Pachter: PVOD Not a Threat to Theatrical

A common theme throughout the pandemic has been Hollywood’s quest to supplant theatrical releases to wary moviegoers with direct-to-consumer home entertainment options such as premium VOD and digital retail.

PVOD got an early boost last spring when Universal Pictures reported it generated $100 million releasing Trolls World Tour direct to consumers in the early days of the pandemic. The move was eyed as catalyst to jumpstarting PVOD — a distribution channel previously considered dead. Since then Warner Bros. Pictures and Disney have released high-profile movies Scoob! and Mulan on PVOD — the latter initially only to Disney+ subscribers — with little mention of revenue generated.

“The silver lining to 2020 from a theatrical perspective is that studios have had the opportunity to test the feared PVOD window, with the results not as compelling for the studios as many had expected, and not as damaging to the exhibitors as feared,” Pachter wrote in a Jan. 11 note.

Indeed, Disney made Mulan available to consumers shortly after then Disney+ exclusive, followed by release on DVD and Blu-ray Disc. Scoob! bowed on disc on July 21, 2020 — two months after its May 15 PVOD release.

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“Studios have opted to postpone major releases into 2021 and later, indicating that studios by and large prefer a theatrical release over PVOD, but will wait for a more normal environment,” Pachter wrote. “With that said, expect more films to shift to streaming as subscription services seek more content after heightened consumption coupled with several months of halted productions.”

While PVOD revenue remains largely a guarded secret by studios, the so-called “dynamic windows” ironed out between Universal Pictures, AMC Theatres and Cinemark, affording exhibitors a cut in digital revenue appears a better business model for all parties during the pandemic.

Under the deal movies with opening weekends over $50 million remain in theaters for 31 days (five weekends) and smaller films stay in theaters at least 17 days (three weekends), with a simultaneous theatrical/PVOD window for the remainder of the window (with downstream windows unaffected).

“We see the Cinemark-Universal model of to be the model on which most negotiations will be based in the coming months,” Pachter wrote. “We think this is the best solution for exhibitors, assuming the PVOD release is constructed as a revenue share between studios and exhibitors.”

 

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