand program: while they were gathered last month at the CinemaCon movie convention in Las Vegas, shortly after Mr. Dodd delivered an address voicing enthusiasm for the moviegoing experience. The report appeared on the Web site of the trade publication Variety.

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