Hollywood studios have used the pandemic to heed the advice of former Chicago Mayor Rahm Emanuel: “You never want a serious crisis to go to waste.”
For decades, the film business has remained frustratingly resistant to change. Movie theater owners have held firm about the boundaries of a traditional theatrical release. Up to this year, a studio’s newest blockbuster had to play in cinemas for 90 days before its home entertainment launch. Film exhibitor’s conventional wisdom: People wouldn’t pay to see the latest Marvel movie in theaters if they could wait a few weeks to watch it on-demand at home. It fostered an often openly contentious relationship with studios, who have long attempted to shorten that three-month timeframe in an effort to reduce marketing costs.
The rise of streaming services, which gave customers the ability to watch hundreds upon hundreds of titles with the click of a button, put additional pressure on the ironclad theatrical window. Cracks started to appear. Yet theater operators pushed to prolong conversations that had the potential to upend their business model for as long as possible so they could keep milking the lengthy period of big-screen exclusivity until they had no choice but to yield to market forces.
Then, the pandemic changed everything — as massive, world-shaking events have a tendency to do. Theaters were forced to close and exhibitors were left without revenue for months. Studios tore up their release schedules, postponing some movies to next year and sending others to streaming services or digital rental platforms. Developments that were unthinkable a year ago began to unfold at incredible rates. When cinemas were able to reopen, theater operators quickly learned that their bargaining power had drastically diminished. If they wanted to showcase “The Croods: A New Age” or “Wonder Woman 1984,” exhibitors had to accept that those titles would be available online sooner than usual. The business had been fundamentally altered.
“Without the pandemic, you wouldn’t have seen the theatrical windows collapse in the way they did,” says Lisa Bunnell, the president of distribution at Focus Features. “Whether you like it or not, the pandemic forced us to try things that would be harder to do in regular times.”
For traditional studios, it’s resulted in a game of 3D chess with action that rivals “Game of Thrones” in terms of pure, head-spinning chaos. Old allegiances crumbled, new alliances were forged with former rivals, battles were waged via press release. In a matter of months, Universal went from being the enemy of cinemas to the savior of the theater business. Not to be outdone, Warner Bros. positioned itself as a villain that could rival nearly any onscreen baddie when the studio announced its entire 2021 slate would debut simultaneously on HBO Max and in theaters. That was after cinemas fell all over themselves praising the company as their white knight for deciding to open Christopher Nolan’s time-bending espionage epic “Tenet” on the big screen during summer. Tyrion Lannister would struggle to make sense of these power plays, maneuvers and strategic retreats.
Industry experts agree that, to at least some degree, the changes roiling the film business are going to outlast the pandemic.
“A lot of the innovation we’ve seen is going to continue,” predicts Jeff Bock, a box office analyst with Exhibitor Relations. “When we look back at 2020, we will see this isn’t a reboot. It’s a rebuild of the theatrical model.”
It remains to be seen how the contours of the new film distribution world become fixed. Studios and theater owners acknowledge the neat and tidy 90-day window is no more. Rather than a one-size fits all model, many believe it could be determined on a studio-by-studio or even film-by-film basis. That means “Fast & Furious” entry “F9” may play exclusively in theaters longer than the upcoming Tom Hanks sci-fi drama “Bios,” even though both hail from Universal Pictures.
“The conversation is more than open at this point,” says Shawn Robbins, chief analyst at BoxOffice.com. “I don’t think the extreme examples will stick. I don’t necessarily see big movies going day-and-date very often,” he adds, in reference to the hybrid release of “Wonder Woman 1984.” “There will be a middle ground.”
“Wonder Woman 1984” broke ground as the first major studio release to debut in theaters and on HBO Max. Courtesy of Warner Bros. Pictures
Universal has started to test that after forging historic pacts with AMC, Cinemark and Cineplex to allow the studio to put new movies on demand within weeks of their theatrical debut. Universal is expected to hammer out a similar deal with Regal, the second-largest U.S. circuit. In return, exhibitors are getting a cut of the digital profits. Universal argues that their deal is more financially viable for the studio in the long run because it requires a transaction on each individual title, in contrast with the subscription services that offer thousands of programs for one monthly price.
“We feel ours is the most sustainable business model,” says Peter Levinsohn, Universal’s vice chairman and chief distribution officer, who led negotiations on agreements with AMC, Cinemark and Cineplex. “It’s something that works for both sides. It creates a stronger ecosystem.”
