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Why do some movies go straight to DVD?

The High Cost of Movie Marketing
The cost to promote a movie is often steep -- studio execs spent an impressive $250 million on marketing for "Men in Black 3."
The cost to promote a movie is often steep -- studio execs spent an impressive $250 million on marketing for "Men in Black 3."
© Yumeto Yamazaki/AFLO/Nippon News/Corbis

Modern movies often come with huge price tags. It's not uncommon for summer blockbusters to cost in the neighborhood of $200 million. Yet as much as these movies cost to produce, the spending doesn't end when the cameras stop rolling.

A studio that spends $200 million on a movie can expect to spend an additional $50 million to $100 million on advertising and promotion -- no small chunk of change [source: The Economist]. In some cases, promotional costs can soar even higher; when Columbia Pictures released "Men in Black 3" in 2012, the studio celebrated spending $250 million on making the film by shelling out another $250 million for promotional activities [source: Davidson]. The Hollywood Reporter estimates that for every dollar spent making the average movie, another 51 to 58 cents goes to marketing the film in the U.S. and Canada alone [source: Gerbrandt].

When a film goes straight to DVD, it's often because the powers-that-be at the studio decided that, for one reason or another, they didn't want to shell out the extra money required to get a movie into theaters and promote it to the public. Until a movie hits theaters, the cost of production is the only sunk cost. It can't be recovered, no matter how badly the movie turns out, but the studio can avoid going deeper into the hole by deciding to send a movie straight to DVD rather than spend money on the promotion required for even a basic level of box office success.

How do studios decide whether to shell out millions for marketing? It often comes down to the results of test screening, where audiences are given the chance to review a film. Studios use the results of these test screenings to predict how well a movie will do in theaters. If test audiences universally pan a film, they may decide to keep it out of theaters altogether. When that happens, it costs relatively little to simply release the movie on DVD and hope to recoup some of the film's production costs.

Yet today's straight-to-DVD releases don't all start out destined for the theaters. Many were designed to head straight for the stores. Why would the studios choose this method of release over the magic of the silver screen? Read on to find out.