[danko]

I think the issue here is with the marketing costs necessary to actually get people into theaters. It's so difficult to actually convince folks to get out of their homes for filmed entertainment that it generally takes a $50-$80 MM marketing budget for a film to do _any_ kind of business at the box office.

This ruins the economics of the 'mid-sized' film, since if you have to tack on $60 MM of marketing onto the production budget anyway, even the smaller films generally have a high level of risk. Thus the whole market has bifurcated between enormous $200 MM behemoths and $2 MM indie movies with limited theatrical distribution trying to promote themselves virally.

[k-mcgrady]

How important is it to get into theatres? I'd imagine doing a deal with Netflix that says they have exclusivity for x months but it can still be shown in a limited number of theatres. The promotion Netflix would do (top of the page on netflix.com as well as the press it would generate) might offset the limited marketing budget you have available and get people who want the full experience to watch it in the theatre.

[MartinCron]

It's probably important to get it into theatres because there still exists a stigma that direct-to-video features are inferior to theatrical features.

[L_Rahman]

Increasingly however it seems that stigma is going away. In fact a number of indie distributors are currently experimenting with simultaneous theatrical + VOD + streaming services releases with a degree of success.

As the average age of people who've come to assume streaming services like Netflix as the norm increases, I think we might a see a greater willingness to forego theatrical releases altogether.