The COVID-19 outbreak meant that all of the UK’s cinemas were quickly closed, with no clear date of when they would be able to reopen. This has meant that all the new releases we were looking forward to watching have been pushed back to later in the year or even into 2021.
But with no end to the lockdown in sight, why aren’t studios releasing their films straight to streaming services and pay-per-view platforms?
The first major cinema release that decided to forgo waiting and head straight to streaming was Trolls World Tour. Set to be released in the early days of the pandemic, the film opted to combine theatrical release with online rentals, and as such was the number 1 on-demand title of its opening weekend.
It did roughly 10 times the business of NBCUniversal’s next biggest opening day digital release, reportedly generating $100m (£80m) and setting the bar for successful online movie releases.
However, it’s important to note that this was an on-demand release, which costs you £15.99 to rent on Amazon Prime, Google Play and YouTube.
This is not the same as releasing a movie to a streaming platform, which charges less than half of that a month for unlimited access to all its titles. Therefore Universal will still have been able to recoup some of its costs.
Another reason that Trolls World Tour would have chosen not to wait was merchandising. Animated films are typically accompanied by the release of a great deal of merchandise which can earn the studio even more than ticket sales.
With Trolls merchandise ready to ship, delaying the release of the film would have had disastrous consequences on their retail earnings. This means that future straight-to-streaming releases may end up being favoured by animated family films with plenty of toys and merchandise available to buy on the same day.
“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,” said Jeff Shell, the chief executive of NBCUniversal. “As soon as theaters reopen, we expect to release movies on both formats.”
The decision by NBCUniversal to skip cinema screenings and go straight to streaming and on-demand services is not without its consequences. Odeon Cinemas, owned and operated by the world’s largest cinema chain AMC Theaters, has retaliated against these comments and threatened to ban cinema screenings of all Universal Pictures films when they eventually reopen.
AMC’s chief executive Adam Aron has claimed that this tactic is “breaking the business model and dealings between our two companies”. He went on to say, “AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East. It also extends to any movie-maker who unilaterally abandons current windowing practices absent good faith negotiations between us.”
This would mean that lucrative franchises like Fast & Furious, Minions and James Bond would not screen in any of the 1,000 outlets owned by AMC worldwide when they eventually reopen.
While Universal does get a greater cut of revenue from streaming services than cinema box office tickets, it’s highly unlikely that they’ll be putting all their efforts into digital releases going forward. The next installments of the Minions, Purge and James Bond have all been rescheduled rather than moved to an on-demand release.
“We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theaters, as well as on PVOD when that distribution outlet makes sense,” the company said.
“Our goal in releasing Trolls World Tour on PVOD was to deliver entertainment to people who are sheltering at home, while movie theaters and other forms of outside entertainment are unavailable.”
Don’t cancel your cinema membership just yet. Most major studios have little or no plans to skip a cinema release, especially for major blockbuster movies. No matter how late they arrive, a big theatrical release will still earn a studio much more money than releasing it on-demand or on streaming platforms.
For proof you just need to look to Disney who, despite heavily investing in their new streaming service, are still planning to release major blockbusters like Mulan and Black Widow in cinemas once life returns to normal.