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Streaming New Movie Releases Could Be Here to Stay
Social distancing has given studios an opportunity to test new types of release schedules
In response to the coronavirus pandemic, major theater chains have been closed for weeks and release dates for major blockbuster movies are indefinitely postponed. To offset their losses, studios are creating new ways for viewers to digitally rent movies from the safety of their home. Disney is aggressively releasing films on Disney+ earlier than planned, and Universal is experimenting with $20 streaming rentals. Digital rentals and streaming won’t make the studios as much money as a theatrical release typically does, but they provide some revenue.
The problem, for theaters anyway, is that once viewers get a taste of watching the latest hit movies from the comfort of their own couch, they may not want to go back to public screenings.
While moviegoers may be vaguely aware that there’s a gap between when a movie comes out in theaters and when they can buy it to watch at home, the specifics of the theatrical release window are carefully negotiated between studios and theaters. Typically, theaters enjoy a two-to-three-month window of exclusivity. The cut studios take from ticket sales varies, but they tend to get roughly 60%. The more tickets sold, the more money both sides make.
However, most of the money movies make during a theatrical run is made early in that window. According to research by Nelson Granados, executive director of the Institute for Entertainment, Media, Sports, and Culture at the Graziadio Business School, 80% to 90% of the revenue a film generates is captured during its first month in theaters. While more money can trickle in over subsequent months as the studio’s cut of ticket sales increase, public interest and the effect of the studio’s expensive marketing campaign can wear off over time. On the other hand, pushing theaters to shrink the gap can lead theater chains to drop big films entirely — as many did with Netflix’s The Irishman — and so studios and theaters face an uneasy truce.
The Covid-19 pandemic has changed the math on that truce. With theaters closed, chains have lost their leverage to persuade studios to keep their films locked up. “I think there’s an…
