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Hollywood's window

July 28, 2006

TODD WAGNER MAY OR MAY NOT have been the smartest guy in the room Wednesday at the American Film Institute's Digital Content Festival, but he almost certainly was the wealthiest. A dot-com billionaire, Wagner and partner Mark Cuban sold Broadcast.com to Yahoo in 1999 for $5.7 billion. So when he outlined a plan to cut the movie industry's costs, raise revenue and increase customer satisfaction, the standing-room-only crowd packed into an AFI screening room in Los Feliz was all ears.

Here, after all, was a guy who, with Cuban, had built a vertically integrated mini-empire of production, distribution and exhibition companies. He also was the executive producer of films ranging from the forgettable "Godsend" and "The Jacket" to the award-winning "Good Night, and Good Luck" and "Enron: The Smartest Guys in the Room."

Wagner's most intriguing proposal is for Hollywood to slash marketing expenses by releasing the DVD version of a movie at the same time it goes into theaters. That way, he said, studios can run a single advertising campaign for a new film instead of having to do a second one months later when a movie comes out on disc. He'd have Disney selling DVDs of "Pirates of the Caribbean: Dead Man's Chest" to Johnny Depp aficionados as they leave the theater.

Wagner's firms have already started down this road, releasing director Steven Soderbergh's low-budget "Bubble" to theaters, satellite TV and DVD sellers almost simultaneously in January.

Wagner is in a better position to try out his theories than a major studio would be, in part because his potential losses are much smaller. "Bubble" cost a mere $1.6 million to produce, which takes the sting out of the abysmal box-office gross. (Wagner says the movie turned a profit before its release, thanks to the sale of DVDs and foreign rights, but he hasn't disclosed specifics.)

The industry as a whole has largely resisted letting people choose to watch a new release at home instead of (or in addition to) the big screen. The most vocal opponents of this change have been theater owners, who say it would crater their businesses.

The ultimate question for studios, though, is whether they can spend less and profit more by releasing their products simultaneously to theaters and retailers. A report by Forrester Research, which found that video-on-demand services and online DVD rental services don't hurt DVD sales, suggests the answer is yes. As Hollywood learned with the VCR, making it easier for people to consume movies can prompt them to spend more, not less.

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