Last week, a landmark deal between AMC Theatres and NBCUniversal rocked the film industry, as the two agreed to shorten the exclusive theatrical windows for films from nearly three months to merely 17 days, allowing for the film studio to release features on Premium VOD less than three weeks after they debut on the big screen. Needless to say, this was a divisive move, not just in the minds of analysts and film fans, who might see this as an inevitability, but also with theatrical exhibitors and cinema chains, such as one of AMC’s biggest competitors, Cinemark.
According to a recent conference call led by CEO Mark Zoradi (via THR), Cinemark is not in favor of the deal between NBCUniversal and AMC Theatres. In fact, the executive for Cinemark believes this is not only detrimental to the theatrical experience but also could mean big losses for cinemas’ bottom lines.
“We believe an exclusive theatrical window is critically important,” Zoradi said. “While we have publicly stated we’re willing to have conversations with our studio partners to evolve with them, we are mindful that an overly aggressive shortened theatrical window could have an adverse impact on the mid-to tail-end of a film’s life.”
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He added, “We will be very careful and methodical about how we approach any change to the theatrical windows. We continue to carefully analyze and research this matter. And we will endeavor to ensure any modifications are in the best interests of the overall industry, our company and our shareholders.”
On the one hand, you have NBCUniversal and AMC, who both believe that it’s beneficial for films to be exclusive in theaters but understand that most of the box office receipts for films happens during the opening three weekends of release with incredibly diminishing returns after a month of release. This would allow for NBCUniversal to take a film from theaters when it starts to lag and release it straight on PVOD. Seems like a win-win, right? Theaters get to reap the benefits of three big weekends and studios get the PVOD goodness. Well, not so fast.
On the other hand, Cinemark believes that this hurts the chains because it’s after those opening three weekends that cinemas begin to really make money off of ticket sales, as studios often collect a bigger percentage of box office splits during that first month and chains make up that difference the longer a film plays in theaters. So, if ‘Fast & Furious’ plays for 90 days in cinemas, it’s days 31 to 90 that allow theaters to recoup costs and make a profit.
And then there’s the third hand (not a thing, but don’t sweat the details) which believes that cinemas are doomed anyway and streaming/PVOD is the way of the future. This contingent believes that it’s inevitable that exclusivity windows will be shortened and studios will just eventually forgo the big screen in a massive way. This is definitely the pessimistic POV, but with COVID-19 forcing the world to live without cinemas for months, it’s a reality that many feel is coming sooner rather than later as customers find out that watching a film at home can be just as nice (or sometimes better) than going to the cinema.
Needless to say, this is the opening stage of a new evolution of the theatrical experience and there’s no clear path as to where this is all headed. But it sure will be interesting to watch unfold.