Will Hollywood embrace more on-demand movie releases?
While it’s unclear when theaters will reopen nationwide or in what capacity with social distancing measures, some major film studios are deciding on whether to push back their theatrical releases or rush them to digital services. Fox News sits down with Variety’s executive editor for film and media to break down what the future of Hollywood movies may look like.
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Amid coronavirus shutdowns, some reports estimate that 89 percent of movie screens across the country are now dark. In fact, AMC, the largest chain in the country, with roughly 630 locations and 11,000 screens, has closed all of its movie theaters indefinitely.
“Right now you're looking at a business where the largest exhibitor in the world, AMC, is, you know, flirting with bankruptcy and insolvency. And a lot of these theaters are going to be closed for months, maybe even over a year,” Brent Lang, executive editor for film and media at Variety, told Fox News.
Since it’s unclear when theaters will reopen or in what capacity with social distancing measures, some major film studios are looking closer at two different release options: push back their theatrical release or rush their theatrical releases to digital services, video on demand (VOD).
“Almost every major studio that had a film in release when the coronavirus pandemic forced theaters to close down has accelerated their release on home entertainment platforms. But in terms of films that have just sort of foregone a traditional theatrical release, there's only a handful,” Lang said.
"Trolls World Tour" was the first film from a major studio to debut on digital platforms on the same date as its theatrical release because of the coronavirus pandemic. It also played in 21 drive-in theaters that have remained open.
“Capone,” Tom Hardy’s much-anticipated gangster biopic that was picked up by Vertical Entertainment, will release on VOD on May 12 with a 48-hour rental.
“I would imagine we'll have more studios experiment with some of these kinds of new release patterns, particularly as there's no sort of indication that it's going to be safe for people to engage in mass gatherings in the coming months,” Lang said.
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Although these new living room–like releases may make viewers happy about not missing out on popular films, theaters have fought to keep the exclusive rights to play movies in their venues first for decades.
Lang said studios have been interested in trying to shrink the amount of time between a film's theatrical release and its debut on home entertainment platforms for years.
“A lot of studios were already betting very heavily on streaming services before the pandemic hit, so I think you're going to see a greater emphasis from companies like Comcast and Warner Media and Disney on their streaming services like Peacock and HBO Max and Disney+,” Lang said. “That's going to be a bigger and bigger part of their business and it's going to be critical to their business right now with theaters closed.”
Movies you may not ever see go straight to VOD? Superhero films. While streaming services like Netflix have found success in making mid-budget movies, thrillers, dramas, and comedies, studios have continued to pump out famous comic book films with big special effects.
“I think that you're still going to have major comic book movies like 'Wonder Woman 1984 and big special effects movies like 'Fast Nine,' those are still going to be in theaters because they cost so much money that you can't really make it back from a straight sort of subscription video on-demand model or from just on-demand rentals,” Lang explained.
Marvel Studio’s “Black Widow,” which was originally scheduled to release in May has been pushed back to November, and the "Doctor Strange" and "Captain Marvel" sequels, among others, have also been delayed.
Marvel Studios' 'Black Widow' cast at the San Diego Comic-Con International 2019 Marvel Studios Panel. (Photo by Alberto E. Rodriguez/Getty Images for Disney)
While an exact budget for “Black Widow” has not been released, Marvel movies can typically cost anywhere between $150 million and $200 million to produce.
The problem with digital releases is that studios get into their downstream revenue earlier, Lang said.
“The idea with a theatrical release is you kind of raise the profile for it and then you're able to monetize that in a lot of different ways. You're able to monetize it by selling the cable rights, you're able to monetize it by selling the streaming rights, by having it launch on-demand and have rentals and sales,” Lang explained. “So you're cutting off a big source of revenue to get there faster and it's unclear that the excitement about launching on these other platforms raises the revenue stream so much that it ends up plugging the hole that's left by not having the traditional theatrical release.”
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Studios generate about 50 percent of their revenues from the theatrical exhibition. As an example of how many downloads a movie would need to garner to have the same type of revenue theatrical releases see, you can look at the original 2016 "Trolls" film which made $153 million in domestic box office receipts. If you used the $20 price tag that the new “Trolls World Tour” movie had for a 48-hour rental, Universal would have to sell about 3.8 million video streams, and then continue to keep rentals at that pace to produce the same amount of revenue through the life of the film.
For now, analysts are cautious about what the future of movie releases might look like. As Lang put it, “nobody wants to be the first person to release a major movie after some of these restrictions get lifted.”
“It's unclear if people will feel safe going into closed spaces with a lot of strangers, frankly, until we have a vaccine,” Lang said. “I think right now in Hollywood, it's just a time of enormous uncertainty and people are stuck in a sort of purgatory until they get more clarity on the public health situation.”
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