How To Read The Numbers For THE INTERVIEW’s VOD Release

Some transparency in comparing THE INTERVIEW's day-and-date release to a typical weekend box office.

With the release of Sony’s The Interview on limited VOD platforms, there were a number of cyber conversations about the ramifications of a major studio doing a day and date VOD release. And then Sony made their first weekend VOD performance public, and there were more calls for open transparency on all VOD reporting. With so little actual data available, it’s understandable for everyone to be looking for more transparency. After all, with the DVD market hitting bottom and the foreign sales market also in a troubled state, it’s become harder for producers and filmmakers to see much return beyond what they are paid upfront. VOD and other digital revenue streams are seen as a hope to compensate for the changing market so any information is needed for an industry hungry to support non-studio filmmaking.

There are various reasons why VOD information isn’t public. First and foremost, there’s no central database that all studios and all VOD platforms report into. DVD has Videoscan. Theatrical box office has Rentrak, ERC, Boxofficemojo (praise Moses that didn’t go away!) and a number of other sites. Rentrak has a service, but it only contains transactional data from cable VOD providers (no iTunes, no satellite) and only if a studio volunteers the data. Interestingly, Magnolia and IFC, the two distributors who built the day and date and ultra models, don’t report in their data. Why? Well, information is power, and if they can control that information (the two together release over a hundred movies a year in a collapsed VOD window), then they can control that part of the indie distribution world. It’s a significant advantage they are unwilling to relinquish in the interest of the larger movie community.

Second, the VOD platforms themselves aren’t fully capable of reporting performance every day, the way theaters report box office to Rentrak. There’s a week to two-week lag between when a transaction happens and when the platforms can fully report it. While there’s still a lot of uses for this data (Videoscan and DVD sales have a similar lag), it won’t supply the thirst for the public to know how a film did the weekend of its release the same way box office is reported and discussed.

Finally, there’s a significant fear that the press and vocal members of the public will misunderstand the information. There is a growing part of the internet that dissects a movie’s weekend performance, and movies are labeled a success or failure after just two days of performance. Most of the group hired to discuss box office on the internet are not long-time industry finance professionals, and their evaluations are frequently studio PR or too concise soundbites. (Indiewire’s Tom Brueggemann is the exception here as he’s a vet and his analyses are insightful and accurate.) There’s a worry that the VOD data, which is even more complex than box office data, will be ripe for misinformation.

The reporting of VOD data on The Interview came with the analysis that many distributors are afraid of. This Indiewire article, “Is the Day-and-Date Release of ‘The Interview’ a Success? That Depends” by Paula Bernstein, contains exactly the type of amateur analysis that people are hungry for but is upsetting to distributors. In her article, Paula adds the theatrical revenue to the VOD revenue and compares it to the openings of This Is the End and Neighbors. Her evaluation of this apples and oranges comparison concludes that The Interview’s revenue “isn’t so impressive.” Nothing could be further from the truth. Once one evaluates all the factors, it’s impossible not to see The Interview’s four day $15 million VOD performance as remarkable.

To fully evaluate The Interview on VOD, and potentially compare it to other films’ openings, there are a number of aspects to consider. First, we should acknowledge that this is informed supposition, meaning we will be making some assumptions that are rather hard to prove. It’s likely the folks at Sony can make a more informed analysis here, but we’re making our best guess in order to make an apples to apples comparison. We are trying to measure the demand of the first weekend or, to put it another way, find a way to compare the The Interview against similar movies.

Bernstein correctly remarks that the initial VOD placement was severely limited. To elaborate, Sony had the movie available on Google Play and it partners – youtube and Xbox, as well as Sony’s direct to consumer website. A normal VOD release will also utilize Google Play, but Google is not a major player in the VOD or EST (electronic sell through) space, and they likely make up less than 5% of a normal title’s transactions. The big players are cable (especially Comcast), satellite (especially Direct TV) and iTunes. Not only do they have the dedicated consumer behavior of people going to their platform looking for content to consume, but they excel at impulse marketing and generate transactions on movies the consumer didn’t know existed until they visit the platform. The fact that The Interview was only available on a smaller player in the VOD space cannot be overstated.

In order to find a way to mathematically compensate for the lack of placement, it’s also important to note that being the only platform certainly drove people who normally use the other VOD platforms to Google. Also, the title had enormous awareness because of the constant reporting of Sony pulling the film from release and making a regular Christmas theatrical release into a political and moral conversation for pretty much everyone in the country. My mother, a retired Jewish socialist living in Florida who has zero connection to pop culture, even emailed me about the film. So on one hand, you have limited, but exclusive, placement. On the other hand, you have huge awareness. There are a few other aspects to consider (people not wanting to give credit card information on the internet on this title, and a lack of knowledge from the average consumer regarding where it was available - even if it was available). For our purposes here, we will assume the limited placement cost the film 40% of total transactions. So if ten people would have watched the movie if it had been placed normally, we can assume only six did.

Another factor is that, with theatrical releases, one transaction equals one person. On VOD, multiple people can watch a transaction. While it varies, the usual multiple VOD platforms use to calculate audience is 1.7, so the two million VOD transactions are actually worth 3.4 million theatrical transactions, if we are trying to compare.

Finally, there’s a slight difference in the average price per transaction for VOD vs. theatrical. The average theatrical ticket price is currently $8.12 (per boxofficemojo). $15 million revenue off 2 million transactions is an average price of $7.50. There were two price points: $5.99 for a rental and $14.99 to own. The $7.50 average suggests the majority of consumers rented, which is what one would expect here.

We won’t factor in piracy since every movie deals with piracy and once a movie is on VOD, it’s going to be on bittorrent. There’s no evidence piracy affected The Interview more than it affected any other movie.

Now let’s do the math. We’re going to build what we think the number of transactions would have been had it been available on all platforms. Using the 40%, 2 million transactions now becomes 3.33 million. Now let’s factor in the additional folks watching each transaction. 3.33 million now becomes 5.67 million. Let’s multiply that by the average ticket price and we get $46 million dollars. $46 million is the largest opening for a comedy in December since Meet the Fockers in 2004 (not adjusted for inflation). Again, rather remarkable.

Let’s be clear, revenue is revenue. Sony did not make $46 million after four days but $15 million (gross, they probably are getting 75% of that number). On a purely demand level, as a way to compare The Interview to other movies, this is probably as close as we can get.

So what does this mean? Unfortunately, not a lot. What happened to The Interview is a once in a lifetime, act of god event. It cannot set any precedent for any forecasting. If another studio action comedy with A-list actors gets a day and date VOD release, it will likely have much wider placement and much high price-points. Studios do have an interest in the VOD space, but international box office has compensated enough for the loss of DVD sales so they aren’t looking at VOD because they still need theatrical box office to drive awareness. The uneasy truce between studios and exhibitors continues. I wouldn’t be surprised to see studios use VOD as a way to get back into the niche audience space (see Ryan Gosling’s Lost River). Chain theaters don’t really want that product (they refused to play Radius’ Snowpiercer outside of four walls even with it having significant theatrical demand and a strong cast) and, believe it or not, most studio distributors are movie fans, and this would give them a way to release passion projects. Here’s the silver lining: majors studios getting more involved in this space will lead to more centralized and public data being released which is what we all want anyway. Let’s just use this information responsibly.

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