The Coronavirus pandemic has hit the theatrical exhibition industry very hard, and looks to have permanently changed the business in some significant ways. Last spring, Universal Pictures tussled with theaters over the release of their films on PVOD (premium video on demand) before the usual 90 day window of theatrical exclusivity had elapsed.
A deal for a seventeen day PVOD window was announced in July, with AMC, which Regal and Cinemark vocally criticized. However, the pandemic lockdowns dragged on, and more studios followed Universal's lead, often cancelling theatrical runs entirely and releasing their films to rental or to streaming services. Then, a few months later, Warner Brothers dropped the bombshell that they were going forward with simultaneous theatrical and HBO Now releases for their entire 2021 film slate. And Disney released "Mulan" and "Raya and the Last Dragon" using a similar model via Disney+, while pulling the theatrical run of PIXAR's "Soul."
These moves are largely being treated as experiments or temporary fixes while the pandemic is still keeping theaters closed, and the new streaming platforms are jostling to attract subscribers. Because hard numbers are difficult to come by, it's not clear how well the simultaneous releases have been doing for Warners and Disney, but they're clearly affecting how the films are performing in theaters. "Godzilla vs. Kong," "Raya and the Last Dragon," and "Tom and Jerry" have opened pretty well domestically, but have subsequently fallen off more steeply. Things are going to change quickly again in the next six weeks, when vaccination access will increase, and we'll start seeing the releases of some bigger titles exclusively in theaters.
However, it's clear that all of these new distribution changes are going to have some long term impact. Warner Brothers recently announced that they will return to exclusive theatrical runs for their film slate in 2022, but the terms of their new deal with Regal Cinemas and Cineworld specify a 45 day window of exclusivity. This has been regarded as a win for the theaters. Consider that Lionsgate released "Chaos Walking" in theaters on March 5th, and then rushed it to PVOD on April 2nd, when it became clear that they had a box office bomb on their hands. Consumer behavior has shifted toward streaming and PVOD options, and many of the films that are currently only playing in theaters risk falling through the cracks. If it's not available via streaming or a VOD option, many potential viewers simply aren't interested.
Remember that the war over PVOD has been going on for over a decade now, since Universal decided to test out releasing "Tower Heist" on PVOD, three weeks after it's theatrical premiere in 2011. Several theater chains threatened a boycott that got Universal to shelve their plans, and future attempts were far more modest, using lower profile films. The pandemic, however, has provided the opportunity for the studios to test out the model fully, and it's no surprise that it's caught on so quick. PVOD is often more convenient, and in some cases a better bargain for consumers than a trip to the movie theater. Interest may wane when the theaters reopen, but the studios have confirmed that the demand for PVOD is there, and they don't want to lose the new revenue stream.
Looking ahead, even if everything goes back to something like normal for theaters, it's going to take a while. Considering the current state of the summer movie schedule, the studios are anticipating a long adjustment period in the U.S., and it'll likely be even longer in other parts of the world. I expect that it won't be until the end of the year, that we really have a good picture of what post-pandemic moviegoing looks like. For now consumers win, because they're getting more options. I don't expect it'll last, so I plan to enjoy it while I can.
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