EXCLUSIVE: This weekend marks exactly one year since former Magnolia execs Tom Quinn and Jason Janego were hired by Harvey and Bob Weinstein to launch Radius-TWC, their first division dedicated to releasing acquisitions in a multi-platform strategy where films premiere first on VOD at a $10 price that drops to $7 when the film reaches theaters. This VOD-centric business is still being honed, and it’s a lightning rod for debate. Theatrical release traditionalists call it a second class way to release films, little more than shuffling the deck to place the ancillary revenue cycle before the theater part that always came first. Exhibitors, concerned that giving screens to films that go VOD first is potentially harmful to their business, are also torn. Stars accustomed to seeing their work on big screens with big P&A commitments are also worried. At the same time, Margin Call and other films show there is a viable business here, particularly for films that don’t justify a big P&A spend. Considering how Harvey can dominate the festival acquisition market, everyone’s waiting to see how Radius will influence the multi-platform game. Quinn and Janego made their first splash with Bachelorette, a pitch black comedy acquired during Sundance for $2 million, and which topped the iTunes movie rankings before it rolled out to theaters this weekend. Here, Quinn and Janego explain their view of a new business that is changing the indie world.

DEADLINE: What will Bachelorette do at the box office this weekend?

JASON JANEGO: In 47 runs across 16 markets, the estimate is $191,033 for the weekend, with a significant increase from Friday to Saturday through word of mouth, and core metropolitan runs performing at or near the top of their complexes. We’re extremely pleased that the film is outpacing much wider releases vying for the same demographic. Our rollout will continue to build on this success in the weeks to come.

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DEADLINE: It’s your first release and it became the first VOD title to top the iTunes top movies chart. Besides a good sound bite, what does that mean in revenues?

TOM QUINN: iTunes is one piece of a big puzzle, but what you should know is, going into our opening weekend we grossed over $4 million through VOD already. That’s the fastest grossing film in this space. It has already exceeded Margin Call. We’re on pace to very quickly top All Good Things, which is the biggest VOD earner in the multi-platform stage. We were number one on iTunes but Rentrak does a national Top Ten ranking for all cable VOD transactions. It’s unanimously all studio films in the top ten, and we reached number four.

JANEGO: That’s a big deal because it is based on transactions.

QUINN: So the number one film is a studio film working at a $4 price point and we’re working at a $10 price point. That starts to put it all in perspective. And the only other films in this category that have been on this top ten list are Margin Call and All Good Things, which both reached nine. Nobody before had exceeded that, and so to be there within 36 hours of release, this is the story that Jason and I have been telling everybody for the last 12 months.

DEADLINE: What story is that?

QUINN: That this is not a dumping ground. These are movies that have huge potential audiences that we want to reach in the most economical possible way in a first window transaction. They’re all theatrical titles.

DEADLINE: You’ve been here a year and this is your first release. What have you been doing all year?

QUINN: We’re distributors who spent 12 months not distributing a movie. We were itching to get back in the marketplace but we had to set the foundation. That meant going out and seeing everybody; exhibitors, VOD provider agencies, press agents, management companies. Just saying, this is what we know; this is what we’ve done; this is what we believe is successful; this is what we believe we can do better; this is how we can improve this model, what do you think? And literally at some point, I felt like the traveling salesman. Tom and I get out of the airport, in the car to this meeting and that meeting. In Cupertino, meeting with the guys at Apple; in El Segundo, meeting with people at DirecTV. We were in Philadelphia several times meeting with the people at Comcast. We spent more time together than I probably spent with my wife, but I really believe that those discussions were an amazing foundation. Now we’re actually putting it into execution.

JANEGO: We could have probably had a movie in the marketplace within three months of starting but I don’t think that was anybody’s goal. We wanted to do it right. We wanted to get a slate of films together to prove what we told everybody we would do. The key was spending time with these people, educating them about things that they don’t know about the model. There is a lot of mis-perception about what it is we’re doing. Is it a VOD label? No, it’s not a VOD label. It’s an approach to distribution that makes a business out of movies that we believe in and love, and they’re all theatrical films.

DEADLINE: I’ve got Cablevision in my home, and I look at the VOD menu and see this alphabetized list of crappy titles. If you made AARP: The Movie, you’d have a big VOD title because it’s atop a long list I am just not interested in wading through.

JANEGO: Cablevision is actually an example of a company that has been responsive to our belief that part of what will make us successful is being able to function as a distributor and working with talent and all the possible opportunities that we can to help promote these movies.

DEADLINE: I recall hearing from buyers who didn’t buy Margin Call that they were told that Kevin Spacey reacted to the prospect of a multi-platform release with an “over my dead body.” It’s understandable; he’s an Oscar-winning movie star accustomed to the big screen. How big an obstacle is this?

