Major Change Coming Between Studios And Movie Chains – Forbes

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About three months ago, before Covid-19 changed everything, movie exhibition chains like AMC, Regal and Cinemark enjoyed an exclusive 90 day “dark window” where studios grudgingly agreed to keep their theatrically released films off of any other platform, including Paid-Video-On-Demand, aka PVOD.

Most industry watchers, including yours truly, predicted that once the virus took hold, the relationship between studios and exhibitors would change.

We’re seeing what looks like the beginning of what will be the end of exclusive, theatrical motion picture releases.

According to Robert Fishman a Wall Street analyst for MoffettNathanson, the first films that will likely tear down the exclusivity wall, will be studio-financed, lower-budgeted movies, i.e. films in the less than $100 million dollar budgeted range.

These less expensive titles represented about 20% of all theatrical releases, pre-pandemic, with the other 80% of all movies being larger-budgeted, “blockbuster” franchise films.

Fishman argues that Universal Studios
UVV
, responsible for the bold, virus-induced PVOD experiment of entirely foregoing a theatrical release for its franchise family film, Trolls World Tour, will likely be the first of the major studios to test the will of exhibitors when it insists on a simultaneous PVOD window for more modestly budgeted movies.

Beneath all of this positioning by the studios to change the relationship with exhibitors are two real issues: audience safety and mounting marketing costs.

No one knows how much of the public will return to movie theaters once various stages of re-opening the economy come into full force. Studios must promote theatrical releases, with marketing budgets often running fully 50% or more of a film’s total cost. If a film is a non-franchise title, some modestly budgeted movies have even seen their marketing spends add up to more than the cost of the movie itself.

Before Covid-19, studios would then have to “re-publicize and re-market” the title as it went for its second often more profitable run 90 days or later, on PVOD.

In an effort to decrease multiple marketing spends, and with an eye towards appealing to consumers too risk-averse to test going out to the movies, studios are apparently finally succeeding at getting exhibitors to eliminate the “dark window” exclusivity period.

Exhibitors have long held the opinion that a “dark window” is sacred to the theatrical experience and core to their business strategy.

After Covid-19 though, studios finally are getting exhibitors to accept a new religion and we’re about to see core foundations shift, if not eventually get torn down completely.

If past is prologue, it won’t be long until consumers can watch their favorite Marvel, Lucasfilm or Pixar movie on Disney+, the same day and date as its theatrical release. 

Exhibitors aren’t stupid. They know by compromising on lower-budgeted fare now, the day will arrive likely sooner than later, that all feature film titles will be simultaneously released on streaming or PVOD.

The bitter, decades-long rivalry between exhibitors and studios may have finally run its course.

Then the next question will be: how long do these independent movie chains really have to survive?

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