Soderbergh blasts the studios at Tribeca

Wired News:

"The economic model of the film business is broken," said Oscar-winning director Steven Soderbergh during a panel discussion Monday night entitled "Downloading at a Theater Near You."

Soderbergh cited a litany of Hollywood problems: the obscene compensation of A-list talent (top stars routinely receive packages worth $25 million) and a revenue-sharing system that he described as unfair to theaters.

There's no denying that there's very little money to be made showing movies in theaters. (Especially if you're a theater.) Pictures rarely make back in theater revenues what they cost to produce and advertise. Where movie studios make their money is on DVD. History shows, however, that a film's performance on DVD is directly related to how well it did in theaters – and so H-wood, for lack of a better model, keeps the theater system going. Not that you could shut the theater system down overnight or that I would want theaters to go away, but at this point the economic model for movie houses is about anything but the movies themselves.

Some theater companies thrive by creating a theater destination and then leasing space to other businesses surrounding the theater; others (like the Alamo Drafthouse) survive by running themselves as restaurants that just happen to show movies. Most of the cineplexes are selling popcorn and soda as fast as they can while pimping out their audiences to pre-show advertisers. I suspect not much will change in the short term but the current "cattle call" business model of motion picture exhibition doesn't seem like one that will last much longer.