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The Collapsing Theatrical Window for Films

As Anthony D’Alessandro notes in Deadline, theatrical release windows for movies are in jeopardy.

There’s been a lot of talk recently that film distribution is moving away from theaters, and towards PVOD – Premium Video on Demand – viewing a film at home on the day of release for as much as $50 a pop. It’s been tried before, and except for big ticket sporting events, it hasn’t really worked out. But that may be changing.

As  D’Alessandro reports, “The urban myth feared by many is that if the per-title rental price in the PVOD window drops down to $20, consumers ultimately will realize that it’s cheaper to watch a movie at home then in cinemas, forgoing costs that come with a night out, i.e. babysitter, parking, dinner, etc. Some studio executives claim their talks with exhibition over PVOD aren’t contentious, but many insiders say that both parties’ working relationship is best described as ‘frenemies.’

Says one distribution veteran: ‘Exhibitors are freaking out. They can’t make money unless they grow their companies, and it’s hard to build these $40M multiplexes. If you have your investors hearing about windows closings, what incentive is there for them to hold on to their stocks?’ The former executive adds that PVOD, if not managed properly, could cause ‘a slowdown in exhibitions’ luxury-seat remodeling and force the mom-and-pop theaters out of business.’ Some also forecast that the domestic supply will shrink, that moviegoing will be relegated to tentpoles with mid- to low-budget fare relegated to in-home streaming.

However, these are doomsday theories, and there’s some positive evidence that the majors aren’t going to cannibalize their own business. Here they are:

The Theatrical Window Will Be Protected: ‘The last thing studios would want to do is threaten that lucrative revenue stream by encroaching on the theatrical window,’ says Tony Wible, Media & Entertainment Senior Analyst at Drexel Hamilton. ‘Theatrical plays a role in pricing the TV licenses for films, and there’s an incentive for studios to maintain the theatrical window.’

Despite Their Bullishness, Studios Haven’t Figured Out a PVOD Formula Yet: There’s buzz that Warner Bros. will come to terms on a PVOD solution by Q4 or Q1 2018, but they’re not going to act alone in the marketplace without another studio. In addition, there are too many moving parts to the PVOD equation, and the whole notion of it goes beyond the Monday-morning haggling between a distributor and exhibitor to hold a film on screens. Other windows like electronic sell-through [EST, when the consumer purchases a permanent video download, either in the cloud or on their computer] would be impacted, and that’s another discussion studios need to have with digital partners including iTunes and Vudu.

If PVOD Becomes a Reality, It Will Face Its Own Challenges: Home consumers already have committed their [money] to cable bundles, Netflix, Hulu and Amazon Prime. When it comes to content in the home, they have way too much of it, not to mention VOD menus are already crowded. So, where’s the incentive to rent one title for [as an example] $30? ‘If you have a $30 VOD product, it’s going to be too expensive for the home consumer when it’s priced against these services,’ says Wible, ‘There’s a value trade-off.’

In Addition, Exhibition Claims That In-Home Streaming Services Aren’t Their Direct Competition: According to Alamo Drafthouse and Neon label chief Tim League,’Theaters are more in competition with restaurants and comedy clubs and the types of entertainment that gets you out of the house.’ Currently, exhibitors such as Regal, Cinemark and AMC are barreling forward with luxury modeling and food/alcohol amenities, and these efforts have led to increased capacity and B.O. revenue upticks, with increased cash-on-cash returns.

Mid- and Low-Budget Movies Can Remain in the Theatrical Space: Some have screamed that economically budgeted fare doesn’t have a chance going forward in an event-driven theatrical marketplace, but the success of Get Out, Split, Fifty Shades Darker, Hidden Figures, John Wick: Chapter 2 and even La La Land have proved otherwise; that’s all about how a studio positions and sells a film. ‘There’s not a clear delineating line of what is meant for theatrical and what’s intended for streaming,’ says Amazon’s distribution and marketing chief Bob Berney.

Whether a mid-budget or indie film winds up on streaming or theatrical has a lot to do with a film’s financiers, and when there’s a company like Netflix willing to pony up big bucks for the smaller screen, money talks. In addition, mid-level and low-budget films ‘need to be event-ized,’ says Berney. Whether they thrive on the big screen boils down to several factors, i.e. a distributor’s passion for the film, how far they’re willing to go with it, a pic’s critical and festival reactions. Not to mention, as long as there are Oscars, there will be smart, upscale specialty movies on the big screen.”

There’s much more to this excellent article; you can read the whole piece by clicking here.

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About the Author

Headshot of Wheeler Winston Dixon Wheeler Winston Dixon, Ryan Professor of Film Studies at the University of Nebraska-Lincoln, is an internationally recognized scholar and writer of film history, theory and criticism. He is the author of thirty books and more than 100 articles on film, and appears regularly in national media outlets discussing film and culture trends. Frame by Frame is a collection of his thoughts on a number of those topics. All comments by Dixon on this blog are his own opinions.

In The National News

Wheeler Winston Dixon has been quoted by Fast Company, The New Yorker, The New York Times, the BBC, CNN, The Christian Science Monitor, US News and World Report, The Boston Globe, Entertainment Weekly, The Los Angeles Times, NPR, The PBS Newshour, USA Today and other national media outlets on digital cinema, film and related topics - see the UNL newsroom at http://news.unl.edu/news-releases/1/ for more details.

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