Hollywood wasn’t built for a year without theaters

Hollywood’s schedule has always run like a fine-tuned watch: a delicate dance of release dates as studios try to optimize movies for the most money, avoiding other massive blockbusters, juggling the changing demands of movie editing, re-shoots and special effects .

But the pandemic’s closing of theaters has confused all of that, forcing studios to shift release dates in a chaotic cascade. Every change has ripple effects because of that strict schedule: When a massive superhero movie moves dates, it trickles down the line, forcing both movies from the studio and from competitors to shuffle their dates to avoid the risk of splitting their audience ( and cash registers).

Small delays turned into big ones; movies scheduled for 2020 jumped to 2021. And yet, in all uncertainty, it seemed that studios were extremely reluctant to turn to what seemed like an obvious solution: just release their greatest movies on one of the newly minted streaming services or digital video storefronts instead of a theatrical release. Hollywood’s current model just wasn’t built to survive without theaters.

Photo: Film Frame / Marvel Studios

There’s a simple explanation for Hollywood’s reluctance to embrace streaming: Theaters are where the money is, and streaming – at least in today’s world – can’t match that revenue.

Traditional theater chains such as AMC and Regal Cinemas still have enormous power over the current film landscape. The amount of money they bring into studios is big enough that companies like Disney and Warner Bros. are willing to part with almost half of their income (theaters usually hold about 45 percent of the till).

When Universal even started mumbling about the idea of ​​releasing some of its movies on streaming alongside theaters, AMC CEO Adam Aron went to near-all-out war and threatened to stop playing any of his films. The two companies have since reached a new agreement allowing Universal’s films to debut on streaming services just 17 days after their debut in theaters – an unprecedented time frame for major films – in exchange for giving them some of the digital take on AMC. .

There is also the prestige of being a “theatrical” movie, one that remains a requirement to be considered for major awards such as the Oscars. Years later, companies like Netflix and Amazon are still trying to get out of the reputation that streaming is somehow a lesser form of entertainment. Smaller movies have fared well in the chaos – some, like Trolls: World Tour, have even defied expectations. But with a few notable exceptions, major studios have been unwilling to risk their billions of films in the unproven market of direct-to-consumer sales or streaming.

Because it’s true: Today’s biggest blockbusters are bringing in more – just like last year Avengers: Endgame, which broke the all-time box office record, earning an astronomical $ 2.79 billion. But these huge movies also come with dazzling costs: Endgame It is estimated to have cost about $ 400 million when factoring in the production budget, the million dollar salaries for stars like Robert Downey Jr. and the massive marketing campaign.

But the theaters’ shuttering has basically brought the entire company to a standstill as studios struggle to figure out exactly what to do with their multi-million dollar investment that no longer has a clear release strategy.

Photo by Melinda Sue Gordon

Take Warner Bros. ‘ Tenet, for example. The blockbuster Christopher Nolan movie is supposed to be one of the biggest movies of the year in the studio, an event that – in a normal world – would have brought huge crowds to theaters and is expected to bring in $ 1 billion at the box office.

Instead, Tenet was delayed, delayed, and postponed again before finally attempting to release while dealing with the severe limitations of COVID. But even then, theater capacities (and thus ticket prices) were cut a fraction of their usual numbers for safety reasons, some of the largest theater markets in the world, such as New York City or Los Angeles, never saw it on the general public. screen all the way.

The results are astonishing: while Tenet Grossing more than respectable $ 300 million in international markets, it has made just $ 57 million in the US – a significant drop, given the estimated $ 205 million production budget Warner Bros. invested in the film (a figure that does not even include the film’s marketing expenditures).

With results like this, it’s no wonder that most of the biggest movies of 2020 have chosen to scrap their releases and reschedule for 2021 and beyond. When gambling hundreds of millions of dollars on a single release, studios can’t afford to risk another theatrical flop in the United States from 2020’s anemic audiences.

But saving movies alone is not the solution either. Each of these films is an investment of tens, if not hundreds of millions of dollars that studios have to recoup at some point and which theaters must remain open. It’s a delicate balance: the film industry needs short-term money to survive, but it’s also designed to generate hundreds of millions in revenue, which theatrical releases just couldn’t deliver in 2020.

The model is already changing and both studios and theaters are starting to experiment with new ways of doing things.

Disney shifted the release of major movies such as Hamilton and Soul to Disney Plus, and it is experimenting with a new Premiere Access for releasing big movies at higher digital price tags instead of traditional theatrical releases. However, it’s not clear how good (or bad) the live action is Mulan actually did in terms of revenue for the business.

Warner Bros. seems to have learned from its matte Tenet strategy and is trying a different approach for both the long-awaited Wonder Woman 1984 and each of his 2021 films. From December through the end of 2021, Warner Bros. his films are released in theaters (where possible) and on the company’s streaming service HBO Max. It’s a move that will theoretically give the studio the best of both worlds by capitalizing on the high ticket revenues of traditional theaters, while still reaching audiences who can’t or won’t go to a theater during a pandemic.

All of these approaches are still largely untested, mainly because of the immense risk involved: no one wanted to gamble with their potentially billion dollar movie, at least not until it was absolutely necessary. And it is not clear whether any of them will provide comparable results to traditional theaters. In 2019, global checkout hit a whopping $ 42.5 billion worldwide – big shoes that will have to fill these new methods.

2020 has shown that Hollywood is not designed for a world without theaters. But 2021 could give us the first glimpse of a world of movies that stretches far beyond the walls of a traditional cinema. But one thing is certain: however we look at the movies of the future, it will look very different from the previous movie.