In theory, the announcement Monday afternoon that Magnolia Pictures acquired rights to the dramatic competition entry "Humpday" should be a cause for celebration for movie lovers.  Instead, it's the worst possible scenario for a movie that needed a creative mini-major behind it.

The Lynn Shelton comedy finds Joshua Leonard ("The Blair Witch Project") and Mark Duplass ("The Puffy Chair") as old college buddies who debate whether they should have sex for an art project.  Of course, the fact they are straight has made the flick one of the most talked about and well received at the festival. 

Magnolia, which is a sister company of Mark Cuban's HDNet, announced that they plan on releasing "Humpday" first on video on demand in July (cough) and then following with a theatrical release in August.  They used the same rollout strategy for the Demi Moore and Michael Caine thriller "Flawless" last year.  Of course, the dirty little secret on that one was a VOD release requires less marketing and therefore less publicity, which means a movie can come and go without so much as appearing as a blip on its audience's radar. And that's nothing new for Magnolia who appears to be a temporary shipping house for HDNET.   "Flawless" received surprisingly excellent reviews and kudos for both actors performances.  By going to VOD first, the indie studio severely limited the film's box office potential.  Proponents of the VOD strategy say sales spur nationwide word of mouth, but they don't have much of a case with "Flawless" making only $1.2 million in its 65 theater release.

While Shelton and her producers are getting a mid-six figures deal from Magnolia for "Humpday," they are killing any chances of this movie having a theatrical shelf life and becoming the true breakout hit it has the potential to be.  With four different buyers supposedly interested, wouldn't it have made more sense to take less upfront for a theatrical release with a better backend?  Isn't getting your work to theaters still what it's about in 2009?  Is Shelton, who has never had a film generate this much interest, truly excited about the VOD possibilities?  Would you be after you've seen multiple audiences embrace your film over a single weekend? 

Sadly, this is nothing new.  In fact, there are two recent examples of films tragically picking the wrong distributor after great festival debuts, and bizarrely, they were both directed by Jonathan Levine.

In 2006, "All the Boys Love Mandy Lane" became a Midnight sensation with the Weinstein's winning a bidding war where they announced intentions to do a major summer campaign.  After contractual squabbles over re-cutting the film, which dragged out over months, the Weinsteins dropped the picture and it was acquired by a second company, Senator Entertainment, who still haven't released it.

Last year, eyebrows were raised when Levine's jury favorite "The Wackness" was snagged by Sony Pictures Classics, a company better known for dramas like "Junebug" and Pedro Almodovar movies. A young, hip coming of age story isn't SPC's style, and as I predicted in my MSN column at the time, this was going to end badly.  Boy did it.  The Sony division couldn't cut a trailer that correctly sold the film, the online efforts were god awful and the publicity efforts were seriously misplaced for a film that needed an intense campaign for moviegoers under 30 to know it was for them.  So, a picture that should have at least bagged $8-10 million minimum barely made over $2 million.   Here's hoping, six months later, Mr. Levine has stopped banging his head against a wall for making that mistake.

Now, "Humpday," is in the same boat, destined to be an anecdote to the 2009 festival and on the road to becoming just a cult classic.

Prove me wrong Magnolia.  I dare you.