By: Tifanie Jodeh Acosta, Esq.
Jerusha D'Souza
The business of theatrical exhibition has suffered tremendously since the onset of the pandemic. Prohibition of large gatherings have caused a severe blow to movies released in theatres. A rise in the streaming market has been recorded, with stocks of companies like Netflix reaching an all-time high, forcing studios to re-strategize their business models to stay relevant.
Warner Bros. announced a ‘Hybrid Distribution Model’ for its 2020 theatrical slate, a consumer-focused model which could change the way films are distributed. Films will be exhibited theatrically worldwide with an additional, one-month access period on the HBO Max streaming platform concurrent with the film’s domestic release. The slate includes 17 films such as "The Little Things", "Tom & Jerry," "Godzilla vs. Kong," etc. The decision was made after the unprofitable release of "Tenet" in theatres. Using this new distribution model, “Wonder Woman 1984” went on to gross $118.5 million globally upon its release.
Back in the 2000’s a similar concept was used for independent films known as a “simultaneous release” or a "day-and-date" release which is when a film is released on multiple platforms on the exact same day, or in very close proximity to each other. The concern with this business model is the overlapping of separate revenue channels. The deal would essentially shut off the “waterfall” which is the industry’s term of the order in which various parties receive net revenue. A ‘day and date’ release would shorten the ‘theatrical window’ which is the time gap between when the movie first hits the theatres to when it becomes available on other platforms, this period is usually for 90 days. Followed by which the movie would become available on home video (DVDs), to television beginning with pay TV, Video on Demand (VOD) and eventually free.
The digital era has changed the sequence of release windows with Subscription Video on Demand (SVOD) i.e., streaming platforms such as Netflix, Hulu, HBO Max, etc., where viewers have the ability to pay a one-time access fee to watch the entire catalogue.
Even before HBO announced its plans for same day releases, Universal released “Trolls World Tour”, its animation sequel as an online rental in April. Disney+ made “Mulan” available in September, but a key similarity is that both movies carried an extra cost to watch them online. They were made available under “premium video on demand”, a special early online release accompanied by high prices that would unlock the title for home-viewing.
Theatre owners like AMC entertainment have the most to lose. Maybe some theatre chains will be on board as long as they get a share of the home video sales. "A" list talent also receive “box office bonuses” as part of their contracts, and are awarded a percent of the global box office sales. These interest groups argue that a move like this could dilute box office revenue, when cinemas have to compete with early availability of a film on streaming platforms, affecting the traditional movie-going experience.
In terms of theatrical release, exclusivity language in a distribution agreement will soon become important, where studios will want to ease up exclusivity windows, and talent will push for larger windows. Steven Spielberg said "everyone should have access to great stories", and that they should be able to "find their entertainment in any form or fashion that suits them." We live in unprecedented times and the way people are viewing and assimilating content has drastically changed.
COPYRIGHT & DISCLAIMER
Tifanie Jodeh Acosta is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs. You may contact her at Asst@entlawpartners.com.
Tifanie Jodeh Acosta grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice
DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.
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