JANEGO: Because this has been viewed as a dumping ground for movies that don’t deserve a theatrical release–which I don’t believe is true–there’s certain talent and certain agents who don’t believe in putting their talent at the forefront of these movies. There is a lot of Hollywood perception about what the value of their clients is and what the value of these films are. But it’s based on perception, and it’s not based on the business. Our business doesn’t have anything like the perceived value of being a top ten theatrical box office release, but that is perceived value. What we are looking at is actual value.

QUINN: I remember being on a film with an agent and when he said, ‘Tom, I’m in the perception business,’ I said, ‘I’m in the business business, or we’re going to be out of business.’ The specialized industry is maybe a 600 screen and under space and this is potentially bigger. We’ve spent the last 12 months convincing people that with the right kind of movie, we can achieve the same kind of perception. That’s what we’ve been able to do with Bachelorette. The cast is supporting it the same way they would a film that would be opening on a minimum 250+ screens. They treated it like a wide release and helped us make the most of all the assets in the VOD world. With each cable provider, with Facebook initiatives, using the barker channels to talk about the movie with an interviewer, with clips worked in. This functions as direct marketing but it’s publicity that we can’t do adequately unless the cast believes in the model. That has been the big difference here. It has been done before, but not to the extend we did it with Bachelorette. Hitting number one on iTunes is a validation of that commitment to support the movie.

DEADLINE: Was iTunes responsible for most of that $4M gross?

QUINN: No, the $4 million was the whole pie, including Comcast, DirecTV, Verizon, Time Warner. So a $2 million acquisition grossed $4 million before we opened theatrically, and the beauty is we have a long way to go in our VOD run, a minimum 60 days of what we call our first window transaction before we get to DVD. We’ve had cast on Jimmy Kimmel, James Marsden went on Live with Kelly, Adam Scott on Jimmy Fallon and Tuesday morning, the girls in the cast are on The View. The producers at Gary Sanchez, Adam McKay and Will Ferrell, all believed in this model as a way to get the film out to as many people as possible. You can exploit every social media opportunity, but it comes down to content. Otherwise, the noise becomes tinny and people become deaf to it.

DEADLINE: When you have made noise in the VOD space and then want to bring the film to theaters, do you have to four-wall it, basically buying theater screens from exhibitors rather than paying them a split of the ticket proceeds?

QUINN: Absolutely. We’re not four-walling all of our theaters but even at Magnolia we would four-wall theaters and we owned a theater chain. There is a misunderstanding of this part of the platform.

JANEGO: We believe this is part of the evolution of the specialty distribution model. We get the idea that there are certain exhibition chains that are a bit hesitant or even overly reluctant. We understand that like everything else, it takes a while to get comfortable with anything moving in that direction. We continue to have dialogue with all of the theater chains and we’re open and willing to discuss how best to work together on all of these films.

QUINN: There are other movies in the same demo that have gone out and put together very aggressive TV spends that resulted in extremely underwhelming numbers, below the average of what you would expect a specialized film to do without that. For a specialized film industry film, that’s just not an adequate business model, and I don’t see a future in it. You have to treat this like a business.

JANEGO: From an economic perspective, the way a lot of these films get released is not a feasible strategy. It’s not economical for people to keep making a certain type of film and release them in a traditional way. It’s too expensive and if we can do something that helps allow these films to continue to be made and actually see some money back and get it out to more people so they can have an opportunity to see these films, that’s what we’re trying to accomplish here.

QUINN: And the dumping ground perception comes from movies that were sort of gaming the system. But this really is a fantastic platform with such a fantastic price point.

DEADLINE: What do you mean, gaming the system?

QUINN: When you’re doing films where I believe the theatrical component is really in service of triggering the rest of the business model, that’s not the kind of films we want to do. We went to Sundance and fell in love with two theatrical films. The Surrogate we didn’t get, that went to Fox Searchlight, and Bachelorette. These are films that have a specialized pedigree, similar to the Stephen Fears movie Lay The Favorite, which we are also releasing. That movie is such an amazing hybrid because it has such a huge Hollywood cast but a Frears sensibility. It’s a perfect multi-platform model. Some said that Bachelorette could have been platformed into release, but I firmly believe that on the right film, there is an immediacy by which word of mouth travels where this ultra VOD model is so effective. We already have a minimum of 400,000 people who’ve seen Bachelorette. Before it opened theatrically, Bachelorette was comparable to a film that has grossed over $10 million theatrically.

