CEO Chapek: Disney to Remain Flexible on Theatrical/PVOD Window

With the theatrical market slowly emerging from the pandemic era, Disney remains unconvinced about a return to the theatrical-first distribution model for original movies.

Speaking Nov. 10 on the company’s fiscal call, CEO Bob Chapek said that while the pandemic appears to be slowing, consumer attitudes toward the consumption of movies has changed. In the fiscal year, Disney released two theatrical titles, Black Widow and Jungle Cruise, concurrently on its $19.99 Premier Access premium VOD platform. That compared with Mulan, Disney’s first PVOD release, in the previous-year period. Widow generated $60 million in PVOD revenue in the movie’s opening weekend, the only film for which Disney has publicly disclosed PVOD sales.

“We had a number of titles released going to theatrical that will eventually go to Disney+, [and] what we’re seeing is some recovery of the theatrical exhibition market, which is a good thing,” Chapek said.

At the same time, the executive said the company is watching “very, very carefully” different types of movies, including family films, to see how different age demos react to theatrical releases and come back to theaters.

Of the top 12 movies at the domestic box office this year thus far, five are Disney titles, including No. 1 in ticket sales: Shang-Chi and the Legend of the Ten Rings, with $224 million in revenue ($430 million globally). The movie was not released concurrently on PVOD.

“We’re sticking with our plan of flexibility,” Chapek said. “We’re still unsure how the market place is going to react when family films come back with a theatrical-first window.”

He said theatrical movies released this have had a “fairly short” theatrical window in regards to the legacy window period.

“We’re doing that so we can get our films quicker to Disney+, but at the same time see if the theatrical market can kick back into full gear as we prime the pump with [new releases],” Chapek said, adding the studio would announce distribution on a title-by-title basis.

“We’re in kind of a flux and change, still,” he said. “While COVID will be in the rearview mirror, God willing, I think change in consumer behavior is going to be more permanent. So, we’re reading that on a weekly basis.”

Whether that “reading” includes more Premier Access releases and shorter windows from the already abbreviated 45-day exclusive exhibition period will depend on market conditions. The days of coddling exhibitors would appear over at Disney.

“We’re going to do what’s best for our shareholders, ultimately,” Chapek said.

ViacomCBS CEO: Paramount Sticking With Multiple Theatrical Windows

With accelerated access to Paramount Pictures’ theatrical releases driving subscriber growth at Paramount+, the studio might appear eager to shorten the theatrical window to as little as 17 days (three weekends) as Universal Pictures does on select movies.

That was the question posed to ViacomCBS CEO Bob Bakish on the media giant’s Nov. 4 fiscal call. Bakish, who is staking much of the company’s future on streaming, including ad-supported VOD and free ad-supported streaming television (FAST), said the popularity of streaming and a resurging box office underscore the need to apply a multiple-release strategy on theatrical movies.

Paramount is employing the new industry standard 45-day theatrical window on most releases (shortened from 90 days), while mixing in shorter windows for select titles (i.e. A Quiet Place Part II), and concurrent streaming access on Paramount+ for others (Paw Patrol: The Movie).

Subscribe HERE to the FREE Media Play News Daily Newsletter!

A Quiet Place Part II generated almost $300 million at the global box office, including $160 million at domestic screens, while being offered early on Paramount+. Paw Patrol: The Movie generated $128 million globally, including $40 million domestically, while streaming concurrently on the SVOD since its box office debut.

In the third quarter, Paramount deployed three different release models for theatrical titles, including “exclusive premier,” “day-and-date,” and “45-day window.”

“We’re experimenting with a bunch of [release] models on the Paramount+ side based on what we think is best for a specific film, obviously keeping in mind all the constituents involved in that,” Bakish said.

“The reality is, we see them all work,” he said. “So, it’s not a question of moving away one [window] or the other. We’re going to continue to optimize on a per-film basis. We’re definitely not moving off the ’45-day fast fall.'”

