Cinemark (Courtesy of Michael Buckner/Variety)
On Monday, Universal Pictures gave theater owners another shove toward the future of moviegoing. The Hollywood studio struck a second deal with a major theater chain, this time Cinemark, to shorten the theatrical window and bring movies more quickly to the home.
Under the terms of the agreement, Universal can put new movies on premium video-on-demand platforms in as little as 17 days. Films that generate at least $50 million in opening weekend ticket sales, however, will have to play exclusively in theaters for 31 days, or five full weekends. Traditionally, new releases remain on the big screen for 75 to 90 days before they move to digital platforms for a $19.99 rental fee.
Universal made a similar agreement months ago with the world’s biggest cinema chain, AMC Theatres — a decision that initially drew criticism. Yet now having Cinemark on board means two of the biggest movie theater chains in the country have resigned to the fact that the film industry will look very different when the world emerges from the coronavirus pandemic.
Is this the final nail in the coffin for theaters? How soon can audiences watch the next “Fast & Furious” sequel at home? Here’s everything you need to know about Universal’s historic deals with Cinemark and AMC.
How do these arrangements work?
These pacts give Universal the option (key word: option) to put new releases on home entertainment platforms earlier than ever. That doesn’t mean every movie will definitely make the jump to digital after three (or five) weekends. Think of it as a safety net. Once upon a time, studios had to wait three months before they could make movies available to rent at home (most still do). That system works well for blockbusters like “Jurassic World,” “Wonder Woman” and anything Marvel — the kinds of movies that regularly gross well over $100 million in theaters. So it’s unlikely that similar tentpoles, or unexpected hits — which Universal has seen with Jordan Peele’s “Get Out” and “Us,” the recent “Halloween” reboot starring Jamie Lee Curtis and Blumhouse’s “The Invisible Man” — will leave theaters prematurely. But the gap between hits and misses at the box office has become unmistakable. Chalk it up to the surge in streaming services, but some movies no longer seem destined for the big screen. Expect embarrassing financial duds like Tom Hooper’s “Cats” adaptation and Robert Downey Jr.’s “Dolittle” to take full advantage of the early access to iTunes or Amazon.
How did they land on 17 (or 31) days?
For the most part, studios and theater owners can tell pretty quickly if a film is popular or not. There are always exceptions (“The Greatest Showman,” we’re looking at you), but movies generate most of their ticket sales within the first weeks of release. By the time a movie has been in theaters for two-plus months, audiences have largely moved on to something else.
If a movie makes $49 million in its opening weekend, does that mean it’ll move on-demand in three weeks?
Maybe, but it’s highly unlikely. Universal doesn’t have to put any movie to digital early, these deals simply provide flexibility in how movies are distributed. If a film generates anywhere close to $50 million in one weekend, it gives a good indication that people want to see it in theaters. It’s hard to believe that Universal will disrupt plans for a movie that’s generating substantial box office revenues.
Can a movie even make $50 million in a weekend during coronavirus?
Good question. Considering only 50% of U.S. theaters are currently open, and they’re operating at reduced capacity, and a lot of the public is scared of getting coronavirus, it’s hard to imagine a film cracking the $50 million mark — or even the $20 million mark — while the pandemic is still raging. If any movie had a shot at hitting that benchmark, it would have been Christopher Nolan’s “Tenet.” But the sci-fi thriller only generated about $9 million in its first three days in theaters. However, the deal should outlast the pandemic, assuming movie theaters make it through to the other end of the global health crisis.
Does this apply to other major studios?
Not at the moment. However, that doesn’t mean rivals won’t eventually follow suit. Paramount has released two movies — post-apocalyptic adventure “Love and Monsters” and supernatural thriller “Spell” — simultaneously in theaters and on digital during the pandemic. Yet they only secured a few hundred screens and a few hundred thousand dollars in ticket sales because major chains, including AMC, refused to play them. Which leads us to our next question…
Why do studios wait so long to put movies on home entertainment in the first place?
Technically, studios don’t have to wait the standard three month-window. But that wouldn’t happen without major blowback.
Take “Trolls: World Tour.” When the pandemic initially forced movie theaters to close in March, Universal had to make a swift decision about the animated “Trolls” sequel: Postpone it until cinemas reopened, or nix theaters and offer it on-demand for a premium price. The studio decided the latter, because they already spent millions upon millions of marketing dollars, and delaying it any longer would cause the budget to balloon even more. Universal offered what they thought was a loophole in putting it on digital rental services on the same day as the films’ global theatrical release. The catch was that nearly every U.S. theater, sans a few drive-in venues, were closed so the only option was to watch it at home. The results — though still ambiguous to the public — were substantial, and Universal’s CEO Jeff Shell later touted that even when the pandemic abates, the company would go forth with simultaneous releases. In response, Adam Aron, the CEO of the world’s biggest theater chain, AMC, vowed to boycott Universal’s movies. (Cut to April, and their relationship looks very different.) But that’s a lot of screens for studios to miss out on, should other chains refuse to showcase their movies.
Why are theaters agreeing to this now?
Theaters have long resisted changes to the theatrical window, fearing that it would cut into their bottom line. But the pandemic has crippled the exhibition industry, limiting their bargaining power in the process. At this point, theater owners are desperate for anything new to offer to patrons. Plus, theater owners could use some fresh revenue streams. While some theaters have closed down again because of low ticket sales, AMC pointed directly to its deal with Universal as the reason its locations can stay open.
Is Regal next?
No, but they’ll presumably get there eventually. Regal, the second-largest chain, closed all U.S. locations because of the lack of new movies, so it’s safe to assume they aren’t making sweeping decisions anytime soon. Mooky Greidinger, the CEO of Regal’s parent company Cineworld, has been among the most openly critical of AMC’s decision. He recently told Variety that he wouldn’t entirely rule out a shortened theatrical window, but was adamant that 17 days is “too aggressive and too short.” Look for a mid-sized chain like Alamo Drafthouse or Marcus Theatres to get in on the action next.
At what point does this arrangement stop making sense?
That’s the million-dollar (or, potentially multi-million-dollar) question. Universal can’t realistically share revenues with every theater operator in the country. There’s an advantage to being an early adopter. Neither the studio, nor theater chains, have disclosed any financials. Yet it’s safe to assume that the holdouts are going to get less of the profits.
Will this hurt attendance?
That’s the fear, at least among theater owners. And sure, some guests will probably just wait a few extra days until they can watch it from the comfort of their couch. But those likely aren’t the same people who made mountains move to be among the first to see “Avengers: Endgame.” The reality is that audiences who like watching movies in theaters will continue to do so. In any case, Universal isn’t allowed to announce when a movie is going to VOD until the three-week mark, so guests won’t know right away how long they’ll have to wait.
Can “Jurassic World: Dominion” and “No Time to Die” come out already?
We’re with you. But … no; at least not yet. Even with their shiny new deals with AMC and Cinemark, releasing a potentially billion-dollar movie still doesn’t make sense in the middle of a pandemic. Theaters in major moviegoing markets like New York City and Los Angeles remain closed, and parts of Europe have been forced to shut down again as coronavirus cases continue to surge. That’s why we’ve seen smaller movies like the body-swap thriller “Freaky” and Western drama “Let Him Go” open in theaters, while the sequel to “Jurassic World” moved to 2022. Isla Nublar beckons…
Variety's Rebecca Rubin contributed to this post.