Lessons Learned from Sony’s handling of The Interview, Theaters, and VOD

Curator's Note

During moments of disruption in the media industries, one force that prevents dominant media companies from taking advantage of new media and technologies is their allegiance to those they consider their major customers. In the case of the film studios, they consider their major customers to be the theatres. Until the economic potential of the internet is rich enough to tempt the studios away from the theatres, the theatres maintain a stranglehold on the industry via a longstanding policy that studios wait to distribute films online for several months after a movie opens. That dynamic was tested in December 2014, when the major U.S. theater chains opted not to show Sony Pictures' The Interview. Sony might have taken advantage of their momentary freedom from the theatres by confidently testing the potential of video-on-demand. Instead, the studio announced on December 17 that they had no further release plans. It wasn’t until December 24 that Sony announced it would, in fact, release the film VOD on that very same day. Over the following month, they released the film to different online and cable platforms via drips and drabs.

By January 18, The Interview, which had a total budget of approximately $75 million, had earned $40 million through VOD. Considering the fact that deals with online distributors are often more favorable for studios than deals with theater chains, Sony did pretty well with their last minute decision. I would argue that the studios have made a major miscalculation in viewing the theatres as their primary customers, when it is in fact the audience who should hold that title. Studios should adjust to the behaviors and desires of their audience rather than trying to shoehorn people back into the theatres. The dustup over The Interview gave Sony an opportunity to move with their audience into the twenty first century. Unfortunately, as with so many aspects of the Sony hack, they handled it badly. Although it was ultimately not a total financial debacle, neither was it a rousing success. Rather than serving as a grand step forward, will it serve as a cautionary tale?


The 1982 film Tron is notable as the first film with a significant amount of mise-en-scene constructed by computers. 1996's Toy Story is notable as the first *successful* film of that kind. I've often wondered, would it have taken 14 years for a successful CG film to be made if Tron had been less of a failure? In other words, did Tron unnecessarily scare studios away from CG? I'm wondering, Jen, if we can make any useful prognostications about the future of on-demand distribution from The Interview? Do you think Sony realizes they mishandled it? Do they realize it was a pretty mediocre film to begin with? Basically, do they think the problem is exclusively or even primarily with this distribution model and what does that mean for the future?

Philip--Great speculation as to the Tron-effect! Jen--Intriguing twenty-first century challenge you present here questioning studios' lasting reliance on theaters. Without the media attention of the leak, would the film have made $40 million? With those stars, in that kind of comedy, slated for a Christmas release, even with the eventually tepid reviews, it's possible the film could have made more in the theaters if all had gone as planned. But, with advanced planning, the possibilities seem like they could push the landscape of distribution even further. The influence of this haphazard release on industry-wide distribution models might be the most impacting legacy of the Sony leak. (Issues of security breaches, for the company, and most importantly for the thousands of--non-million dollar earning--employees whose private info has been made vulnerable, might be kept out of the headlines. For security reasons, of course.) I don't think studios can wait the 14 years between Tron and Toy Story to slowly experiment and test the waters of VOD distribution for big films. Jen, as you point out, with the choices available now in how to access/watch movies, audiences are especially powerful.

The questions you raise about potential lessons learned are very apt! I often think that the leaders of these large companies become so focused on whatever is immediately in front of them that they lose the forest for the trees. It will be interesting to see how Tom Rothman manages the studio now. Although he's reputed to be a details guy instead of a big picture guy, so we may see more of the same?

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