A Q&A with Mark Cuban
Editors note: Correspondent Marc D. Allan is reporting from Los Angeles over the next few weeks.
LOS ANGELES — Mark Cuban thinks he’s devised a better way to make and market independent films, and the soon-to-be 50-year-old billionaire and entrepreneur (and 1981 Indiana University grad) came here (to Los Angeles) last week to explain his plan to the nation’s TV critics.
Essentially, it works like this: His movie companies, 2929 Entertainment and Magnolia Pictures, finance the productions. Their films are first shown for three weeks on HDNet Ultra Video on Demand (Cuban owns HDNet), which is available in hotel rooms and is coming to cable and satellite systems. Because hotels, cable and satellite providers split the income from VOD, Cuban expects them to advertise these first-run films incessantly — like they do with wrestling events — creating buzz for the films and, ultimately, income.
After three weeks, the movie will be shown for free on HDNet the Wednesday before it debuts in theaters. Then the movie will open in Landmark Theatres (the chain he owns) before going to DVD without the usual 90-day waiting period. The DVD will come out on Magnolia Home Entertainment. (Guess who owns that?)
The result, he said, is giving consumers the movie “how you want it, where you want it, when you want it.”
The next Magnolia picture is “Humboldt County,” an engaging story of a medical student who, after getting a failing grade in one of his classes, takes off with a singer to meet her family — who grow marijuana for a living. The film debuts Sept. 1.
Will Cuban’s system result in better movies? We’ll see. But as always, he’s confident that he’s built a better mousetrap. Here’s more of what he had to say.
NUVO: You say the business model for independent films is dead. What do you mean?
Cuban: As a distributor, every dollar I spend to promote a movie — like “Humboldt County” — I need two back because I only get half of what goes to the theater. So if a movie has a box office of $10 million, $5 million of that would come back to me. So if I spend $6 million on P and A (prints and advertising), which is not a big expense, I’ve just lost $1 million and I’ve got to pray I make it back in some other way — VOD or DVD.
Whereas, with the Ultra VOD program, the cable and satellite companies are putting out these ads to promote it because they have a vested interest, and that generates a ton more visibility and promotion. So doing it this way, we think independents have a chance. We can get them theatrical release, we can get them DVD release, we can get them VOD all during a period when the movie is the hottest and there’s the greatest demand. Versus the way it’s done now — which is, spend a lot of money or spend no money and pray people show up in theaters. And if they don’t show up, the movie is done. And there are so many independent films, there’s not enough slots to be able to do that and spend that kind of money for everybody.
NUVO: Is this essentially a loss leader?
Cuban: No. It’s because we control the whole vertical chain. So if you go to the theater, I’ll make money. If you buy it on Ultra VOD, I’ll make money. If you subscribe to HDNet movies, I’ll make money. If you buy the DVD, I’ll make money. Sony Picture Classics, Paramount, Vantage — they’ve got after-release VOD, DVD and theatrical. We have a lot more opportunities to get a return, and that changes the economics for us.
NUVO: Lately, the Landmark Theatres in Indianapolis have been showing movies like “Get Smart” and “Indiana Jones.”
Cuban: We’ll show a mix. Take “Diminished Capacity,” a movie that just came out. To have that movie play in Indianapolis, you need receipts generated from previous cities in order for the economics to work. With this model, the hope is we’ve got revenue we know is available from Ultra VOD, we know Insight is promoting it as part of their Ultra VOD in Indianapolis. That’s going to create more opportunities for us to release it in Indiana.
NUVO: Is having mainstream movies at Landmark a way to offset the money independent films don’t make?
Cuban: No. When you see “Get Smart” or a blockbuster movie in an AMC, Regal or whatever, you’re going to see it in traditional stadium seating. When you go see “Indiana Jones” at the Inwood Theatre in Dallas, you saw it in an auditorium that had all comfortable seats, and our audience isn’t the kids screaming at the screen and talking on their cell phones. Because we have liquor at that theater, kids aren’t even allowed in. It’s date night for grownups.
So when you go see it in Indianapolis or you see it in Dallas or the Landmark here in one of the living room auditoriums, it’s a completely different experience. In Denver, our new Landmark there, it’s $12 to get in, it’s all the popcorn you want and all the soda you want — that’s part of the price. And we have a VIP option, so if you want to reserve your seats, it’s an extra $2. On the weekends, the VIP options go first. So adults who want to go out and have a nice date, they don’t mind — $14 a head is still cheap.
NUVO: So it’s not an issue of the quality of independent movies?
Cuban: No. An arthouse theater, for us, is date night for grownups. All our new theaters, all our redesigns are made so you don’t say, “Aw, shit, it’s at the mall and I’m going to have to fight my way through and I don’t want to deal with that.” Or you can say, the Wednesday before, I can see it on Wednesday night HDNet movies or I can just see it on Ultra VOD.
NUVO: All these things you’re doing in other theaters — are you going to do them in Indianapolis?
Cuban: Yeah, yeah, we’re trying. Because it’s in the mall there, we don’t have as many options. But we’re looking into options there. Obviously, that’s close to home for me, so I take special interest in what we’re doing there. And I know it’s been an issue for some people there, but the reason you’re going to see the blockbusters there is because it’s still an adult-oriented theater.
NUVO: You don’t need to do this. Why are you?
Cuban: It’s fun. This is an industry that’s done wrong. I love movies, I love the process. Independent movies got it wrong and they have had it wrong for a long time. That’s why all the big companies are closing their independents (production companies), the theater companies are reducing the amount of screens for independents. But on the flip side, the cost of producing independent movies is dropping like a rock. You get a Peter Bogdanovich to do it on a participation basis or do it for scale and you can create great movies. I’m saying, here’s a better way to do it.
NUVO: What did you learn at IU that prepared you for this?
Cuban: You know what? I learned how to learn at IU, and that was key because in any one given class, you might not pick up something that you could use. But I challenged myself at IU and they let me take on those challenges and taught me how to learn and adapt and deal with different situations. To go to school there was one of the best decisions, if not the best decision, I ever made.