DEADLINE: The big advantage is you avoid pricey TV spends. But aren’t theaters that are collecting a percentage instead of a four-wall fee charging higher splits than the usual 50-55% because you initially bypassed them for ultra VOD?

QUINN: Everybody has a different deal, a different split theatrically, same as on VOD. What I’m saying is if I have to release a film with a TV spend in order to get to my audience on a minimum 900 prints, it’s sort of a dead zone, a dangerous place to be. There are so few films – I’d say probably two a year – that ever come out of that and gross in the $15 million-$20 million range that merit that kind of $10 million P&A spend, I don’t want to be in that business. That business doesn’t make sense to me. I do want to be in the theatrical business, and make my films available at an appropriate size and be bullish about it. We could very well fall flat on our face and if we do, we’ll readjust as we go forward.

DEADLINE: But aren’t these theaters saying, you’ve already let the cow out of the barn here, so instead of paying us X, you’re paying X+? Isn’t that an accepted part of this new model?

QUINN: It has to work financially for everyone, so it’s like any negotiation. And if it doesn’t work, we’re going to have to readjust.

JANEGO: This is a model we’re continuing to evolve. It evolved while we were at Magnolia. Part of that is the negotiation and the deal. It is important for us to get the movie into as many theaters as we can, and so a lot of this is about striking the best kind of deal possible.

DEADLINE: So what else you got after Bachelorette?

QUINN: We’ve quietly released our second film, Solomon Kane, this fantastic action epic based on a lovely character from a Robert E. Howard novel.

DEADLINE: Wait, hasn’t this been kicking around at Cannes for a couple of years?

QUINN: It’s a movie I chased for two years; loved it, loved it, loved it. I originally saw it in Toronto, and the producer, Sammy Hadida, we wouldn’t, couldn’t come to terms with it until I got to The Weinstein Company. Lionsgate was chasing it and that was a wide release proposition, but after Conan did not live up to expectations, it put this film in that no man’s land where you are either trying a wide release on 2300 screens or it’s straight to DVD title. What we’re saying is, this movie does work theatrically, but maybe that’s to a midnight audience in 15 markets. But there are a lot of people who’ll want to see this and it has grossed over a million bucks in two plus weeks. To me, that is a beautiful success. You have people who want to see this as a theatrical title, but I can’t get to that audience unless I am willing to spend $25 million plus in P&A to do it. We are releasing in a smaller footprint than Bachelorette; we’re not trying to shove it down an exhibitor’s throat at five hundred screens, that doesn’t make sense. What we are doing does make sense.

DEADLINE: How does that movie gross $2 million when I didn’t even know you were releasing it?

QUINN: It’s the beauty of the internet and this platform and working with providers who have the real estate and are willing to come up with things that haven’t been done before.

DEADLINE: Like what?

JANEGO: On X-Box, where the film performed incredibly well, they have been giving away ten minutes of the movie for free. So you can actually test the movie before you decide to buy it. People are saying, this film looks amazing, I want to buy it.

QUINN: The film already had a huge awareness online, it was at Comic-con twice and James Purefoy has a built in core audience. It’s very different from Bachelorette, but I believe that the people watching on VOD now will be buying the DVD as well.

QUINN: And we’ve just launched Butter, which has a huge cast in Jennifer Garner, Ty Burrell, Olivia Wilde, Rob Corddry, Hugh Jackman. We’ve been working with the cast and we think it has a lot of potential.

JANEGO: This movie has been particularly fun to work on because Harvey is a producer and has been involved since the beginning. If there’s a film distribution hall of fame, Harvey would have his own wing. To be able to interact and interface with him about this movie on a daily basis has resulted in one brilliant idea and thought concept after another. The cast will give this film awareness. We’ve had revenue driven word of mouth screenings. We have done some special targeted marketing things but we’d rather not give them away to others.

DEADLINE: So you are doing innovative things on X-Box and other venues that the public at large and even your competitors aren’t really aware of?

JANEGO: When you say the public at large, it’s so hard to define what that even means.TV ratings are down so much. People are being bombarded with so many different forms of media, you have a moment to capture their attention and get them to act. If there’s a way for us to capture that moment and get them to press a button on their remote or their iPad, that is amazing technology to have a direct interaction with your consumer that lets them act on it immediately. And with the traditional arthouse movie-going crowd, they get their information reading reviews and seeing trailers. We have a Bachelorette trailer playing at the Angelika, and doing many of the same things that do with a traditional theatrical release, but we have this incredibly effective tool.

DEADLINE: Those trailers play at theaters you’ve four-walled?

QUINN: I’ll leave that to everyone’s discretion to figure out.

