2020 was the turning point for a 100 year old business model. Find out what the new model of cinema distribution looks like?
With all the craze around content today, there's no question about the big bucks that the movie business rakes in every year. In 2019, global box office revenues totalled $42 billion – an all-time high – contributing almost one-third of the estimated $136 billion in the value of worldwide movie production and distribution. There was hopes to double this amount in 2020 but life had different plans.
The Covid-19 pandemic upended the film industry, halting film production and closing cinema theatres almost overnight. Nobody could’ve foreseen this and worse, there wasn’t a crisis plan in place for such a calamity. Studios were in a state of uncertainty as to what might be the future of their slated releases for the year, especially with big IP's that were scheduled to bring in billions.
The streaming giants came knocking
As the world went into lockdown, many resorted to online media to distract themselves from the chaos around them. Streaming services were a popular escape route and the services continued delivering new content, almost on a weekly basis. In the MENA region, SVOD service Starzplay reported an increase of 50% in streaming hours per unique user.
The increase in popularity of streaming and video-on-demand in recent years has forced studios to grapple with theatres over the theatrical window. The theatrical window is the the length of time a movie plays in theatres before it is offered on other platforms Studios are always excited about the idea of content being able to breathe a second life on these platforms. But with box office returns being extremely massive, shortening the window has been a contested point of discussion in Hollywood. On the other side of the coin, theatres are dependent on the lenght of this window for their survival.
Universal plays its move
Would you believe it if we told that the movie that changed the course of the film business, that put streaming at the forefront was Trolls World Tour. Yes, it’s true. As cases began spiking in March, Donna Langely, Chairwoman of Universal Pictures decided to make some of the studio's films which were already in theatres available on-demand immediately. The list included other movies as well such as The Invisible Man, The Hunt, Emma and Trolls World Tour. "We had a big consumer product program on the film, and there was just no way that we could move it out of the year. We really wanted to get it out there to our audience. So, yes, we made the bold decision to put it into the home and use the digital marketplace to be able to do that," as stated in an interview in CNN Business.
But Trolls World Tour gained notoriety due to its numbers. Within the first three weeks, the sequel earned nearly $100 million in rental fees in domestic markets. This little experiment set the tone for how movies would be released during the pandemic. The Trolls sequel became such a big success, even topping the numbers from its predecessor. Soon, Warner Brothers and Disney+ began to follow suit, with Disney taking the highly anticipated live-action feature Mulan to its streaming service for an extra fee.
This little move began creating a disruption to the existing film distribution model.
The New normal for cinema
Soon after Universal sent the Trolls sequel to VOD, popular theatre chain AMC banned Universal from being able to preview their movies at their theatres. But that rift soon faded and turned into a landmark deal that created a new theatrical model for Hollywood. As part of the new deal between between theatre chains and Universal, slated film releases will have three weekends — or 17 days — of in-theatre exclusivity, rather than the typical 70 to 90 days. Post which films will be shifted to video-on-demand platforms. "It's now a 100-year-old business mixed with a ten-year-old tech business. I think we're learning whether or not we can all get along," said Langley in the same interview
Warner Brothers decided to go a different route and announced in December 2020, that it would be releasing their entire 2021 slate of films in theatres and simultaneously on HBO Max, their new streaming platform, on the same day. The move is an attempt to compete and grab Netflix's humungous market share. Disney and NBCUniversal are also doubling down on the streaming route. Now, the war on streaming has actually begun.
Like other industries, the pandemic accelerated the pending shift for studios to began putting more focus and attention towards streaming. Once all is said and done with the corona virus, many are unsure of what holds for the future of theatres. Independent theatres are expected to be heavily impacted. Even before the pandemic, studios would often give exclusive rights to larger chains or mandate that smaller venues block screens regardless of demand. Some are warning of a consolidation among theatre operators. In Italy, for example, art house and indie distributors are calling for government intervention to maintain plurality in the market.
In countries such as India, theatres have only begun to reopen this month. In the Middle East, countries such as the UAE reopened theatres in mid 2020 but there's hardly enough data to prove whether more people have started coming back to theatres or whether they're still binging on Netflix. Only time will tell.
