Fox’s Juno Move Looks Like A Half-Pregnant Strategy

Fox’s decision to offer its box-office success, “Juno”, on iTunes the same day as the film is released on DVD and Blu-ray, is another step towards an inevitable re-alignment in the linear movie distribution channel.

Fox joins Disney in releasing films for sale on iTunes, four months after all the studios agreed to film rentals via the same platform. Already, a variety of first release films can be purchased or rented on Amazon’s Unbox service.

Interestingly, the decision by Fox to test the iTune waters with Juno is based primarily on the characteristics of the film’s audience - a demographic more likely to engage in online purchases, or participate in a VOD offer. In other words, the move reflect’s the studios case-by-case approach in deciding on the most appropriate distribution strategy.

On this basis, some films are likely to follow the traditional, linear path - cinema, DVD/Blu-Ray, cable, free-to-air, VOD - while others could be released via a retail mechanism like iTunes and Unbox, competely bypassing the cinema chains altogether.

Like media and advertising, distribution options can and should be customised based on the characteristics of the content and intended audience. This profiling is best illustrated by the concept Digital Network Awareness (in a previous post) and the increasing need to discriminate between customers based on their digital ‘graph’, which is determined by their awareness of, and familiarisation with, certain digital technologies.

More than just changing customer preferences, the changing economics of film distribution is placing further pressure on studios to consider all their digital options.

Controversially, recent economic research suggests that, given the growing number of retail options available to studios, such as VOD, there is an increasing amount of money being left on the table.

Economic modelling is now indicating that studio revenues can be maximised by releasing films on rental DVD and VOD at the same time as the theatre release. In fact, revenues can be improved by as much as 16% by enacting this change.

The downside? Theatre owners would experience a 40% decline in their own revenues, effectively decimating the theatre/cinema industry.

A 16% jump in revenue, however, particularly for a volatile industry like film production, looks very tempting. Unfortunately for cinema operators, film studios aren’t the most altruistic of businesses.