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.

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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.”

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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.

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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.

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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.

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Disney Bowing ‘Free Guy’ and ‘Shang-Chi’ in Theaters Exclusively for 45-Day Window

Disney Studios is returning to the movie theater in the late summer with exclusive (and curtailed) 45-day windows for 20th Century Studios’ Free Guy and Marvel Studios’ Shang-Chi and the Legend of the Ten Rings. Free Guy launches Aug. 13 and Shang-Chi Sept. 3.

In Free Guy, Ryan Reynolds stars as Guy, a bank teller and NPC (non-playable character) who discovers he’s living in a video game.

Shang-Chi is based on the Marvel Comics.

The films mark Disney’s first exclusive theatrical releases since the Aug. 28 release of The New Mutants.

Meanwhile, theatrical titles Cruella (June 18), Black Widow (July 9) and Jungle Cruise (July 30) will debut in cineplexes and on $29.99 Premier Access through Disney+ simultaneously.

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Cinemark Announces New Deals With Studios to Exhibit Movies Theatrically

Cinemark, the nation’s No. 3 movie theater chain, May 7 announced it has reached agreements to theatrically showcase films from five major studio partners across its U.S. screens.

This announcement builds upon the exhibitor’s November agreement with Universal Pictures and includes agreements with Warner Bros. Pictures, The Walt Disney Co., Paramount Pictures and Sony Pictures Entertainment.

Collectively, the agreements secure a consistent supply of content and demonstrate a shared commitment to offering consumers the ultimate movie-viewing experience, with compelling content exhibited within the theatrical environment, according to Cinemark.

The agreements come on the heels of Cinemark inking distribution of Netflix original movies in an abbreviated theatrical window — the first for the streamer. Cinemark isn’t divulging specifics on the studio deals, citing “unique attributes” specific to each studio that mutually benefits both parties.

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With many studios also operating direct-to-consumer distribution through streaming and premium VOD, exhibitors are having to re-visit legacy theatrical window agreements to remake them to better reflect the changing consumer access to screen entertainment.

“In our ongoing efforts to maximize attendance and box office during the pandemic and beyond, our goal is to provide the widest range of content with terms that are in the best long-term interests of Cinemark, our studio partners and moviegoers,” CEO Mark Zoradi said in a statement. “We are pleased with these recent developments and are confident we are taking positive steps toward reigniting theatrical exhibition and evolving the industry for a post-pandemic landscape.”

The new distribution agreements come as Cinemark attempts to claw its way out of a financial hole caused by the pandemic. The chain said it attracted 7.7 million moviegoers and $114.5 million in revenue in the first quarter (ended March 31). That compared with $543.6 million in revenue during the previous-year period. Its net loss ballooned to $208.2 million, compared with a loss of $59.6 million in the previous year period.

Netflix, Cinemark Partner for Zack Synder’s ‘Army of the Dead’ Theatrical Distribution

Cinemark, the nation’s No. 3 theatrical chain, and Netflix have partnered for the pending release of the streamer’s original movie Army of the Dead from director Zack Snyder. Cinemark will release the movie on its screens in both Cinemark XD and Digital Cinema beginning May 14. Cinemark XD is a projector capable of 35 trillion colors and custom surround sound that makes moviegoers feel part of the on-screen action.

Tickets are on sale now at and on the Cinemark mobile app to watch the zombie movie before it is available on Netflix on May 21.

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Army of the Dead stars Dave Bautista, Ella Purnell, Omari Hardwick, Ana de la Reguera, Theo Rossi, Matthias Schweighöfer, Nora Arnezeder, Hiroyuki Sanada, and Garret Dillahunt, Tig Notaro, Raúl Castillo, Huma Qureshi and Samantha Win as a group of mercenaries who travel to Las Vegas to pull off a casino heist during a zombie apocalypse.

“Cinemark is excited to work with Netflix on our first wide release … in our theaters across the U.S.,” Justin McDaniel, SVP of global content strategy, said in a statement. “Zack Snyder fans will love seeing the action in an immersive, cinematic environment with larger-than-life sight and sound technology.”

Netflix heretofore has insisted any theatrical release of an original movie coincide with simultaneous streaming access worldwide, a stance that has resulted in most exhibitors boycotting Netflix movies.

Cinemark and Netflix have worked together on limited releases that put multiple films on the big screen. While this is the first wide release of a Netflix film at Cinemark theaters, the companies expect to work together on future releases.

“Following the success of our limited-run in-theater tests with Ma Rainey’s Black Bottom, The Midnight Sky and The Christmas Chronicles 2, we are looking forward to the wider theatrical release of Army of the Dead,” said Spencer Klein, head of distribution at Netflix. “We are thrilled to offer consumers the opportunity to watch this highly anticipated film in theaters and on Netflix.”

AMC Theatres CEO Open to Concurrent Streaming Windows — Depending on Fiscal Terms

It’s not often the CEO of a company that lost $946 million in its most-recent fiscal quarter, and $4.6 billion for the fiscal year, is giddy with excitement. Nor is it common to hear the same executive say he’s not opposed to concurrent streaming/theatrical distribution.

But it was all there in virtual color on AMC Entertainment’s March 10 fiscal call spearheaded by CEO Adam Aron.

