Universal's New Plan Could Steal Every Major Director From Warner Bros. And Paramount

Universal Pictures just made a move that will upend Hollywood, thankfully for the better. The studio has revealed it will keep its movies in theaters longer before bringing them to Video On Demand and streaming, reversing a new normal that has been prevalent since the Covid-19 pandemic in 2020 and had a huge impact on the theatrical industry. It's a move that could help the studio court major directors in the future.

According to The New York Times, Universal has extended theatrical runs for its movies in 2026 to at least five weekends for new movies. What's more, beginning in 2027, the studio will guarantee at least seven weekends for its movies. 

Focus Features, which generally makes smaller movies like "Hamnet," remains an exception; three weekends of theatrical exclusivity will still be the norm for films released under that label. 

It's a huge reversal of course, as Universal has often waited just 17 days, or three weekends, before putting most of its movies on premium VOD in recent years. How long movies stay in theaters isn't just dictated by ticket sales. It's become complicated in recent years, with no uniform agreement among the Hollywood studios. Donna Langley, the chairwoman of NBCUniversal Entertainment, had this to say:

"Our windowing strategy has always been designed to evolve with the marketplace, but we firmly believe in the primacy of theatrical exclusivity and working closely with our exhibition partners to support a healthy, sustainable theatrical ecosystem."

"Universal remains a theatrical-first studio," Langley added. "That's proven by the breadth of our slate, our commitment to our filmmakers and the ongoing investments we make in the creative community."

Universal has argued that on-demand is good for business, with VOD bringing in lots of revenue. That may be true, but the days of rushing movies to VOD, even if they disappoint at the box office, appear to be over for the studio.

This is welcome news for theater owners, given the struggles in recent years. Reports have suggested that the global box office may never fully recover from the pandemic. The rise of streaming and the advent of "new movies at home right away" thanks to premium VOD, aka paying $20 to rent a new movie in its first window at home, has greatly hurt the box office. Universal seems to be taking the stance that, several years removed, it's a better long-term strategy to keep movies in theaters longer. Directors are almost certainly going to like that strategy.

Warner Bros. and Paramount are set to merge after Netflix backed out of the deal, meaning Hollywood is about to shrink. The Paramount regime has boasted of providing a 45-day theatrical window, which is good. However, Universal is making a loud, firm, money-where-their-mouth-is commitment to theaters for the long haul. Seven weekends is better than almost any other studio right now. Uniformly, big directors want their movies in theaters. It's why Netflix has had a difficult time retaining talent in recent years.

Case in point, "Stranger Things" creators the Duffer Brothers went to Paramount because Netflix wouldn't let them make movies for theaters, at least not in a meaningful way. Christopher Nolan already jumped ship from Warner Bros. to Universal for "Oppenheimer," and he's making "The Odyssey" for them as well. Steven Spielberg's "Disclosure Day" is a Universal movie.

Prior to the Netflix/Paramount bidding war, Warner Bros. had been signing up A-list talent left and right. That may no longer be the case given uncertainty with the looming merger. Universal is positioned to be a first choice for filmmakers now. The studio should have a leg up thanks to this change of strategy.

Whether or not other studios follow suit remains to be seen. If they don't, confusion will remain among consumers, who have no idea when to expect a movie at home, or when it will be in theaters.

"It hurts the box office," film consultant David A. Gross said to the Times about that confusion. "More uniformity from studios would help, as would going back to a longer exclusive window for theaters."

AMC Theatres called Universal's new strategy "extraordinarily beneficial," adding that it "strengthens the entire theatrical ecosystem." AMC is saddled with debt and has been taking losses recently. Other theater chains are undoubtedly going to be thrilled as well.

There's some irony here: Universal kicked off the premium VOD trend in 2020 with "Trolls World Tour," an unlikely movie that changed Hollywood forever. But keeping movies in theaters longer is simply good for business. Data has shown repeatedly that movies with robust theatrical releases do better on VOD and streaming, and since NBCUniversal's Peacock is the only major streamer that still isn't profitable, the studio prioritizing a streaming funnel doesn't make sense anymore.

Another big talking point has been "movies make the majority of their money in the first three weekends." That may be true, but when Netflix announced its theatrical window plans for WB movies, I pointed out that "Sinners" made 65% of its money, or $240 million, through its first three weekends. It went on to gross $367.8 million in total. There are numerous examples like this, and that logic leaves a lot of money on the table. It seems Universal has no interest in leaving any more money on the table.