Why is international distribution so tangled even for recent movies released first online?

The iTunes trailer for John Dies at the End proclaims that it will be available online, "everywhere" from december 2012 before its cinema release in January 2013. Of course by "everywhere" they mean the USA and nowhere else.

By "everywhere", they're not referring to geography, they're referring to the various digital storefronts where movies can be rented/purchased from. I.e. iTunes, Xbox, On Demand, Vudu, etc. You'll observe that at the bottom right of http://trailers.apple.com/ there's likely a USA flag, not a UK (or other EU country) one, which indicates the site's region is USA, so Apple's treating you like you're in the US.

My general question is why does this still happen?

In short, regional distribution rights. When a movie is made, instead of releasing to all countries, the studio will release it in the country of origin. They then look at other countries that have large enough markets, and offer local companies the chance to be the local distributor. A local company buys the rights, optionally localizes the film (subtitling/dubbing), and then distributes it. Via this path, when it is released in other countries, the film is relevant and useful to the local market.

I can understand the tangled rights issues of movies where the contracts were written before electronic distribution was invented, but these are modern movies perhaps even ones where early online distribution was part of the plan. Why not plan international release on the same date worldwide?

Here it's not a case of tangled rights, it's just that the original movie studio doesn't want to anger your local studios/distribution companies by cutting them out of the loop. Selling American films in Europe directly probably works well enough, since enough people in Europe speak English. However, for the people in those countries who do not, they depend on the local studios/distribution companies to do the translation work. If the original studio skips localization, they're preventing these people from enjoying the film as well.

The original studio could do the localization work themselves or partner with the local studios/distribution companies such that the localized versions are available on the same date as the original release. However, that adds possibly unnecessary costs (if the film is unpopular in its original country, it probably would never be localized elsewhere) to the film before the studio has made any money back on it. It would also add delays to its original release date, as the current timelines for movies are often down to the wire, to wait for the localization process to happen properly would delay the original release of the film by weeks/months.

Why piss off the entire international audience (who watch the trailers on iTunes or some other international internet site) and then make them frustrated when they can't get the movie?

Because it would cost them time and money to accommodate international audiences, and to be frank, you'll end up buying it any way.

Additional reading: This article goes into greater detail on the nature of these regional distribution deals.

A: It costs too much.

A simplistic analogy is a new college graduate saying, “You know, I’m just going to buy 10 houses at the same time and sell them all on the same day and make millions” – vs. buying, selling, buying selling, to build equity, to learn the product/markets along the way, and to spread the insane distribution negotiation process out. So – juggling 10 balls at once vs. 100 at once.

Also, traditionally a release does not even open in the US all at once. I’d be interested to see what percentage do.

Summary:

a.) Up-front money is the game. It’s hard enough to secure financing for a production, AND to support local marketing which can be more than the production itself, depending on how they want to hit it. (All those print ads, television ads, so that people know to even go see the movie – major beaucoup that.) You have to get loaned money back ASAP! (Look at Blade Runner. Ridley lost rights to the picture because he could not fulfill the contractual steps to pay back the money on time.) (See State & Main for parody on how tight up-front money is. [“..So, that happened.”])

b.) Each print costs like $2K. Having every movie house (37,000 in the US) – and in every country – open at once is fantastically expensive in both up-front cash but also logistically.

c.) Negotiating distribution is a crazy and painstaking business process. It is said making a picture is easy compared to distributing it even locally. And foreign distributors do not want to buy what is not proven in at least one market.

You can see how these things are all compounding right? A.) alone is frickin’ hard to get done.

So you might imagine how irksome it would be when people blithely demand a worldwide opening (and conveniently forgetting the same limitations in their own country’s film industry.) It’s rather like the “I don’t care.” iPhone guy. (Now there is a movie production that you can get worldwide distribution on the same day!)