Why Do Companies Bother With Tiny Theatrical Releases?

by Justin Sevakis,

Terry asks:

I don't understand how Funimation Films is supposed to turn a profit with the way they show some of the films they distribute. For example, according to Boxofficemojo, the first Rurouni Kenshin movie was only in theaters for 3 days and it was only screened in 27 theaters, for a grand total of $32,445. That really doesn't seem like it earned more than it must have cost them. What's their strategy with these super limited theatrical engagements?

Limited theatrical releases very seldom make money. While distribution is nowhere near as expensive as it was back in the analog days (when every theatrical print cost $1,000+ and every play date meant trucking a 65-pound pair of film canisters to the theater), it's still extremely cost and labor intensive to do. Theaters have to be convinced that people will show up -- which usually means that you have to guarantee that you'll spend a certain dollar amount on local advertising in that area. The bigger the market, the more money they expect you to spend -- for New York City or Los Angeles, that could be thousands of dollars.

If theaters can't be convinced that you have the marketing muscle to put butts into seats, the distributor will often just buy out the theater for a few nights -- a practice known as "four-walling." Basically, the distributor pays the theater owner to rent the auditorium outright. If people show up, they get the ticket costs and make back the money they spent. If not, they're just out the cost of the night. Weekends are far, far more expensive to rent than weekdays, so usually a super small release like the sort Funimation usually does will end up with a few weeknights instead of a weekend show.

So you're right in that the $32k that Funimation took in for Kenshin probably wasn't much more than the run cost them. This is pretty typical for a small scale theatrical run like this, especially one that doesn't run for a full week. On the other hand, they probably didn't lose money. Moreover, the benefits of doing a theatrical release can be far greater than just the money it brings in.

A theatrical release legitimizes a movie in a way a direct-to-video or direct-to-VOD release doesn't. It shows up on the radar of movie websites, and gets reviewed by critics. It gets talked about in the media -- local TV and talk radio stations often have a segment dedicated to what's in theaters that week, and cover small "art house" releases as well as big mainstream blockbusters. Much like a late night television broadcast does for anime, putting a movie in theaters for a limited time -- even if you have to pay the theaters to take the damn thing -- can be such good marketing for later home video and VOD releases that it's worth losing money on it.

For theatrical films, most Japanese creators would far prefer that people go see it in a theater than see it at home, on video later, so for some licensors, doing at least a small theatrical release is a stipulation for licensing the movie in the first place. Some contracts even specify a number of theaters that the film must be screened in. Often these demands are made without any real knowledge of the American theatrical market, or the difficulties in marketing a release in a country as big as this one. Sometimes a small theatrical release will simply be the publisher playing ball with a licensor demand. Other times, the creators are hung up on the idea of maybe, possibly winning an Oscar. The licensor will insist on an Oscar-qualifying theatrical run, which usually means four-walling the movie in New York AND Los Angeles for a week. These almost always lose money.

But there are many reasons to do a theatrical release other than actually making money, and most of them have to do with marketing. Simply making a small splash in the theatrical world puts you on the map in a way that a direct-to-video release could never dream of doing. It's very often worthwhile, even if only a handful of people show up.

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Justin Sevakis has worked in the anime business for nearly 20 years. He's the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap.

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