Soderbergh does a DVD-theater release combo

Partnered with billionaire Mark Cuban, the art-house director takes on traditional Hollywood business practices.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
6 min read
A red carpet will roll out Thursday night in front of Parkersburg, W.Va.'s historic Smoot Theater for the official premiere of a movie that, according to backers, represents the future of the film industry.

The movie is Oscar-winning director Steven Soderbergh's "Bubble." But the persistent buzz around its release has less to do with the film's artistic merits than with the fact that it will be broadcast on the high-definition network HDNet the night of its full theatrical release, Jan. 27, and also made available on DVD just four days later.

For many in the movie business, this is heresy. Most of the big movie chains have refused to carry the film. Financed and distributed by former Broadcast.com executives Mark Cuban and Todd Wagner and their Wagner/Cuban Companies, the film is a direct shot at Hollywood's traditional way of doing business.


What's new:
Steven Soderberg's small-budget film "Bubble" will be the first major movie whose release on DVD follows its release in theaters by only four days.

Bottom line:
The movie's backers, former Broadcast.com executives Mark Cuban and Todd Wagner, are betting that their release strategy will cut marketing expenses for the films they back and ultimately make more money for theater owners.

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"Mark and I sat down and said, 'Can we find a way to survive in an industry that has not been good for equity investors?'" Wagner said. "This is the only way that real entrepreneurs have a chance to have a shot in an industry run by huge studios."

"Bubble" is part of an early wave of experimentation with different release strategies that's disturbing business as usual in Hollywood and has put theater owners, already smarting from a decline in box office revenues, on the defensive.

Movies have long been released in "windows"--first to theaters, then to home video, and from there to TV, pay-per-view, video-on-demand, hotels, airlines and so on. By staggering the availability to each market, studios have hoped to tap the full potential of each, without simultaneous competition from other distribution platforms.

That model has been challenged in recent years, undermined both by new distribution technologies and growing levels of online piracy and counterfeit-DVD sales. Movies are now routinely available online even before their premiere, and can be found for sale on street corners for just a few dollars as the curtain goes up in theaters.

In recent months a few powerful Hollywood insiders, led by Disney chief Robert Iger, have been talking about the need for dramatic changes in the windowing system in order to respond to those challenges.

Last week, Twentieth Century Fox said it will begin releasing movies to video-on-demand services simultaneously with DVD releases, a goal long sought by online companies like MovieLink, which have complained that they get films too late to compete with ordinary video rentals.

But the "Bubble" experiment with unveiling DVDs at the same time as the theatrical release is an anomaly, and the big theater chains are trying to keep it that way. The biggest chains, including AMC Entertainment, Cinemark Entertainment and National Amusements, have said they have no interest in carrying a film with a model that could undercut their own business.

"We feel that day and date (for a DVD release) dilutes the theatrical release," said Terrell Falk, a Cinemark spokeswoman. "This wouldn't be something we would show."

The art-house director and the billionaires
Wagner first met Soderbergh, who won the 2001 Best Director Oscar for his film "Traffic," not long after he and Cuban had sold Broadcast.com to Yahoo for more than $5 billion in 1999. The pair of newly wealthy entrepreneurs were interested in filmmaking, and Wagner was talking to everyone he could in Hollywood, trying to understand the business.

That first meeting, at a restaurant in Los Angeles, resulted in an agreement to help fund two of the director's films. Wagner came back to Soderbergh again 18 months ago, and explained the idea of "day-and-date" DVD releases over a lunch in New York City. An enthusiastic Soderbergh agreed to direct six films for the Wagner/Cuban Companies, and "Bubble" is the first of those to hit the screen.

For the director, this new way of releasing movies was part of a broader experimentation with new technologies, in hopes of shaking up Hollywood's typically risk-averse habits. He could not be reached for this article, but has discussed his thoughts in other recent interviews.

"Bubble" itself is an experiment in filmmaking as well as in distribution, shot on high-definition digital cameras, using nonprofessional actors drawn from the residents of Parkersburg and

another nearby town. Soderbergh has pegged its budget at about $1.6 million, a pittance even by art film standards. The film tells the story of a love triangle and murder at a doll factory.

For Wagner and Cuban, the simultaneous DVD release represents a business decision more than an ideological statement. Their analysis of the movie business led them to bring as much of the distribution chain as they could under their own control, including buying the Landmark Theatres chain, releasing DVDs themselves and distributing films on Cuban's HDNet channels.

Releasing a film on all three platforms at once allows them to save on marketing expenses, which can be crippling for a small film, Wagner said. They'll do the same thing with seven or eight films in total over 2006, charging more for the early release DVDs than for a typical home video, he added.

"This way we can cut through the clutter once, spend the money once and allow people to buy it however they want to consume it, whenever they want to watch it," Wagner said. "Imagine that, literally listening to consumers."

The 1 percent solution
The entrepreneurs are adamant that they're not trying to undermine the cinema business. After all, they're theater owners now themselves. They're offering to set aside 1 percent of DVD revenues for this and future similar releases, divvying it up between theater owners who agree to distribute their films. They say their projections show that theater owners can ultimately make more money this way, as more people see the films.

Greg Laemmle isn't convinced. He runs the arty Laemmle Theatres chain in Los Angeles and has even carried some of Wagner/Cuban's earlier work, including the Enron documentary "The Smartest People in the Room," which ran on Cuban's HDNet while still in theaters.

His chain has carried movies like "Ray" and "Lost in Translation" that came out on DVD while still in their theatrical run, and ticket sales almost immediately fell off precipitously, he said. Nothing Cuban and Wagner have said has changed his mind.

"God bless them, they own films, and they own chains, and we will watch with curiosity," Laemmle said. "But the reality is, we've seen the impact that DVD release had on grosses, and there wasn't a lot of business left."

All of this is a lot of pressure to put on a tiny-budget murder mystery filmed using local citizens as actors. National Theater Owners Association Executive Director John Fithian said the attention paid to the release has been out of proportion to its real merit.

"If I was Todd Wagner, I would try to get a lot of controversy, so people would go see this tiny picture," Fithian said. "This won't be a good experiment on simultaneous release, because it's gotten so much attention, and so much free publicity."

Even Cuban, who has vociferously defended the digital-release business model, as well as his own role in pushing the idea of collapsing release windows, is looking beyond the "Bubble" release.

"With all the drama the media is trying to assign to (the release strategy), it could be its own movie," he wrote in an e-mail to CNET News.com. "It's just one of many evolutionary steps the media industry takes every year."

But at least for the citizens of Parkersburg, who will see their own homegrown stars on the big screen tonight, "Bubble" will be always have a place in filmmaking history.