Movie studios face an unprecedented choice as summer drags on: resort to high-priced digital rentals or wait for theaters to reopen

wonder woman 1984

  • Movie studios have recently delayed tentpole releases like
    “Tenet” and “Mulan” as coronavirus cases surge in some states,
    including Texas and California.
  • AMC Theatres, the world’s largest theatre chain, delayed its
    reopening from July 15 to July 30.
  • Movie studios have recently turned to premium video-on-demand
    for some releases, but should rely on PVOD even more if theaters
    remain closed for the foreseeable future, according to Exhibitor
    Relations box-office analyst Jeff Bock.
  • But instead of completely tainting their relationship with
    movie theaters, studios are likely to examine releases on a
    movie-by-movie basis.
  • Shawn Robbins, the Box Office Pro chief analyst, is less
    confident about PVOD’s long-term viability, calling it a
    “worst-case scenario for the vast majority of high-profile
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More than three months after movie theaters throughout the US
shut down due to the coronavirus pandemic, the industry’s immediate
future is still up in the air.

Coronavirus cases have surged in states like Texas, Florida, and
California, which have begun to roll back reopening strategies to
slow the spread.

Warner Bros. recently pushed back Christopher Nolan’s “Tenet” to
August and “Wonder Woman 1984” to October. Disney delayed its
live-action “Mulan” remake from July to August, as well.

The release changes prompted AMC Theatres, the biggest theater
chain in the world, to delay its reopening from July 15 to July

The National Association of Theater Owners said earlier this
month that it
expected 90% of the global theatrical market to be open
in time
for “Tenet’s” initial release date of July 17. But since then, the
movie has been moved twice and the two biggest theatrical markets
in the world — the US and China — remain in flux. China’s
70,000 movie theaters have been closed since January,
costing the Chinese box office billions
 compared to last

“Studios and theaters are dealing with a constantly changing
marketplace with state and local health and safety protocols that
dictate whether or not theaters can open,” Paul Dergarabedian, the
Comscore senior media analyst, told Business Insider. “These are
never-before-seen issues that have made the theatrical release
calendar a constantly evolving document.”


PVOD is looking more and more reasonable, one expert says

One alternative to theaters that studios have started to embrace
is premium video-on-demand (PVOD) releases, often at $20 a

Movies that were briefly in theaters hit digital retailers soon
after theaters shut down, like “The Invisible Man” and “Bloodshot.”
Universal went one step further by releasing “Trolls World Tour” to
PVOD on the same day that it was supposed to hit theaters. Warner
Bros. followed with the animated “Scoob!” and Paramount will
release “SpongeBob: Sponge on the Run” to PVOD in 2021 and then CBS
All Access. So far, the major studios have mostly experimented with
the aforementioned family films or smaller fare.

A person familiar with Sony’s thinking told Business Insider
that its position hasn’t changed since March, in that it doesn’t
believe in closing the theatrical window and it will be “business
as usual” once theaters reopen. The other major studios have
previously expressed commitment to the theatrical experience, but
were mum for this story. Representatives for Disney, Paramount, and
Warner Bros. did not return requests for comment. Universal
declined to comment.

But PVOD is looking like a more viable option even if studios
don’t want to fully admit it — even for more expensive movies —
according to the Exhibitor Relations box-office analyst Jeff

“I’m willing to bet as many as 75% of the standard audience will
stay away from movie theaters if they try to reopen in July or
August,” Bock said. “That’s a number that studios will absolutely
not be comfortable with. And the only thing they can do right now
is lean on PVOD.”

He added, “There is an opportunity to make a significant amount
of money. For the right film, the time is now — the studios will
never have a more captive audience to make an in-home event out of
a blockbuster film.”

According to a Morning Consult survey published June 15,

23% of US adults say they would be comfortable going to a movie
, up slightly from 22% earlier this month and 21% in
May. But it’s still lower than people’s comfort with going out to
eat or going to a shopping mall. And the comfort level among
younger people actually dropped, among millennials from 29% earlier
this month to 25%, and from 31% to 28% among Generation Z.


Studios could make decisions on a movie-by-movie basis

While PVOD is looking more attractive, it would be difficult for
studios to earn the profits through PVOD that they would through
the theatrical box office with major releases like “Wonder Woman
1984” and “Mulan.” If studios want to remain committed to theaters
while experimenting with PVOD, they might examine releases on a
movie-by-movie basis.

The Wall Street Journal
reported in April that “Trolls World
Tour” had generated $95 million in rental fees and $77 million in
revenue domestically, prompting NBCUniversal CEO Jeff Shell to say
that the studio would “release movies on both formats” when
theaters reopened (he later said during an earnings call that PVOD
would be “complementary” to theaters).

That didn’t sit well with AMC Theatres, which has
vowed to not play future Universal releases once theaters
. It highlights the difficult choice studios will have to
make if theaters remain closed for the long term: releasing movies
on premium digital formats to make money in the short term, or keep
delaying theatrical releases and reaffirm their commitment to

Shawn Robbins, the Box Office Pro chief analyst, is less
confident in PVOD being an alternative to theaters.

“PVOD has been and will remain part of the conversation so long
as theaters aren’t up and running, but it remains a worst-case
scenario for the vast majority of high-profile releases,” Robbins
said. “Tentpoles, and the studios that depend on them, simply
cannot thrive financially without the theatrical window.”

Even if studios resort to PVOD more in the coming months,
Robbins said it would be an “extreme exception to the rule, not a
long-term change of the business model that is expected to return
to normalcy once the virus is under control.”

Alamo Drafthouse Cinema employees in Texas say they’ve been forced
to make a difficult choice as movie theaters reopen: return to work
in fear or lose their paychecks

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Movie studios face an unprecedented choice as summer drags
on: resort to high-priced digital rentals or wait for theaters to