Instead of fretting over DVD release windows, just stop making insanely expensive crap!
There's an interesting piece over at the New York Times about the ever-shrinking window of opportunity films have in which to succeed or fail. As the Times has one of those websites where they want you to register before you can read anything, I'll sum up.
Studio films, being increasingly expensive to make, are under greater pressure to return their investment faster and faster, due to competition from pirates and even the legitimate DVD market. A movie's theatrical success can now, in most instances, be predicted not by the end of the opening weekend, but by mid-afternoon on opening day. But the shortening of the window between theatrical and DVD release has actually damaged theatrical business; most moviegoers are perfectly happy to hang loose and wait for a new movie on DVD. So it's DVD sales that are now keeping Hollywood afloat. But, strong box office is usually the thing that determines strong DVD sales (especially as most DVD's in America are bought at the Great Satan, Wal-Mart, which I can probably guarantee you isn't carrying titles from labels like Anchor Bay or Blue Underground).
So it's a dilemma, kind of like the old "you can't get hired without experience, and you can't get experience if no one hires you" thing.
The expense of filmmaking (I can understand how a movie like The Return of the King costs $100 million, but how did we get to a situation where the average Hollywood production is costing nearly that?) and the difficulty most of these studios are even having staying in business is what's accounting for the nonstop reliance on franchises and remakes. If you haven't got strong examples of either, you're in a serious state of assfuckery. Just ask Paramount, whose recent attempts at franchise-building (Tomb Raider) have gone over about as well as a best man at a wedding reception who decides to make his entire speech/toast a series of homo and fart jokes. This is one studio desperate for Spielberg and Lucas to get the lead out and produce the fourth Indiana Jones, I can tell you!
I don't think it's possible for Hollywood to go back and widen the DVD window to give movies a little more room to breathe in theaters. Mainly, because the toothpaste is already out of the tube. And also, if a film flops in theaters, it becomes even more important to rush that DVD onto the racks before the corpse of the film starts stinking up the place completely.
As for eliminating the window entirely, which some producers are contemplating, there are certainly risks involved with that. Steven Soderbergh's next film, Bubble, is going to take the unusual route of being simultaneously released theatrically, on TV and on DVD. Already, some theater chains are rebelling, but this little experiment could provide low-budget indie filmmakers with a helpful roadmap to let them know how best to release a specialized-audience picture. What has been left out of 2929 Entertainment's grand plan is internet distribution, but I suspect that will come along soon, what with the success iTunes has been having selling television shows for the iPod. I'm very interested to see how 2929's grand plan works out for them. It won't eliminate theaters, of course, but letting moviegoers know they have multiple options available to them right then might just encourage their interest.
I think there's an easier way for Hollywood to stop worrying about falling revenues and the threat ironically posed by their own thriving aftermarket. It's two steps, basically. 1. Cut costs. 2. Stop making movies that suck. One of the most successful films in release right now is Saw II, of all things. Yes, it's a franchise, and it's horror, which guarantees it a built-in audience to a certain degree. But Lion's Gate's approach to film production in general — no huge budgets, treat each film with care and attention instead of tossing them out indifferently as instant tax losses a la Miramax — is smarter than Hollywood's overall. Saw II cost $4 million to make and has to date taken in $75 million. By contrast, Flop-of-the-Year Stealth cost $135 million and only took in $31 million ($75 million worldwide). Maybe before studios hire executives, they should pay closer attention to prospective candidates' SAT math scores.