I hate it when the bean counters are making the decisions.
There are so many different things I want to say about this topic, but I want to keep the post short, so here goes
Here's why the studio execs probably think this will work...
1) Closer distribution cycles between theater and DVD release means less money on advertising (no need to build awareness twice).
2) DVD distribution is much cheaper than film distribution (at least until digital projection becomes more prevalent) because the it is shared with lots of other packaged goods.
3) The margins on DVD's are much higher than they are for films (from a studio stand point) because they don't have to share profits with the theaters.
Here's why I think this idea will fail...
1) Second week sales will drop considerably (why see it again in theaters when you've got the DVD, or will get within a week or two?)
2) DVD's won't as easily be able to "save" a film's profitability. Frequently when a bad film comes to DVD, the studio will put a whole different spin on it to try and change the negative word of mouth it got in theaters. It's harder to kill negative word of mouth when it's still fresh in people's brains.
3) People on the fence about whether or not to see a movie in theaters will be more likely to just go straight to the DVD, cutting into more potential profits.
In the end, I think the studios are just cannibalizing their own business.
Sorry this post ended up being longer than I had hoped. Discuss!