For most of my adult life, the cinema has been my place of worship. At least once a week, armed with a small popcorn and large Coca-Cola, I’d settle into the back row, dead center, and in the dark, I’d step into worlds, stories, characters, and moments that nourished parts of my soul that even years and years of cinematic devotion later, I’d be hard-pressed to accurately articulate. Even the more tangible aspects of this ritual — the immersive screen, the surround sound, the collective laughter and tears, the feeling of togetherness with a room full of strangers — are so powerful they are beyond mere words. However, the COVID-19 pandemic put a sudden and jarring end to this routine and drew the entire industry to a standstill.
On Wednesday, “Tenet” started rolling into theatres internationally, and it arrives on American shores next week. Beyond the conversations about the film, there is palpable desperation that the release will be the first step to things returning to the way they were. However, it all feels illusory, the last gasp of a business that had been successful in outrunning the inevitable — until now.
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Faced with a formidable streaming landscape that is now impossible to ignore, Hollywood in the midst of completely rethinking how they do business, and with audiences less convinced than ever that the theatrical experience is worth saving, it’s difficult to fathom, and even harder to admit, but….
Moviegoing as we once knew it is dead.
Why Go To The Movies….
Cinemas haven’t had it easy for years, however, they’ve long managed to stay in the fight. Even so, ringing the death knell for the theatrical experience is hardly new. But the pandemic has truly exposed the rickety framework of the current business model, one that has seen major studios pivot almost exclusively to shiny, IP-driven, sequel-producing, merchandised-product-spawning packages that rely on huge, opening box office weekends and packed cinemas to thrive.
This drive to deliver one billion-dollar blockbuster after another has led to the major studios producing fewer movies, but each with the expectation to return a staggering, if not inconceivable return on investment. The result has been smaller, character-driven, midsize movies being squeezed out, in favor of one big gamble after another. The stakes are incredibly high for all involved, and it doesn’t take much to cause serious instability.
Just look at 2019. The winter and spring saw a handful of films underperform, with revenue running 13.3% off the mark of the previous year. By April, the industry was already pinning their hopes on one film — “Avengers: Endgame” — to save the summer box office. Well, Marvel’s mightiest did save the day — the box office hauled in $4.86 billion between April and August. Here’s the stinger: Disney branded IP accounted for 50% of that figure, with ‘Endgame’ alone tallying up 18% of those tickets. But all those mighty superheroes and the string of branded entertainment couldn’t stop 2019 from being domestically one of the worst years in movie ticket sales since 1995.
Paradoxically, the global box office had its best year ever, but an industry that relies on a smaller amount of moviegoers to proper up fewer numbers of movies to ever-rising blockbuster figures is not a formula that’s sustainable to keep cinema chains alive. It certainly can’t keep relying on a single studio or movie to keep saving the day. It becomes more difficult to remain viable when being pressed to give up a greater and greater percentage of ticket sales to the studios.
Disney in particular made headlines in 2017 when they demanded 65% of takings from theaters booking “Star Wars: The Last Jedi.” Now, “Tenet” — the film that savior of cinema Christopher Nolan is hellbent on releasing in the middle of a pandemic to save the theatrical business — is going to see Warner Bros. pocket 63% of ticket sales, leaving theaters that will be operating at reduced capacity even less revenue to keep the lights on.
Soon, cinema chains might be fighting for even smaller scraps of the pie.
….When You Can Just Watch Them At Home
It didn’t take long into the pandemic for studios and distributors both big and small to shift their business model. Universal Pictures grabbed the biggest headlines when they decided to send their splashy, spring release “Trolls World Tour” straight to Premium Video On Demand. With a $19.99 rental price, the movie tallied $100 million across three weeks, and with Universal pocketing 80% of the take from digital platforms — a far bigger share than they would’ve gotten from a theatrical release — it was an unprecedented success. The studio also chalked up another $60 million by quickly shifting their pre-pandemic releases that were still in cinemas — “The Hunt,” “Invisible Man,” “Emma,” and “Never Rarely Sometimes Always” (the latter two through their Focus Features shingle) — to digital platforms, also with a premium rental price.