Bakish reiterated that the Quiet Place sequel performed well at the box office, despite the pandemic, while also driving Paramount+ subs. The executive said this weekend’s (Nov. 5) theatrical release, Clifford the Big Red Dog, would stream concurrently on Paramount+.

“We think [the] kids and family [market] in this continued COVID time, [that] these films are right for day-and-date release,” he said.

Jeff Shell Upbeat on Concurrent Peacock, Theater Movie Release Strategy

When Universal Pictures released Halloween Kills on the Peacock subscription streaming platform the same time as the sequel’s box office debut on Oct. 15, the move marked NBCUniversal’s ongoing proactive steps to rejigger movie distribution in the streaming ecosystem.

Speaking on the Oct. 28 Comcast quarterly earnings call, NBCUniversal CEO Jeff Shell said the decision to offer $9.99 monthly Peacock subscribers (not $4.99 free ad-supported subs) early access to Jaime Lee Curtis’ return as Laurie Strode and her cursed lifelong battle against Michael Myers, paid off.

“We added a few million more subscribers,” Shell said, adding that the move, coupled with the Tokyo Summer Olympics on Peacock, energized the platform. NBCUniversal gave no updates on Peacock subscriber data, which topped 54 million sign-ups and 20 million paid subs through June 30.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Kills, which generated $49.4 million to lead all weekend new releases, was the second movie after The Boss Baby: Family Business on July 1 to have a concurrent streaming bow. The latter, a sequel to 2017’s The Boss Baby, also topped its opening weekend box office with $16 million in ticket sales.

Shell said the results underscore the reality that streaming and box office can co-exist without cannibalizing revenue streams. The executive was instrumental in Universal taking a hatchet to the 90-day theatrical window — now releasing some titles on premium VOD just 17 days after their exhibitor debut.

“We’ve seen across all streaming platforms that movies move the dial,” Shell said. “It shows that you can play in two different markets.”

In addition to releasing select titles on Peacock and in theaters at the same time, the SVOD service in 2022 will have exclusive access to all Universal titles four months after their box office debut as part of the studio’s new Pay 1 window distribution strategy.

Shell said he remained “really excited” about the status of Peacock going forward.

“We’ve been in business for just over a year, and we’re already more than a third of where Hulu is now, which is a service that’s been more than decades in the making,” he said.

Notably, Kelly Campbell, former president of Hulu, was hired by Shell to the same position at Peacock earlier this month.

Disney to Bow Remaining 2021 Theatrical Slate Exclusively at Box Office

Disney’s pandemic-era experiment releasing theatrical movies simultaneously at a premium price ($29.99) on Disney+ is done for 2021. In a big win for exhibitors, the studio Sept. 10 announced that its remaining theatrical slate would have a 30/45-day box office exclusivity each movie’s debut.

The remaining 2021 releases include The Last Duel (Oct. 15), Ron’s Gone Wrong (Oct. 22), Marvel’s Eternals (Nov. 5), Encanto (Nov. 24), Steven Spielberg’s West Side Story (Dec. 10) and Kingsman prequel The King’s Man (Dec. 22).

Disney is riding high on the current theatrical success of Shang-Chi and the Legend of the Ten Rings, which has exceeded the studio’s expectations, including topping the domestic box office for a second straight weekend with $35.8 million.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The studio previously experimented by simultaneously releasing box office releases Raya and the Last Dragon, Cruella, Black Widow and Jungle Cruise as a $29.99 Premier Access add-on for Disney+ subscribers.

Black Widow star Scarlett Johansson is suing Disney over the strategy, alleging breach of contract. Disney said it generated $60 million in Premier Access revenue from Black Widow its first weekend and gave Johansson as piece of that, though the actress alleges the strategy in general undercut her potential compensation based on a percentage of the box office.

Warner Bros., AMC Theatres Agree to 45-Day Theatrical Window in 2022

AMC Entertainment Aug. 9 disclosed it has inked an agreement with Warner Bros. Pictures  for a 45-day theatrical window on the studio’s 2022 new-release movies at AMC Theatres — a shortened window similar to the studio’s existing deal with Regal Cinemas signed in April.