The problem is these companies are up against a ticking clock. AMC is teetering on the verge of bankruptcy. It has sold stock and renegotiated with creditors to try to improve its liquidity, but debt is a pesky thing. At some point it needs to be repaid. Cinemark and Cineworld, which owns Regal, also are highly leveraged. And those are the exhibition giants, which have strong relationships with banks. Many of the independent theaters, which don’t have access to major lenders, won’t be able to find a lifeline to get them through the worst of the pandemic.
At the same time, the major media companies have made it crystal clear that they view challenging Netflix as their greatest imperative. Disney devoted nearly an entire four-hour long investor day to touting its plans to arm Disney Plus, Hulu and its other subscription offerings, while also reorganizing its executive hierarchy to better focus on streaming. Meanwhile, WarnerMedia and Comcast are pouring hundreds of millions of dollars into adding programming for HBO Max and Peacock, respectively, and Viacom is readying Paramount Plus, the re-branded CBS All Access streaming service, for its closeup. The streaming wars promise to grow more pitched in the weeks and months ahead.
As for filmmakers, they seem to be making the pivot to the new platforms with relative ease. Netflix boasted new movies from the likes of David Fincher (“Mank”), Spike Lee (“Da Five Bloods”), George Clooney (“The Midnight Sky”), and Aaron Sorkin (“The Trial of the Chicago 7”) in 2020 and has a good chance of converting at least one of these splashy projects into an Oscar winner. And Apple, Amazon, and Hulu countered with new films from auteurs and A-listers such as Sofia Coppola (“On the Rocks”), Sacha Baron Cohen (“Borat Subsequent Moviefilm”), and Lee Daniels (the upcoming “The United States vs. Billie Holiday”). Some of these films were initially set up at traditional studios before the pandemic upended plans for a theatrical release and resulted in a great selloff.
“They have a checkbook and they have an aesthetic,” Fincher said of Netflix during an interview this fall. “They’re working with the people they want to work with. I respect that.”
Yet even as Fincher looked ahead to the emergence of a different kind of studio system, one built around streamers, he warned of the dangers of a new status quo. “I hope it doesn’t feel clubby,” he said. “I hope it doesn’t feel like there’s an Amazon-type filmmaker and a Netflix-type filmmaker and an Apple-type filmmaker. That feels like subdividing in a twee way.”
Despite the convenience and comfort of at-home viewing, Hollywood studios aren’t resigned to the collapse of the theatrical business. Talk to any film executive, and they will ensure you that people are more than eager to resume normal life.
“We’ve all heard the analogy that the roaring twenties followed [the 1918] pandemic,” says Tom Rothman, the chairman of Sony Pictures. “That feels instinctively correct. There’s a tremendous pent up desire to get out of the house and away from our screens and experience life with other people.”
Of course, a return to any kind of normalcy — and with it, regular moviegoing — is dependent on a widely distributed COVID-19 vaccine. Most public health experts believe that milestone won’t be reached until late spring or early summer.
Harman Moseley, the owner of St. Louis Cinemas, a small chain in the Midwest, has already been burned by turning his marquee lights back on before the pandemic had lifted.
“I’m not going to reopen until I’m confident we can attract crowds that will offer us the possibility of economic viability,” Moseley says. “I was open for two months [in the summer]. My payroll was more than my gross. If my rent were due, I would already be bankrupt.”
Movie theaters have spent thousands on COVID-safety protocols. But cinema operators are still struggling to sell tickets. AP
It’s also undeniable that theaters will need to evolve and recalibrate to get people back in their auditoriums. Audiences have spent the past year watching films from their sofa for the same price as a single movie stub. An HBO Max subscription costs $15 per month. Movie tickets in New York City and Los Angeles sell for $20 a pop.
“I live in fear of exhibition chomping at the bit to get back to the status quo,” says Chris Aronson, Paramount’s president of domestic distribution. “I do believe people will want to get out of their homes and resume a normal lifestyle, but it’s very shortsighted to think that’s all that needs to be done. Theater owners need to look at every facet of their business, like we’re looking at every facet of ours.”
Ted Rogers, the film programmer at Ragtag Cinema, a non-profit independent movie theater in Columbia, Missouri, agrees with Aronson. He understands that showing the next “Jurassic World” sequel won’t be enough to keep the cash registers ringing. He’ll have to also find ways to strengthen the bond between his customers and the cinema he operates.
“I think it’s about leaning on what arthouses have been doing this whole time: speaking directly to the audience, not programming to the lowest common denominator,” Rogers says. “That’s what’s going to wow audiences. Not just being a work-a-day exhibitor, but creating a community space.”
Matt Donnelly contributed to this report.
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How 2020 Changed Hollywood, and the Movies, Forever - Variety
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