Disney, the company that said Robert Downey, Jr was being greedy for asking for $50M a picture to play Tony Stark, just tried to play Scrooge McDuck….but then had to back off!
The battle between studios and theater owners for profit splits has been interesting in the last few years, but Disney amped the stakes:
About two months ago, as Avengers: Age of Ultron prepared to open, Disney sent a note to theater owners to update its master licensing agreement, which governs the terms by which an exhibitor can play a film. Looking to get even more back from the box office, the studio wanted discounted matinees to end at 5 p.m., rather than 6 p.m., the traditional cutoff time.
The directive prompted an emboldened response from National Association of TheatreOwners’ John Fithian, who wrote a letter to Disney four weeks later stating that he had received “an avalanche of complaints, concerns and fears” from his members.
Those concerns also addressed Disney’s intention to use NATO’s average ticket price (currently $8.12) as the minimum mark for splitting box-office revenue, even though ticket prices could be lower in smaller cities and towns. If cinema operators discount tickets below whatever a studio minimum is, they must chip in the difference to the overall pool. All studios have a minimum, but they fluctuate from market to market.
Though Disney itself didn’t get barraged with individual complaints, the studio has decided to abandon the idea of cutting matinees off at 5 p.m. The studio also will revisit using the average ticket price across all markets, even though it never has invoked the directive, which has been on the books for more than a year.
As if home media technologies (including hardware and platforms like Netflix) weren’t already cutting into cinema distributor’s profit margins, now they are getting it from upstream just as bad. We at Gabbing Geek analyzed their business model going forward and filtered the data through Michael Porter’s Five Forces framework of competitive analysis. Despite winning this battle, our results came back, “THEY IZ SCROOOOOOD!”
RDJ’s demands aren’t looking so bad, are they?