analysis | How Sony’s release of “The Interview” online could change the film industry

Sony Pictures has just announced the simultaneous release of controversial film “The Interview” through internet video-on-demand services in tandem with a limited theatre release.

Make no mistake, this is huge.

Never before has an industry stalwart like Sony chosen online distribution simultaneously with a theatrical run. Should online releases of “The Interview” generate significant returns and positive consumer feedback, the film industry would be forced to reconsider their approach to digital distribution. Theatres could be inclined to release future films both in theatres and online.

In a surprise move, Sony has also secured distribution deals with Microsoft and Google, supplementing Sony’s own online video-on-demand services. Piggybacking on the hype generated through the high profile hacking scandal at Sony, these deals could provide Microsoft and Google’s online VOD services with much needed visibility as they struggle to make headway in a market dominated by incumbents like Apple’s iTunes and Netflix. In particular, Google’s release of “The Interview” on their relatively unknown YouTube VOD service could increase consumer mindshare, something the service has struggled with in spite of the enormously popular YouTube brand.

A dual release model would represent a major victory for the consumer. As moviegoers are given the choice between watching a new movie in theatres or in the comfort of their own homes, theatres would necessarily lower costs and provide additional value to entice consumers through their doors. This may spark a new golden age in the moviegoing experience, one in which theatres provide additional amenities and offerings not typically found during the home experience.

Simultaneous distribution is typically used by smaller studios that do not have distribution agreements with large, nationwide theatre chains. By releasing films online while they play in theatres, small studios can reach the largest possible audience before a film loses any momentum it generates. In contrast, larger studios stagger their releases so that theatres can extract the maximum profit from a film before it is released online and on physical media, where it generates profit solely for the studio.

But for a behemoth like Sony to simultaneously distribute a film online is unprecedented. As unusual as it may be given their track record, Sony could become one of the most forward thinking studios out there. Sony has just upended the traditional model, and it’s the consumer that comes out the ultimate victor.