When asked about Disney, Warner Bros. and Universal Pictures’ efforts to shorten the theatrical window for specific titles and slates of movies, Aron said change and thinking outside the box has been part of AMC’s DNA for years. He recalled signing onto the 2016 concept, dubbed “Screening Room,” from Napster founder Sean Parker that would have made new-release movies available in consumer homes concurrently with their theatrical launches.

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“That never took off … but over the past several years, [we have] indicated in private conversations with every major studio that we were willing to be the most experimental movie circuit around with respect to windows strategies that were different than the traditional norm,” Aron said.

But with change and experimentation, the executive stressed there always had to be a positive for AMC and its shareholders; not just the studios.

“When we couldn’t strike deals with studios on shorter windows, we resisted them with all of our might,” Aron said. “This is an area I feel very good about.”

He recalled the exhibitor’s very public 90-day letter writing campaign with Universal Pictures that resulted in a landmark agreement enabling the studio to distribute theatrical titles directly into homes within 17 days of their box office debut, depending on ticket sales.

“It suggested there were alternate ways of distribution,” Aron said.

Fast-forward to Warner’s HBO Max announcement that the studio would release its entire 2021 theatrical slate simultaneously on WarnerMedia’s upstart subscription streaming video platform.

“We put out a very clear statement: That we were not willing to let Warner advantage its streaming service at AMC shareholder’s expense,” Aron said.

Yet, it doesn’t take a sleuth to notice that AMC is screening Warner Bros. movies such as Judas and the Black Messiah and Tom & Jerry — both of which are also streaming on Max.

“You should probably assume that if we’re playing Warner Bros. movies, we came to an agreement with the studio that benefits our shareholders,” Aron said without elaborating.

The executive said AMC is willing to engage with every major studio on the same topic, arguing that since the exhibitor has been business partners with all the major studios for decades, it can adjust business relationships.

“They can support their streaming services and theatrical leases, and do so not at our expense,” Aron said, adding that discussions with studios where the window policy has changed, “we think we have come out ahead and not behind.”

Separately, as of March 5, about 90% of AMC Theatres domestic screens were open. The exhibitor is slated to re-open screens in Alameda, Calif., which includes Oakland and East Bay on March 12, with a possible reboot in SoCal possibly by March 19.

To put the magnitude of a Los Angeles market re-opening into perspective, the “designated market area” is about double the size of the NY City market. Indeed, almost 33% of all AMC domestic movie viewing dollars is generated in just four states: California, New York, New Jersey and Connecticut. AMC permanently closed 60 underperforming theaters, including 48 domestically and 12 internationally in 2020.

“The New York re-opening is a harbinger of things to come,” Aron said. “We are like La Guardia Airport closed by a thunderstorm with tons of planes circling above, all waiting to land and all needing to land.”

The executive said the week will mark the 100th million vaccination in arm nationwide, with another 60 million to 90 million injections scheduled monthly.

“The real salvation of our company will be because of vaccinations,” Aron said, adding that in his eyes, the most important person in the entire movie business is Albert Bourla, CEO of Pfizer.

“He and his talented colleagues, and those of Moderna and Johnson & Johnson, are who have given us our new fortitude,” Aron said, adding he had the privilege of thanking Albert firsthand for saving AMC.

“And those sentiments of thanks were never more deserved,” he said.


Lionsgate Vice Chairman: Sony Distribution Deal Increases Margins; Says Theatrical Window Forever Changed

Lionsgate vice chairman Michael Burns says he expects to see increased consolidation of marketing and distribution efforts within the home entertainment market.

Speaking March 9 on the virtual Deutsche Bank confab, Burns was asked about last month’s decision to consolidate North American DVD/Blu-ray Disc distribution with Sony Pictures Home Entertainment.

Sony will handle distribution of Lionsgate’s packaged-media releases in the U.S. and Canada beginning in July. The studio’s North American distribution has been handled by the former 20th Century Fox Home Entertainment, which was acquired in 2019 by Disney.

“It will be good for us,” Burns said. “We’re all in the same [retail] business, which is to try to make as much money as possible. So, if you can consolidate operations and squeeze a little bit of margin here and there by having significant volume, which gives you that opportunity, I think you’re going to see more of that [in the industry].”

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When asked about ongoing efforts to rejigger the traditional theatrical window, Burns said he believes the windows will continue to change and have “changed forever in many ways.”

“That’s good for us,” he said. “I like the prospects for the motion picture business right now. You have limited supply and increased demand in that business.”

Lionsgate vice chairman Michael Burns

Lionsgate movies in the pipeline include back-to-back “John Wick” releases, among other action movies; Borderlands; a Monopoly-themed movie with Hasbro; and The Hunger Games prequel Snakes and Songbirds. 

The executive said changing windows with established major theatrical franchises such as “Hunger Games,” The Twilight Saga and “John Wick” diminish the titles’ upside in future retail channels. For the movies that don’t do well at the box office, shortening windows to 17 days (or three weekends), Burns said going straight to the consumer is “a really good thing” as opposed to waiting three months or longer before electronic sellthrough, VOD or DVD.

“There are a lot of advantages to having flexibility,” he said. “We’re not going to commit to one release pattern or another. The movie business is a mixture of art and science. And so we’re going to look at each movie individually and go where we can make the most money.”