Theatrical movies on demand

Yesterday, NBCUniversal made the potentially game-changing announcement that it would be releasing some of its theatrical movies on demand starting this week, shattering the theatrical exhibition window that has been in place for decades. Other studios soon followed, and speculation ran rampant about whether this decision marks the end of movie theaters.

Well, the National Association of Theatre Owners saw yesterday’s coverage and wants everyone to pump their brakes a little. The organization, which is comprised of theatre owners from not just the United States but 98 other countries, released a statement acknowledging the affects of the coronavirus on their industry. But they also cautioned people against jumping to conclusions, pointing out that releasing every movie straight to streaming is not a viable financial option for the studios.

After recapping how movie theaters have faced mandated and voluntary closures in recent days to slow the spread of the coronavirus (aka COVID-19), NATO’s statement says, “Our partners in movie distribution have postponed major new releases in response to the Coronavirus situation in markets around the world. Other titles beyond the immediate horizon have not changed their release dates.” But here’s the part that’s really worth paying attention to:

Although there has been speculation in the media that the temporary closure of theaters will lead to accelerated or exclusive releases of theatrical titles to home streaming, such speculation ignores the underlying financial logic of studio investment in theatrical titles. To avoid catastrophic losses to the studios, these titles must have the fullest possible theatrical release around the world. While one or two releases may forgo theatrical release, it is our understanding from discussions with distributors that the vast majority of deferred releases will be rescheduled for theatrical release as life returns to normal…When those titles are rescheduled, they will make for an even fuller slate of offerings than normal as they are slotted into an already robust release schedule later in the year.

Again, this comes from theater owners, so it may be worth taking with a grain of salt since the scenario they put forward is clearly in their best interests considering the circumstances. But they do have a point, and this is something we wrote about last week: studios have simply invested too much money into making movies like Black Widow and F9 to release them on a streaming platform, even if they were to charge $19.99 for a 48-hour rental period. And here’s the thing: even if theater chains have to close down because of the economic strife they’re suffering during this awful period, it looks like the studios may be able to swoop in and purchase those theaters themselves, so they can program their big blockbusters and cut out the middle man altogether, making more of their money back in the process.

The statement concludes with a hopeful message: “While movie theaters will suffer some financial harm in the near term, and many of their 150,000 employees will face personal hardship, when this crisis passes and people return to their hard-wired social nature, movie theaters will be there for them as they have always been, with a full slate of movies far into the future.”

I understand that NATO doesn’t want to sign its own death certificate, but right now, it’s hard to see how the traditional movie theater business as we know it (or, more accurately, knew it) will be able to weather this storm.

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