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Theater chains made a lethal mistake in rejecting The Interview

The Interview Online Revenue

Much has been made about movie theater chains’ decision to reject running The Interview on December 25th due to safety concerns. It is now becoming clear that these theaters have made a huge miscalculation that may cause much bigger problems than just reputation damage.

FROM EARLIER: Hackers turned ‘The Interview’ into Sony’s biggest online release of all time

On December 28th, The Interview continued doing strong business in the hundreds of independent theaters that are screening it. The comedy is holding per-screen average of $1,400, roughly on par with Night at the Museum: Secret of the Tomb and Annie.

What makes this extraordinary is the fact that Sony has announced that The Interview grossed more than $15 million via digital distribution channels like YouTube Movies, Google Play Store and Xbox Live. In just three days. And yet the movie is still performing on par with its comedy peers in movie theaters when you look at screen averages.

It is not clear that North Korea was responsible for hacking and threats against Sony. But whoever is responsible for the entire debacle may have triggered a chain reaction nobody will be able to contain.

Nobody has really had any idea how well a big-budget studio movie would play in digital distribution if you did a day and date launch simultaneously with the theatrical debut. Some small-budget horror movies and indie dramas do debut with on-demand video on the same week they hit theater, but these tend to be strictly B-list fare.

The Interview was an A-list comedy intended to go toe-to-toe with Into the Woods, the Disney holiday juggernaut. Of course, the media coverage it received due to the Sony drama was massive and probably unique. But nevertheless, now the movie industry has actual data about how digital distribution can generate strong sales while keeping theatrical distribution of the film viable.

This is exactly the scenario the big movie theater chains dread. Until now, they have been able to block the movie studios from experimenting with day and date releases of major movies. From now on, the temptation to do a splashy digital distribution deal to kick up interest in some middling movie will be overpowering — especially if the digital release can be designed to be global to blunt piracy.

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