JANEGO: We’re not in a position to say which ones we four-wall and which ones we don’t. The movie’s playing at the Angelika so we’re having trailers for this movie playing at The Angelika. We’re just using that as an example.

DEADLINE: This is a growing point of contention with the major theater chains. After Margin Call became a surprise success story, I understand that the chains that played it were regretful.

QUINN: If I were the proud distributor of The Avengers, and this is the model that I was using to release it in, then it makes for an issue to address seriously. I’m not bringing that movie. I’m a specialty independent distributor trying to give our films a chance. There was that very tough moment in our specialty world when the mini majors went out of business, and without this option, you don’t get to make Bachelorette. You only have wide release studio films and I think that is a terrible scenario. I would not be a film distributor because those are movies that I don’t understand.

DEADLINE: Are you putting out The Details, the movie that The Weinstein Company paid $7.5 million with a $10 million P&A commitment, making it the big deal of the 2011 Sundance Festival?

QUINN: Yes.

DEADLINE: If the movie had been that good of a theatrical prospect, it would have been released. Was this dropped in your lap, like a toy on the Island of Misfit Toys?

JANEGO: No no no no. We don’t want to be The Island of Misfit Toys. To make it clear, there are movies we said no to, that just didn’t make sense for us. We have regular dialogue with Harvey and Bob and David Glasser, but we sought this out because we believe we could make it work, that it would be right for Radius and The Weinstein Company. But like any distributor, we can say no. I think there is a huge audience for this film. It’s a very high profile specialized film in the way that all those mini majors that went out of business – this would be cat nip for them – this is what they would do. I think that we can do it better with this model.

DEADLINE: How can it be better than that big P&A commitment?

QUINN: I think we can reach a wider audience in the first window when everybody is talking about it, that’s why. It’s an art film, it needs to be talked about. People need to talk about this film in order for us to create more value.

JANEGO: I go back to this media world that we live in today, with Facebook and all these other things that make your attention wander so quickly. You have one moment and if you can reach at that many people with our platform of eighty five million homes, not to mention anyone who has iTunes or X-Box…If you reach them at the same time when it’s being discussed around the country and reviews are happening, you have an advantage. And let’s face it, we’re not working with P and A budgets of twenty or fifty million dollars, it’s not what we do.

DEADLINE: What does it cost to do that?

JANEGO: It’s not a one size fits all. It could be half a million dollars, it could be three million dollars.

DEADLINE: How many a year do you want to put out?

QUINN: I’d love to find about 24 good films, but 15-18 might be more realistic. Films of various shapes, sizes and genres, including documentaries.

DEADLINE: Don’t most of these division work in much higher volume?

QUINN: We don’t want to be in the volume business. There was more volume at Magnolia, more than I wanted to support. That’s why I think 18 is the right number. There were several years there we were doing 40 movies a year. That’s a lot of movies.

DEADLINE: What would make this a good Toronto for you?

QUINN: Well, last year, I wish we could go back and distribute Shame. I wish we were distributing Rampart and Goon.

DEADLINE: How would you have done Shame differently? Fox Searchlight hoped for Oscar nomination love for Michael Fassbender and Steve McQueen and when that didn’t happen for the NC-17 film, Shame didn’t break out and become the hot button film many of us thought it would be. How might that movie have fared better under this formula?

QUINN: You can’t just rubber stamp a film by saying that’s a multi-platform film. But you could broaden the art film audience for a film like that through VOD, because it’s a more efficient delivery system and it’s a more efficient and economical business.

JANEGO: We both love that particular film, and it’s a movie that people would discover at home on a Friday or Saturday night. Maybe they never set foot in theaters where that movie played. But you could have had people discover and watch the movie, people who probably never would have seen it.

QUINN: A good example where that works is Melancholia, the last film I worked on before I left Magnolia. That film, because of the VOD platform, is the most successful Lars von Trier movie ever in this country, and it grossed over $3M theatrically.

DEADLINE: How much did it gross on VOD?

QUINN: I don’t want to speak for my old company but let’s just say that it’s more profitable and that more people saw it in a window that matters most – the first window – than Dogville, Breaking the Waves, Dancer in the Dark, all his movies. To me, that’s good business. It’s fun doing God’s work on a beautiful movie, and you’re supporting art cinema in a way that I think is profoundly engaging.

We also have the Nicolas Winding Refn film Only God Forgives. I’m excited because Nicolas has a long career of making amazing horror hybrid genre movies and pushing talent to the absolute limit. I mean he’s done it every time out, so to do this with Kristin Scott Thomas and Ryan Gosling, you know, I love that we get to take a risk on that film, and let the audience decide where the movie fits, in a multi-platform window.