It’s worth remembering that Universal — along with every studio in Hollywood — has had their eye on PVOD for years now. Way back in 2011, the studio backed off plans to offer the Ben Stiller and Eddie Murphy starring “Tower Heist” digitally for $59.99 day-and-date with the film’s theatrical release, after stirring up the ire of theater owners across the country. Of course, a decade ago, cinema chains had far more clout, and the streaming landscape was hardly as robust as it is today.
Unsurprisingly, theater owners were as furious this spring at Universal, as they were back then, but the pandemic completely shifted the balance of power. After initially being one of the most vocal critics of Universal pivoting to PVOD, AMC made a landmark deal with the studio, that will allow them to collapse the theatrical window to as short as 17 days before they can bring a film to digital. The concept here is simple: if a film has a gangbusters opening weekend, and is packing them into cinemas, Universal keeps it on the big screen. If after 17 days a film is “underperforming” (it’ll be interesting to see what determines that metric), the studio can quickly try their luck on PVOD.
From the perspective of AMC, this deal probably makes sense: most blockbuster films count on earning their biggest haul on opening weekend, and a 50% drop in ticket sales by the second weekend is usually par for the course. It means they don’t have to keep something like “The Mummy” on their screens any longer than they have to, while Universal can decide to quickly change gears if they see a film is going to perform below expectations.
But this model is absolutely disastrous for anything that’s not a tentpole. If this kind of plan becomes the norm, there’s absolutely zero chance for films that don’t immediately break out of the gate to find an audience. Just a couple of years ago, 20th Century Fox’s “The Greatest Showman” was a slow-burn sensation. The film opened in the Christmas 2018 corridor to some very soft numbers, and critics weren’t kind — it was enough to spell disaster for Hugh Jackman starring musical. But word of mouth powered an unexpectedly long run for the film, and even though it never rose higher than #4 in the box office top ten, it became a massive global hit ($435 million worldwide), winning a Golden Globe, earning an Oscar nomination, and even spawned sing-along screenings. If it had been released under the 17-day window, no studio executive would’ve thought twice about quickly yanking the movie before it had a chance to prove itself.
The picture is even grimmer for indie studios, who at least used to count on grabbing a few screens at the multiplex. Independent and foreign films live and breathe on carefully constructed rollouts that depend heavily on word of mouth and mounting critical buzz. Bong Joon Ho’s Oscar-winning phenomenon “Parasite” took nineteen weeks to build its way toward playing on 2,000 screens across the country. But what do you think AMC is going to prioritize programming on as many screens as possible if they’re only going to have “Fast & Furious 29: The Bourne Crossover” for a couple of weeks?
Disney’s recent decision release their $200 million blockbuster, “Mulan,” directly to PVOD for $30 through their Disney+ platform is another shot across the bow. While Disney CEO Bob Chapek claims the release will be “a one-off,” it’s very hard to believe this isn’t a beta program for what the future could portend. First off, you don’t spend time, effort, manpower, and money building a new PVOD payment infrastructure on your recently launched streaming platform for just one movie. Secondly, all you have to do is read the room. Studios are seeing a pile of PVOD money just sitting on the table — money that will go directly into their pockets, that they don’t have to split with anybody else, much less a theatrical distributor — and there’s simply no way they’re going to ignore it. And while Warner Bros. is keeping Christopher Nolan happy by releasing “Tenet” exclusively in cinemas, studio CFO John Stephens has hinted to a new direction, pointedly stating that the pandemic is “forcing us to look at new ways to distribute content.”
Nonetheless, change isn’t immediate and there will be all kinds of variations between theatrical, PVOD, and hybrid releases to see what works best but traditional release windows for tentpole films are in a moment of undeniable evolution. The current fall theatrical release dates for “Wonder Woman 1984” and “Death On The Nile” are certainly reasons for hope, until you release those films are largely filling a barren landscape, with most films pushed to 2021. Moreover, those release dates still feel like placeholders, shifting goalposts that will undoubtedly change when the second wave of the pandemic — that is still nowhere near under control the United States — arrives.
No one thought “Mulan” would ever go straight to streaming, but almost every film now seems to be a viable candidate. And when “Mulan” lands next week, everyone will be watching closely, and if the numbers are impressive, you can bet the PVOD conversation will only continue to catch fire at every studio around town.
