Studios Gamble on Theater Rebound in 2021

Amid the burgeoning Streaming Wars between established players Netflix and Amazon—and plucky-upstarts Disney+, HBO Max, and now Peacock—comes a new battle: The Should we Send to Streaming Wars.

Disney fired the first shots across the bow by releasing the highly anticipated live-action version of the beloved animated classic, Mulan, on Disney+ last year at a premium price point in addition to the monthly fee, before allowing all Disney+ subscribers to stream it in December sans fee. 

Then came the bomb drop from Warner Bros. Their entire 2021 movie slate would drop in theaters and on HBO Max streaming simultaneously. HBO Max subscribers would have a 30-day exclusive window to watch theatrical releases in the comfort of their own home. 

The announcement sent shockwaves across the industry, angering theater exhibitors and sending an already struggling AMC—the largest theater chain in the U.S.—stock cratering. 

But through the fog of war, hope is rising through the morass. Hollywood is betting big that there will be a return to normalcy for theaters at some point in 2021. The bet hinges on the safe rollout of the Covid-19 vaccine. 

Instead of selling their movies to the highest bidder, studios have taken the strategy of delaying major tentpoles. Hollywood hopes that there will be a return to normal—or as close to normal—movie theater experience by the time the fall rolls around. As a result, studies have begun delaying their spring and summer slates to the fall. 

The impetus to keep movies in theaters is not just so that they can be seen as designed: the biggest screen possible in a packed theater, but also because the financial impact is so large. For example, a $200 million tentpole released in theaters has the potential to reel in $1 billion worldwide, not to mention additional revenue streams such as merchandising and sequels. 

As a result, No Time to Die, Daniel Craig’s swan song as James Bond, has been pushed for the third time to the fall by MGM and will now be opening early October instead of April. Sony’s Ghostbusters: Afterlife is being pushed from a summer release to November. 

It’s not just the halo movies that the studios want to release in theaters for maximum revenue returns; the mid-level films are still seen as important to a studio’s bottom line. For example, Paramount’s A Quiet Place Part II saw its release date pushed from April to mid-September. 

John Fithian, president-CEO of the National Association of Theatre Owners, explained the importance of studios upholding the theatrical release model: “The studios have delayed the vast majority of their major releases until movie theaters are back in business for a very simple reason. A theatrical release is their biggest source of revenue on these titles, and they cannot be profitable without such a release…the tunnel of this pandemic for exhibitors has been long, but the light at the end of that tunnel looks very bright indeed.”

Because of the pandemic, many major studios sold off smaller and mid-range titles to streamers, all too happy to gobble up new content with a finished film packaged and ready to go. Streamers have been eager to pay top dollar for titles as well. However, the limits to how much streamers were willing to pay was tested this summer when there were rumors swirling MGM was considering selling No Time to Die for upwards of $800 million. “The unspoken rule? You are not going to sell a movie that has a huge upside in theaters,” said one veteran executive. Insiders also say there are no plans to move Marvel’s Black Widow to Disney+. Paramount has refuted rumors that Top Gun: Maverick will be released on Paramount+, the successor to CBS All Access. 

“We have no plans to move our theatrical release of Top Gun,” says Paramount president of distribution Chris Aronson. “I think the next two months are critical, and whether the new administration can implement a robust vaccination plan. If Biden’s 100 million vaccines in 100 days works, then I think we’ll be in good shape.”

Aronson’s quote brings the focus back to the crux of Hollywood’s issue: the pandemic. The reason Hollywood has hope that a return to normalcy is in the near future is based on things like the National Research Group’s weekly surveys of moviegoers. The “comfort” scores of moviegoers have quickly risen, and 82% of respondents say they would feel comfortable going to the movies once the vaccine is widely available.

Let’s hope that the fall optimism is a worst-case scenario and that we are able to see movies in packed theaters with raucous crowds. Seeing Vin Diesel and the Rock punch bad guys while driving cars through airplanes on a 42-inch tv just doesn’t do it justice.  

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Source: The Hollywood Reporter

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