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Online release saves ‘The Interview,’ but theaters still rule

Releasing the controversial film “The Interview” on the Internet has paid off for Sony Pictures. But don’t expect the embattled entertainment giant or other major players in the movie industry to make a habit of putting big releases on the Web and in theaters at the same time.

“It’s a unique situation — unprecedented,” said Paul Verna, a digital media industry analyst at the research firm eMarketer in New York. “I don’t think other movie studios are necessarily going to set out to launch a similar release plan.”

The major reason is that it still doesn’t pay for Hollywood to favor the Internet over cinemas. Movie tickets continue to produce more revenue per viewer than online sales and rentals. For example, a single movie ticket usually runs around $10 or more; “The Interview” cost $5.99 to rent and $14.99 to buy. Moreover, two or more people can watch a rented movie for the same price, but each theatergoer must pay for his own ticket.

The studios “would vastly prefer $20 rather than $6 for two people watching,” said Michael Pachter, an entertainment analyst at Wedbush Securities in Los Angeles.


Sony did rake in $15 million from online sales and rentals of “The Interview” in four days, more than five times the $2.8 million the film generated from cinema sales — although the film was shown in only a small number of theaters in the first few days.

Two weeks ago, it seemed that film buffs might never see “The Interview” at all. The comedy, about two bumbling buddies who set out to assassinate the dictator of North Korea, inspired a devastating hack on Sony from a group calling itself the Guardians of Peace . The group began by releasing sensitive stolen files, including e-mails, personal information about employees, and copies of unreleased Sony movies. Then the Guardians threatened terrorist attacks on movie theaters that showed “The Interview,” which was originally scheduled for release on Christmas Day.


On Dec. 17, after several of the nation’s biggest theater chains dropped “The Interview,” Sony Pictures withdrew the film. But that decision spawned an intense backlash, including a public rebuke from President Obama, who blamed the hack on North Korea’s government.

Sony backtracked by arranging screenings of the movie at more than 300 independent theaters and by making it available for sale or rental through the online video services YouTube, Google Play , and Apple iTunes .

According to Sony files leaked by the Guardians, “The Interview” cost about $44 million to make, so the film’s online performance has taken it a good way toward breaking even.

On Wednesday, Sony said that it would also offer “The Interview” through major cable and satellite TV providers, including DirecTV, Comcast, Cox Communications, Verizon FiOS, and Time Warner Cable. Dish, the third-largest pay-TV service, has also agreed to offer the movie.

In addition, Sony said that on the day after New Year’s more movie theaters would begin showing “The Interview,” bringing the total to 580 screens nationwide.

While the Sony hacking case generated intense publicity for “The Interview,” most movies will probably benefit more from an old-school theatrical release than an online debut. The theatrical release is a marketing event that generates reviews in newspapers and magazines, as well as word-of-mouth reactions from theatergoers.


“It would be hard to drive the same kind of interest through digital distribution,” Pachter said.

Not that filmmakers haven’t tried.

In 2006, director Steven Soderbergh, who was famous for the hit films “Erin Brockovich,” “Traffic,” and the “Ocean’s Eleven” series, released a film called “Bubble” simultaneously in theaters, on DVD, and through cable TV video-on-demand services. Hardly anybody saw the movie, partly because major theater chains refused to carry it unless they got it exclusively.

At the time, John Fithian, who was president of the National Association of Theater Owners, called Soderbergh’s simultaneous-release strategy “the biggest threat to the viability of the cinema industry today.”

The failure of “Bubble” suggests that Hollywood won’t be in a hurry to try this strategy again.

“They actually need the movie theaters,” Pachter said.

But Verna, from eMarketer, said studios won’t soon forget the lesson of “The Interview” — that in rare cases, an online release can pay off.

“It could be a situation where they simply feel that the movie doesn’t have a lot of potential to drive huge amounts of business in the theater,” Verna said. “Releasing it digitally, they feel that they could reach a wider audience.”

But in most cases, Verna said, simultaneous releases won’t pay off.

“The economies of a theatrical release, assuming you can get people into theaters, still make more sense.”


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Review: ‘The Interview’ was bound to disappoint

Rogen and Goldberg didn’t anticipate ‘Interview’ controversy

Hiawatha Bray can be reached at Follow him on Twitter @GlobeTechLab.