Will ‘The Interview’ make money for Sony?

Nova Safo Dec 24, 2014
HTML EMBED:
COPY

Will ‘The Interview’ make money for Sony?

Nova Safo Dec 24, 2014
HTML EMBED:
COPY

Sony Pictures released the Seth Rogen film “The Interview” on various digital media platforms today. It is available for purchase ($15 plus tax) or rent ($6) on Google Play, YouTube Movies (yes, there is such a thing), Microsoft’s Xbox, and a special website Sony created for the film.

Marketplace opted for the purchase option:

The movie clocks at two hours, but its plot has dragged on for weeks — it was at the center of an international hacking incident attributed to North Korea, in which troves of Sony Pictures’ secret financial data and executive emails were released.

The film will also be screened in some 200 movie theaters across the country on Christmas Day. It was originally scheduled for a wider release, but the nation’s top movie theater chains canceled screenings after attackers issued a threat. Sony then announced its intentions to release the film following a public scolding by President Obama

Now, the question is whether the film will actually recoup the reported $90 million it cost Sony to make and market the movie. 

“I would be shocked if they’re going to recoup their … investment,” says Peter Kafka, a senior editor at the technology and media site Re/code. “You can sort of work out how many folks they need … to rent this thing to make it worthwhile.”

That number would be about 16.7 million rentals, if the studio was getting 100 percent of the proceeds from each sale. It won’t be.

John Sloss, who advises on digital media distribution at Cinetic Media, says “The Interview” would have had a much better chance at making money if Sony had released the film earlier and on every digital platform at once. After all, he says, cinemas aren’t where the profits are for studios.

“More often than not, the theatrical is a loss leader, because most of the releasing costs go onto the theatrical release, which builds awareness,” which then helps sell the film on other platforms with better margins, says Sloss.

Sony might have gotten between 40 and 50 percent of the price of a movie ticket at the cinema. But, it’ll get between 70 and 90 percent of the money spent on the various video on demand platforms that are showing “The Interview.”

“In a couple of years, transactional VOD, when combined with DVD, will exceed the revenue of DVD when it was at its height 10 years ago,” says Sloss, adding that that could total to about twice as much as a film makes in movie theaters.

The question now is whether the enormous attention the film has gotten because of the cyber attack will translate to enough viewers — and enough positive word of mouth from those who initially see the movie — to add up to significant revenues for Sony Pictures.

And how did Marketplace feel about the movie?

 

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.