AMC protested last year when WarnerMedia announced it would distribute Warner Bros.’ entire 2021 theatrical slate concurrently on HBO Max. AMC had initially agreed to the concept for the studio’s initial release, Wonder Woman 1984, citing the ongoing pandemic. But the exhibitor’s tone changed when it realized the the box office/streaming strategy was more than a one-off deal.

“It’s no secret that AMC was not at all happy when Warner decided in December to take movies to the home on HBO Max simultaneously with the theatrical release,” CEO Adam Aron said on the company’s second-quarter (ended June 30) fiscal call. “Therefore, it’s especially gratifying that Warner Bros. is yet again embracing a theatrical window. It’s especially pleasing to be working so harmoniously with Warner Bros. once again.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Aron said the exhibitor, which struck revenue-sharing agreements with Universal Pictures to accommodate the studio’s expedited move toward retail channels, including PVOD, is in discussions with other studios.

“We actually are in active dialogue with every major studio on this very important topic,” Aron said. “We are hearing considerable support in Hollywood that an exclusive theatrical window is an important way to build big and successful movie franchises. Clearly, though, this whole subject is quite topical. It’s very much a work in progress.”

Indeed, a return to quasi normalcy resulted in AMC generating $444.7 million in revenue, up from just $18.9 million during the previous-year period when the pandemic had most domestic screens shuttered. Through six months of the fiscal year, revenue is down 38.3% to $593 million, from $960.4 million in the same period in 2020. The net loss decreased to $344 million, from $561.2 million. Through the half-year, revenue is down to $911.2 million, from $2.73 billion in 2020.

“AMC is playing on offense again,” Aron said.

Theater Group Slams Disney’s ‘Black Widow’ PVOD Release Strategy Following Box Office Drop

NEWS ANALYSIS — Following the 80% drop at the domestic weekend box office for Disney/Marvel Studios’ Black Widow, which saw Warner Bros.’ Looney Tunes sequel Space Jam: A New Legacy, featuring NBA superstar LeBron James, finish No. 1 in ticket sales, one interested party is blaming Disney+ and PVOD.

The National Association of Theatre Owners (NATO) has long been a champion of the theatrical window — the 90-day exclusive period enriching exhibitors and studios while laying the groundwork for secondary distribution channels such as packaged media retail, digital and pay-TV.

Disney, via Marvel superhero movies, dominated the last pre-pandemic theatrical year in 2019 with more than $11.1 billion in global box office revenue. But the times have changed, and with vaccinations becoming politicized and moviegoers now presented with earlier in-home movie access via HBO Max (Warner) and premium VOD (Disney, Universal, Lionsgate) and Paramount+ and Peacock (NBCUniversal), NATO is fuming at the fiscal repercussions.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Indeed, Warner is releasing its entire 2021 theatrical slate — including Space Jam: A New Legacy — concurrently for free to subscribers on Max. Disney has made select movies (i.e. Black Widow) available for $29.99 purchase on Disney+.

Citing Black Widow’s excellent reviews, positive word of mouth, and strong previews and opening day total ($13.2 million/$39.5 million), the trade group was surprised by the movie’s 41% second-day drop in ticket sales, a weaker-than-expected opening weekend, and a stunning second weekend collapse in theatrical revenues.

“Why did such a well-made, well-received, highly anticipated movie underperform?,” the group asked in a July 18 statement.

NATO contends that despite assertions that the pandemic-era improvised release strategy was a success for Disney and the simultaneous home entertainment release model, the legacy exclusive theatrical release window translates into more revenue for all stakeholders in every cycle of the movie’s life.

Based on comparable Marvel titles, and other successful pandemic-era titles like F9: The Fast Saga and A Quiet Place Part II opening day to weekend ratios, NATO says Black Widow should have opened to anywhere from $92 million to $100 million. Based on preview revenue, compared with the same titles, Black Widow could have opened to anywhere from $97 million to $130 million.

