On average, insiders say, studios consider a low-budget VOD release a success if it's rented more than 50,000 times, which translates to $250,000 to $500,000 in gross sales. A similar number would be a flop at the box office, but advertising costs for VOD are a fraction of what's needed for a theatrical release.
The best marketing for a VOD movie, in fact, is simply putting it in theaters. VOD providers highlight movies still playing in theaters in a special section and charge up to $10 for them, compared with $5 or less for ones that have finished their theatrical runs.
"The theatrical part of these releases are something of a hoax," said Martini. "You can justify a higher price so long as it's playing in one theater in Timbuktu."
In addition, most major newspapers — including the Los Angeles Times — review only movies that play in theaters.
There are real trade-offs, though. Choosing an early video-on-demand release can mean foregoing any chance of box office riches. Major chains including AMC Entertainment and Regal Cinemas, which control most of the nation's movie screens, won't play a film if it's available in homes sooner than 90 days after it opens on a big screen.
Eager to protect their relationships with exhibitors, major studios follow the same policies and don't put much marketing muscle behind early VOD releases.
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In June, 20th Century Fox's prestigious specialty label Fox Searchlight formed an unusual partnership for "The Do-Deca-Pentathlon," a comedy directed by brothers Jay and Mark Duplass.
In order to keep its hands clean and avoid upsetting the theater chains, Searchlight recruited Red Flag to release the movie in theaters while it handled VOD. Mark Duplass said he was happy with the compromise. He and his brother's most successful movie, "Cyrus," grossed only $7.5 million in theaters and the experimental "Do-Deca" had much dimmer commercial prospects.
"I believe that movie would lose money if Searchlight put it out the regular way," said Mark Duplass. "I have no problem with people watching 'Do-Deca' at home — it's more financially responsible and will give us a wider reach. That's a win-win for me."
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