Theatrical exhibition is being remolded but the clay is still wet. The window for cinema release has definitively collapsed and along with it the metrics for calculating the economics of feature production.
That’s not to say that exhibition doesn’t have a role to play and a potentially major one at that. But as the saying goes, in Hollywood no one knows anything.
The kicker for a Deadline article on the topic is the fate of Zack Snyder’s zombie movie Army of the Dead.
Having been picked up by Netflix (from Warner Brothers, in 2019), the streamer gave the $90 million action flick a cinema release in May, where it opened to a paltry $780,000 in 600 theaters (domestic).
A week later it landed on Netflix, where some 72 million subscribers saw it in a month, making it one of the company’s most-watched films ever.
Deadline points out that for Netflix and fellow streamers like Amazon Prime a limited theatrical run is valued for certain features for its marketing value (to “eventize,” in the jargon) and not for any box office bonanza. The streaming business model is to attract and retain subscribers and is not dependent on monetizing (or spending millions on marketing) per title.
That is playing havoc with the way studio execs, agents and talent are used to bartering and budgeting a movie’s likely payback from the box office on down through ancillary sales.
“If windows do shorten more permanently,” a senior Netflix exec told Deadline, “the one thing that means is that theaters are going to need more films.”
Exhibitors apparently acknowledge as much. In a reverse of their stance pre-pandemic when chains would hold out for a three-month exclusive window, they are now talking to streamers and the studios with streaming divisions about booking more streaming fare.
“Now, after theaters survived brushes with bankruptcy and the kind of existential questions they have never faced before, there is a greater urgency to secure product,” writes Deadline reporter Dade Hayes.
It’s about time the traditional theatrical release model got a shake-up, according to some.
Eric Wold, an analyst with investment firm B. Riley, says “good riddance to the old windows with their stale titles obligated to play to empty auditoriums for weeks.” A more variable windowing approach, he says, can “optimize the performance of certain films and the entire theatrical exhibition ecosystem.”
Strong films, he suggests, will play through traditional window lengths and poor performers will be pulled to free up auditoriums “and potentially drive greater revenues for all involved.”
Netflix, Apple and Amazon show no sign of letting up in their pursuit of A-list filmmakers, offering to make their pet projects with a seeming carte blanche of editorial and budget.
Netflix is spending $450 million on two sequels to Rian Johnson’s comedy whodunit Knives Out; Apple may have outbid Netflix for Martin Scorsese’s next picture, Killers of the Flower Moon (Scorsese having made The Irishman at Netflix), and has landed Will Smith Antoine Fuqua collaboration Emancipation. Perhaps Netflix was saving some of its $20 billion content pot for Steven Spielberg, with whom it has signed a multi-project deal.
While the streamers financial model does not rely on theatrical play, ironically the valuation of the Netflix Knives Out sequel deal would not have been possible without the theatrical run of the original film, demonstrating the appeal of the film as a franchise starter.
There would seem to be an understanding all round that theatrical remain an important part of the equation but the bulk of revenues going forward will no longer be from the box office for most movies.
Instead, the value is on streaming platforms which are less than transparent about how well individual titles fare. That means lots of head scratching and guess work for agents working out how best to secure top dollar for their clients.
“In a world [during the pandemic] where there’s no theatrical and there’s a little bit of veiled mystery to it, we are looking for new ways to guarantee participation,” says Kristen Konvitz, a senior agent at ICM.
“There’s no clear answer right now with how this is going to happen,” agrees Ari Emanuel, CEO of talent agency Endeavor. “We are negotiating on behalf of our clients and our own properties to make sure that we get the proper economics as we go forward, and that’s the way we are going to operate until we find the proper flow, which is going to take a little bit of time as COVID kind of moves on.”