Widow opened with a $80 million domestic box office weekend.

NATO contends early analysis pointed at the $60 million in Disney’s Premier Access (PVOD) revenue and compared it to the domestic theatrical of $80 million and suggested a success, especially since Disney keeps every dollar of home release.

“It does not,” writes NATO. “Approximately 15% of revenue goes to the various platforms through which consumers access Disney+. It ignores that Premier Access revenue is not newfound money, but was pulled forward from a more-traditional PVOD window, which is no longer an option.”

The trade group pointed out the average number of people per household in the U.S. is 2.37 — a number considered to be higher among family-oriented Disney+ households.

“How much password sharing is there among Disney+ subscribers?,” asked NATO. “Combined with the lost theatrical revenue and forgone traditional PVOD revenue, the answer to these questions will show that simultaneous release costs Disney money in revenue per viewer over the life of the film.”

Piracy no doubt further affected Black Widow’s performance, and will affect its future performance in international markets where it has yet to open.
Pristine digital copies became available within minutes of release on Disney+. Black Widow was the most pirated movie for the week endedJuly 12. It was also available on myriad illegal streaming sites all over the Internet.

NATO said similar digital piracy/password sharing occurred for all simultaneous releases, including Wonder Woman 1984, Godzilla vs. Kong, Cruella and Mortal Kombat).

“This did not happen for F9 or A Quiet Place 2,” wrote NATO. “How much money did everyone lose to simultaneous release piracy?”

The trade group suggests that the many questions raised by Disney’s limited release of streaming data opening weekend are being “rapidly answered” by Black Widow’s “disappointing and anomalous” performance.

“The most important answer is that simultaneous release is a pandemic-era artifact that should be left to history with the pandemic itself,” wrote NATO.

NBCUniversal CEO Jeff Shell: PVOD Not Very Cannibalistic to Theatrical, Home Entertainment Markets

With movie theaters in California set to open to full capacity June 15, NBCUniversal CEO Jeff Shell is upbeat about the exhibition business as it enters the important summer period. And with good reason. Universal Pictures is set to release on June 25 in the U.S. tentpole title F9: The Fast Saga.

The ninth installment in the Fast and Furious franchise, with a $200 million production budget, has already generated $269 million in foreign revenue since launching on May 19 — including almost $204 million in China.

“It’s a big day tomorrow,” Shell said June 14 on the virtual Credit Suisse 23rd Annual Communications Conference. “[F9] is really the first big blockbuster post-pandemic, and we already have close to $300 million of box office revenue in the door. The movie is very satisfying if you’re a ‘Fast and Furious’ fan, which I am and was before I came here. And there’s a lot of life [left] in that franchise.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

With the domestic F9 box office likely to top $50 million at the box office, Universal, per its new agreement with exhibitors, would open the theatrical window to at least 31 days. Universal could offer the movie into homes after just 17 days in theaters for a $19.99 digital rental (PVOD) if the box office falls below $50 million.

Shell said PVOD has been a success during the pandemic, with early signs that the distribution channel is not siphoning away packaged media and transactional VOD sales as initially feared. He said the studio was worried PVOD would cannibalize theatrical revenue, DVD, Blu-ray Disc and electronic sellthrough.

Those concerns extended to the sequel to 2017’s The Boss Baby, which generated $30.2 million in combined DVD and Blu-ray Disc sales. Universal is slated to debut the animated sequel, The Boss Baby: Family Business, on the Peacock streaming service and in theaters on July 2.

“The early data is that PVOD is not very cannibalistic to either channel,” Shell said. “We’re hitting a new market for the vast majority of people who [use] PVOD, and PVOD is very profitable to a movie studio.”

Indeed, the executive admits the margins surrounding PVOD are higher than in any other distribution channel. Shell said he doesn’t know what the future holds for early home entertainment access, but the detente reached with exhibitors on the issue is working.