Bigger Content, Less Choice
The industry is currently in a moment of seismic change, and where moviegoing emerges from here is unpredictable, but if there is one certainty, it’s that it will not go back to the way it was before. Showing up at your local 20-plex with a dozen options to choose from will likely be a relic from the past. As windows collapse and more films are pushed to PVOD, we’re likely to see less choice on the big screen as chains look to maximize branded entertainment as much as possible, creating further polarization between tentpole films and everything else.
There’s also the question of whether cinema chains will even survive this pandemic at all. Last fall, Cineplex, Canada’s largest theater chain, was sold to U.K. titan Cineworld (though the deal is now headed to a lawsuit between both companies), who also owns U.S. chain Regal. As Cineplex tentatively reopens across Canada, it is facing a staggering revenue collapse, and even if “Tenet” shows from now until Christmas, how long can cinemas remain viable? Meanwhile, AMC has been on the ropes for much of the year, with whispers of bankruptcy, and rumors sparking earlier in the spring that Amazon was eyeballing a purchase. Even as cinema chains reopen, social distancing measures mean they are likely operating at a loss. And what happens to these chains when they have to shut down again should the pandemic worsen? On top of that, the recent dissolving of the Paramount Decrees is another ominous omen on the horizon.
The former anti-trust law prevented studios from owning cinema chains, and while the common wisdom is that studios don’t want to be part of the exhibition business, that was also said about streaming in its earliest days. It’s only just a matter of time before a studio figures out how to turn exhibiton into a worthwhile revenue stream, and makes a play for one of the major chains.
Imagine you’re Disney. You buy AMC, close the locations that aren’t turning a profit, and convert the rest into Disney Event Centres. When “Avatar 5” opens, you can see it on the big screen at the Disney operated multiplex, buy some official merchandise on your way out, and then in a few months watch it on Disney+ in your home. Or, pay $30 to watch it at home if you don’t have a Disney multiplex near you. That’s an entire revenue cycle dumping money directly into the mouse house’s pockets. And it’s unlikely that a chain owned by Disney or Warner Bros. or Amazon is going to feel compelled to make room for films that aren’t their own.
It also feels increasingly likely that independent and foreign films will exist in a completely different landscape, as there won’t be much room for them at your local multi-screen cinema. And we’re already seeing the business model for arthouse films drastically changing.
“I do think [independent] movies will be distributed with limited theatrical or no theatrical at all,” producer Jordan Horowitz (“La La Land, “Fast Color”) predicted last year. “As more and more streaming services are making features, I think we’ll start to see festivals be the theatrical experience for a lot of these movies. The movie will premiere at Sundance or Toronto, and then premiere on streaming that week or the week after.”
It was a prescient statement and one that’s already coming into fruition thanks to the pandemic. Industry streaming platform Shift72 — which offers highly secure online viewing and has worked with major festivals including SXSW and TIFF — is seeing a staggering boom in business. And in a fascinating interview with Deadline they revealed that the independent space might be seeing a game-changing shakeup.
“I’ve been talking to a number of sales agents about global day-and-date releases for independent films and there is a lot of enthusiasm for it. They love that we report in real-time and that the money goes to you immediately,” company director John Barnett stated.
That being said, arthouse and independent cinemas have done an excellent job of not only curating their programming but making a clear case of why the cinematic experience matters. They’ve cultivated an audience that understands the magic of seeing a film on the big screen. Moreover, working with partners like Kino Now and Film Movement, they have quickly pivoted to finding ways to work with distributors and generating income via revenue-sharing “virtual cinema” experiences, even if their projectors aren’t yet turned on. Of course, it hardly replaces the money they’d pull in from a packed screening, but according to a 2016 survey by the Arthouse Convergence, their audiences on average see 34 movies per year, with about half at their favorite arthouse. That audience will most certainly return, even if the number of the films getting released at the arthouse, versus going straight to digital, decreases.
Unfortunately, the same can’t be said for the cinema chains. And the worst advocates for going to the multiplex might be the cinema chains themselves.
