The innovative, controversial but undeniably successful distribution of Kevin Smith‘s Red State will enter its next phase this Labor Day. On Smith’s morning Smodcast Plus One Per Diem Tuesday, he announced Lionsgate will exclusively handle the video on demand and Blu-ray rights to the film and that audiences can watch it beginning this Labor Day. Then, when the film opens in October, theaters showing the film will follow the screening with a live, digital, interactive Q&A and a live Hollywood Babble-On Smodcast. Read more info after the break.

Smith’s full explanation of the plan is on The Red Statements. He explains why he’s doing this, goes through some of the history and more. Basically, Video on Demand will cost about $10 in September for a few weeks. Then in October, it won’t have a traditional wide release. It’ll play selectively – at whatever theaters agree to Smith’s wild idea – which means screening, satellite digital Q&A then a live podcast that the audience can watch all for about $20.

Here’s Smith with more about the theatrical side (bolding and links are all Smith’s):

Any good business person tries to limit their costs to maximize their profits. If I accompany the film at all public exhibitions, then I can charge what any movie theater would consider a premium, because I’m giving the audience real 3D – me, answering their questions right there in the third dimension – as opposed to that murky bullshit they’re overcharged for this summer. I refuse to buy my opening with millions of dollars when I can accompany the film into the world and return more profits to my investors than fellow Sundance 2011 alumnus Cedar Rapids can return to Searchlight (this is not me slagging on Cedar Rapids – the Fox Searchlight flick that followed us in the Eccles that night at Sundance; like every flick Miguel Arteta directs, Cedar Rapids is worth your time). Sadly, I’m not Hermione Granger (though my boobs are bigger and I, too, would choose Ron over the troubled Potter kid) and I don’t have a Time Turner, so I can’t be everywhere at once. This means I’m limited in my theatrical release to one city per night… unless we use existing technology to be lotsa places at once. Like let’s say Red State is showing at your local multiplex. But then right after the movie ends, a live, interactive Q&A with the filmmaker starts, beamed into the theater via satellite. Even if you’re not there in the room, you’re Tweeting questions from your theater and getting responses from the guy on the big screen. And then, after three hours of movie and interactive Q&A? Boom: LIVE PODCAST! That’s four hours of once-in-a-lifetime entertainment for less than $20: a movie, a show, then another show. And y’know how we’ll market it? Via Twitter and my podcasts and in-theater trailers. So it’s not gonna cost us much but time and effort, which makes for lots more profit (the key motivator for all patrons of the business of show).

And here’s what he had to say about the video on demand, which will be handled by Lionsgate:

So starting Labor Day weekend, you can see Red State in your house for like $10. If you gather up ten friends and watch it together, then it’s like a buck a pop. I used to feel like any release that didn’t include TV spots and newspaper ads was somehow a failure, until I remembered that I don’t make the Avatar or Hangover II type of flicks that demand a theatrical experience in the first place. In Red State, I made a hardcore, mid-90’s indie flick: it’s raw, it’s nasty, it’s funny, it’s strange… and it’d be doomed at the box office if it had to run the traditional gauntlet. But once you realize the game is rigged, you can change the game. If you can’t win at rugby, change it into football. Make up your own rules. As a filmmaker who’s proud of his now-in-profit art, I don’t care how the audience initially sees my flick anymore: if VOD is the easiest way to get my specialized, non-commercial, non-studio flick to them, I’m happy to pipe it directly into their homes and laptops. I’m a grown-up and I accept that I can’t have everything I want in life all at once; sometimes, as my wife has taught me, you’ve gotta settle for the fat guy.

Again, over on The Red Statements Smith expands on both of these points, providing context and explanation as to why they’re doing this, why they can and why he’s proud of it. Plus, he extends the olive branch to major theater chains telling them why they should play Red State. So far this has all worked out and it makes sense to keep pushing the boundaries to see what’s possible. What do you think?