“And right now, it appears to be, in many ways, an additive revenue stream for us and for others,” he said.

Shell said the studio decided to be opportunistic and not just experiment releasing Boss Baby 2 concurrently on Peacock, but expedite the movie’s chance to be “really successful” financially.

“I think there’s not a lot of movies like this coming in this [concurrent] corridor,” Shell said. “It [is] very much movie by movie situation. And you’re going to see a lot of that … people trying different things. And as we recover, depending on if the movie is more domestic or international, will drive a lot of those kind of changes market by market.”

Meanwhile, with the 2020 Tokyo Summer Olympics set to begin on July 23, Shell said NBCUniversal has become more comfortable that the Games will actually occur — despite ongoing COVID-19 concerns in Japan — adding that depending on ratings, the quadrennial spectacle could be the most profitable Olympics in the history of the company.

“If you want reach, there is nothing better than the Olympics,” he said. “You have 17 days where you dominate every night. You have … this exciting [competition] coming together after a world-changing event to celebrate athletes, success, stories and drama.”

The CEO said that what generally drives Olympics ratings is the strength of the U.S. team in marquee events such as gymnastics, swimming and track & field.

“We’re really pretty optimistic about this,” Shell said. “Simone Biles is just amazing and she’s going to be, for the first week of the Olympics, on every night. And then our swimming team is really strong and our track and field team is really strong.”

In addition to prime time TV coverage of the Games, NBC Sports will stream hundreds of hours from Tokyo on the Peacock hybrid AVOD/SVOD platform.

Jury Still Out on Streaming/Theatrical Hybrid Movie Releases

NEWS ANALYSIS — With the domestic box office picking up steam over the Memorial Day weekend as more moviegoers get vaccinated and consumer confidence grows, Hollywood’s rushed streaming/theatrical hybrid movie distribution experiment receives further scrutiny.

Disney’s Cruella, the live-action prequel feature film following a young Cruella de Vil, finished a distant second over the weekend with $26.5 million at the box office to $57 million for Paramount Pictures’ apocalyptic sequel A Quiet Place Part II. Disney also made the Emma Stone-starrer available for purchase to Disney+ subscribers for $29.99 Premier Access. With a reported 688,000 households opting to purchase the movie, according to Samba TV, Disney generated another $20.5 million in higher-margin revenue than theatrical. When combined with $16.1 million in foreign ticket sales, the movie totaled $63.1 million over the weekend.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

That narrows the fiscal gap significantly to A Quiet Place Part II, which generated $22 million internationally, to total $79 million over the holiday weekend.

Now, what if ViacomCBS had made the movie available on PVOD to Paramount+ and Showtime OTT subs? Would that have enhanced the movie’s fiscal take considering the two streaming services had 36 million subscribers globally at the end of the most-recent fiscal period? Would the added sub revenue have been worth obliterating the theatrical window and risking ticket sales?

Paramount didn’t take that chance. Instead, the media company opted to screen A Quiet Place Part II exclusively in theaters for 45 days before making it available for no extra cost to Paramount+ subscribers.

Box Office Pro analyst Shawn Robbins contends that without transparency from studios on streaming data, it’s a guessing game how well the hybrid distribution model is working.

“One might even argue the silence on streaming data speaks volumes about how studios feel about the results so far,” Robbins told Observer.

On a fiscal call, Disney CEO Bob Chapek said the media giant remained loyal to the theatrical window — and alternative distribution, depending on the movie in question.

Indeed, Cruella, whose box office fell below the studio’s Maleficent: Mistress of Evil with $39.5 million, saw its Premier Access sales finish almost 40% below Disney’s first PVOD release, Mulan, over the Labor Day weekend last year.

“One of the things we learned is flexibility is good because there’s two dynamics going on: One is people’s willingness to return to theaters and theaters’ ability to return in a meaningful way,” Chapek told analysts. “And then the second is the change in consumer behavior that’s happening naturally, with COVID probably acting as a bit of a catalyst, but was going to happen anyway.”

