It has been a difficult 18 months for the cinema industry. As Covid restrictions lift will audiences abandon their sofas for the theaters once more?
Arguably the most important movie of recent times was not a multiple Oscar winner or astonishing artistic statement by an auteur, not even a massive box-office superhero release. No, it was Trolls World Tour, Universal’s fairly run-of-the-mill family animated feature released in April last year and pretty much the movie that changed the way the film industry distributes its titles for the moment.
The world’s cinemas, and more to the point the thousands dotted across North America that can provide a highly influential 40% of any movie’s takings alone, started shutting their doors due to Covid in March 2020. And while the US is not as influential as it was — 2004 was the year that international box office overtook the domestic one for Hollywood — for marketing reasons and momentum alone it still matters. And so Universal Studios made the momentous — and in hindsight, quite correct — decision not to wait until the theaters reopened but instead release Trolls World Tour via Premium VOD (PVOD).
That decision was a huge success. Trolls World Tour raked in an estimated $100 million in on-demand rentals in its first three weeks of play in North America, impressively close to the $116 million grossed by the original Trolls movie in its first three weeks in 2016.
“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,” NBCUniversal CEO Jeff Shell told The Wall Street Journal. “As soon as theaters reopen, we expect to release movies on both formats.
Fast forward to July 2021 and Disney’s latest entry in the Marvel Cinematic Universe, Black Widow, becomes the next title where a studio is happy to talk about numbers. We talked about this in detail recently, but the key takeaway is that it got a simultaneous theatrical and online release and its opening weekend revenues split 36%/36%/28% between domestic box office, international box office, and PVOD respectively.
Originally scheduled for release in May 2020, Disney delayed the title three times before deciding on the split release strategy, something which theatre chain owners with newly reopened cinemas looking for audiences were very unhappy about.
This is a row that has rumbled on since Trolls World Tour debuted. 2020 hit box office revenues hard. Theater closures led the North American box office to plummet 80% to $2.2bn, and the global one fall 71% to $12.4bn; tentpole titles either went to streaming services (Mulan) or were pushed back into a far future release (No Time to Die); and the studios used the lever of the pandemic to look hard at the whole subject of release windows.
The incredible shrinking release windows
Release windows have been in long term decline for decades. In 2000, the average Hollywood studio movie was released on a home video format 171 days after its initial theatrical release. By 2017 that had fallen to 105 days and, post pandemic, after shrinking to as little as 17 days in some deals, 45 days seems to be being established as the new normal as studio look to maximise their revenues, especially if they have a DTC route for releases.
Whether that length of time will be enough to protect cinema chain revenue is open to question, however. In some countries this is considered important enough to be a matter of legislation. In France, for instance, the French government had to pass a temporary measure to shorten the mandatory windows for lockdown, which are set at four months for major titles. That only covers PVOD or other home entertainment formats too; movies released theatrically in the country have to wait 36 months before they can be offered on streaming platforms and those rules have not changed.
US theater chains can only dream of such levels of protection. For them it is the free market or nothing, but it’s also worth mentioning the increased velocity of worldwide releases. Back when films were distributed on celluloid, the cost of printing multiple copies tended to mean that global distribution happened in stages, with titles appearing in Europe four months or more after their US release. The move to digital masters and projection has meant that the industry can now release simultaneously on a global basis. And, in part to prevent piracy, that’s exactly what it does.
The $64,000 question: Will audiences return?
The movie industry as we know it, and as it has existed for decades, has been under unprecedented attack from the rise of streaming in the past decade. With growing film slates — Netflix won more Oscars this year than any other studio — and titles that only meet the bare minimum standards to qualify for a theatrical release in terms of number of screens, SVOD has rewritten the rule book when it comes to movies. It has also undermined their hegemony too, helping to make elevate high profile episodic TV series to the position of cultural significance that used to me the exclusive preserve of tentpole titles and study marketing departments.
Streaming perhaps poses a greater threat than ever now. While surveys indicate there is enthusiasm for returning to the cinema, the habit has been lost and the audience is split. For every family that wished they could see Black Widow at their local multiplex there will be one that looks at average ticket prices nudging $10, the cost of food and drink, the hassle of getting there, the quality of the experience, and decide that $30 for them all to sit and watch it on the day of release in their own home is a no-brainer, especially as they can do it in 4K on large screens with Dolby Atmos.
That seems to have been what happened. Black Widow ticket sales fell 41% from opening Friday to Saturday, against a normal Marvel benchmark of 15%. It then, according to NATO, the National Association of Theater Owners, dropped 67% the following weekend. As a result, Black Widow star Scarlett Johansson is actually suing Disney for loss of earnings, having signed a deal which included a percentage of the box office receipts taken during a typical release window.
Such deals are probably going to have to be renegotiated in future as Black Widow’s performance seems to be a pandemic era pattern for event movies: decent openings powered by the enthusiastic cinema-goers followed by steep declines as the people that would once have followed the hype and gone along to a showing have decided to watch at home when given the option, or simply wait until the release window closes once more.
“The many questions raised by Disney’s limited release of streaming data opening weekend are being rapidly answered by Black Widow’s disappointing and anomalous performance,” NATO said in a statement titled Black Widow Shows Theatrical Exclusivity Is The Way Forward. “The most important answer is that simultaneous release is a pandemic-era artifact that should be left to history with the pandemic itself.”
Indeed, the consensus is that that will be the case. As The Hollywood Reporter says, both Disney and WarnerMedia (which has simultaneously released titles via HBO Max) have indicated they will return to a traditional theatrical release when the pandemic subsidies, both in the US and overseas.
Audiences will undoubtedly return to the movie theatres of the world, especially when release windows expand again. Whether they will return at pre-pandemic levels in 2021 is doubtful, though, especially given the complicated patchwork of vaccine rollouts, delta and other variants, and mandated lockdown orders that influence box office numbers in the current climate. 2022 might even be considered too early.
What will be interesting to see is the model that emerges as the streaming services return to working with a 45 day release window. An exclusive PVOD offering in the $10 range for another 45 day period is a distinct possibility before a more general release to subscribers.
As with many things that have been fundamentally changed by Covid, it looks like the future is a hybrid one.