They’ll Just Show Up
For years, cinemas have operated with the confidence and arrogance that with a guaranteed theatrical window, audiences have no choice but to buy a ticket if they want to see the latest Marvel or ‘Star Wars’ or ‘Harry Potter.’ Even as audiences have griped about the rising costs of tickets and concessions, diminishing projection quality, and audiences that talk or text their way through movies — a terrible idea they themselves have toyed with embracing — cinema chains haven’t done much to address those concerns.
Now, as they find ways to open during a pandemic, they are busier suing for the right to operate (and losing), and making half-hearted gestures towards customer safety, than they are making a case for why they matter, beyond being the only place to see “Tenet.”
In a general survey conducted last year, 46% of respondents stated that they went to the cinema one time per year or less. What will cinema chains do to change that statistic? So, let’s say “Tenet” brings people in — what are cinema chains doing to sell audiences on coming back? For the longest time multiplexes have tried all kinds of cosmetic gimmicks — reclining chairs! the same overpriced and crappy food, but delivered to your seat! D-Box! — but nothing has made a notable difference. They’ve mistakenly put all their efforts and emphasis on trying to lure moviegoers by focusing on entirely the wrong things. It’s the movie that matters.
It’s up to cinema chains to remind everyone about the thrill of moviegoing, the wholly immersive experience of a movie playing on a big screen, with terrific sound. That it’s something that for over 100 years has been absolutely vital and unmatched. They are going to have to go beyond the novelty of 15-cent tickets. They are going to have fight harder than ever to convince the audiences they have taken for granted for years, who are now sitting at home surfing through multiple streaming services, that moviegoing needs to be a regular part of their lives once we all return to normal life.
However, it could already be too late for cinema chains to reverse course. Executives should be concerned over a recent survey that shows, not only are audiences okay with watching a new release blockbuster at home, they’ll even wait out an exclusive theatrical window. And oh, “Tenet,” that movie positioned to save the business? 54% of those surveyed said they want to see it in the cinema, but would be fine wait too. Only a paltry 16% said the cinema was their format of choice for Nolan’s film. (And yes, I’ve read the wildly misleading survey about tickets sales for the film — let’s see how the actual numbers play out.)
Cinephiles will tell you that there’s nothing at home that can replicate a great cinema experience. And no matter how true that statement is, audiences have forgotten that, and it’s because cinema chains have forgotten that as well.
Love Live The Movies
While the cinema business will change, movies will keep being made, and people will keep watching them. The art form is not going anywhere, and it will keep evolving. In every corner of the globe, there are storytellers eager to share their vision with an audience.
During the period I wrote this, “Scott Pilgrim vs. The World” had celebrated its 10th anniversary. I still remember seeing the movie at the Fantasia Film Festival in Montreal, with a palpably excited and amped audience, who absolutely tore the roof off the place.
Last fall, I sat in a packed screening of “Parasite,” and it was an absolute thrill to feel the electricity move through the room when the hidden passageway to the basement bunker was revealed. The second last film I saw in cinemas before the pandemic was the restoration of Elem Klimov’s astonishing and harrowing “Come & See”; you could hear a pin drop in the cinema, and I’m so glad I watched it without the easy distraction of a phone by my side.
Visiting Dublin last September, I caught a screening of “People on Sunday” on a rainy evening inside a giant hall at the National Gallery of Ireland, accompanied by live music performed by Rachel Grimes. And I will never forget seeing “Singing In The Rain” at a repertory screening a couple of years ago, and the packed audience bursting into spontaneous, collective applause as the credits rolled.
These are the kinds of moviegoing memories I’m eager to make again. Movies are communal experiences, and cinemas are a rare space where we congregate in an act of collective vulnerability, giving ourselves to a filmmaker and their story, and sharing it together — there is nothing else quite like it. There is no algorithm that will ever replicate it. And it’s worth fighting for because, without it, movies will be just a little bit less alchemical.
Every film, both big and small, deserves an opportunity to transform an audience on the big screen. I hope that as the industry goes through a revolutionary change in their business, we don’t forget the cinematic moments, experienced in a movie theatre, that reoriented our perception of the world, which made us feel a little bit closer to the strangers around us.
When this is all over, let’s meet at the movies.