Regardless, Warner Bros. Discovery, the latest pending iteration of the former Time Warner, plans to return to the theatrical window in 2022 following this year’s hybrid HBO Max/theatrical concurrent release strategy.

“You should expect us to lean into theatrical distribution for decades and decades to come,” CEO Jason Kilar told a separate Wall Street panel.

Lionsgate’s Joe Drake: ‘We Are Very Bullish on the Theatrical Market’

With Hollywood studios in the pandemic era embracing shorter theatrical windows in order to accelerate direct-to-consumer access through premium VOD, home entertainment and streaming, Lionsgate is remaining loyal to exhibitors while also accepting new opportunities to monetize movies.

Speaking May 27 on the Lionsgate fiscal call, Joe Drake, chairman of the motion picture group, said the studio is approaching each movie’s distribution strategy based the economics of the day as the industry moves beyond the pandemic.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Lionsgate’s Joe Drake

Recent release Spiral: From the Book of Saw topped the seating-challenged domestic box office on consecutive weekends as part of a 21-day exclusive theatrical window, followed by concurrent access via premium VOD.

The June 16 release The Hitman’s Wife’s Bodyguard, starring Ryan Reynolds, Salma Hayek and Samuel L. Jackson, will have a 45-day theatrical window, followed by direct-to-consumer access.

In the fiscal year, Lionsgate released 10 movies, four straight to PVOD (The Secret: Dare to Dream, Antebellum, Fatale, Barb and Star Go Vista Del Mar), one to Netflix (Desperados), and five in theaters and PVOD (Words on Bathroom Walls, Fatale, Pinocchio, Chaos Walking and The Courier).

“We certainly have a lot happening in windows, and we have really taken the approach … to look at each film as its own piece of business and how that is best served,” Drake said.

Motion picture segment revenue in the quarter declined about 25% to $292.4 million, compared with $393.3 million in the prior-year quarter, and segment profit declined almost 40% to $61.6 million, compared with $101.2 million last year.

“I think what you’re going to see, and certainly what we’ve experienced, is that we love the theatrical business, we’re working very close with exhibitors, which have been great partners working with us,” Drake said, adding that Lionsgate is working on finding the right way to collaborate with exhibitors, help support the theatrical market, while maximizing the value of its titles.

“I think that’s going to continue for a bit and we’ll see where that settles out,” Drake said. “We are very bullish on the theatrical market. You’re going to see a really big weekend this weekend.”

Indeed, Disney and Paramount Pictures are separately releasing titles Cruella and oft-delayed A Quiet Place Part 2 — tentpole titles Hollywood hopes will drive moviegoers back to the cineplex.

Lionsgate in the current FY 2022 plans to release upwards of 60% of the theatrical slate it had in 2019 and 2020, with distribution back to normal in FY 2023.

“We sort of approach each film agnostically and look at that moment in time, look at release dates like a competition, and the best way to monetize it,” said CEO Jon Feltheimer. “It gives us a lot of flexibility, both from a dating perspective [and] it also gives us more flexibility in terms of how we’re going to ultimately monetize [a movie].”

Regal Owner, Universal Pictures Ink Shortened Theatrical Window Pact

Cineworld, corporate parent of No. 2 exhibitor Regal Cinemas, May 13 signed a shortened theatrical window deal with Universal Pictures that affords the exhibitor a share of revenue from premium VOD distribution.

The pact is similar to Universal’s deal with AMC Theatres and Cinemark that grants the exhibitor exclusive 17-day screening of movies. If the title generates less than $50 million at the box office, Universal can offer it into homes for a $19.99 digital rental (PVOD). If the box office exceeds $50 million, the theatrical window is extended to 31 days.

Regal has a separate agreement with Warner Bros., affording the exhibitor a 45-day window beginning with the studio’s 2022 theatrical slate.

Subscribe HERE to the FREE Media Play News Daily Newsletter!