News flash from Hollywood: The window is closing
Lesson summary
Hi there, this is Jeff and welcome to Plain English lesson 328. JR is the producer and he has posted the full lesson, including the free transcript, at PlainEnglish.com/328.
Coming up today: Big changes in Hollywood’s business model. Theater revenue was down 70 percent in 2020 and the pandemic has accelerated a trend toward faster streaming releases of movies. That has theater owners nervous. The expression we’ll review today is “cash in on.” The video lesson online is about how to use “according to”—but not in the typical way we use that phrase. But first, let’s get going with the main lesson.
The window is closing
For as long as people have been going to the movies, one truth has held: a movie from a major studio is shown exclusively in movie theaters. Only after a suitable waiting period is it available to watch at home. This enduring truth of Hollywood business—the essential experience of watching a new movie—is under attack.
It’s called the “theatrical window.” It’s a window of time in which a movie is only available in movie theaters. For almost the entire history of moviemaking, the window has served both the studios and the exhibitors. The exhibitors are the movie theater chains and individual theaters.
Studios and theater chains have a love-hate relationship, but they need each other. The majority of the money a movie makes comes from theater ticket sales, so the studios need the exhibitors to show the movie on enough screens, sell the tickets to the public, and collect the money. The exhibitors, obviously, need the studios to provide good movies to attract the crowds. Both sides split the ticket revenue, usually according to a heavily-negotiated formula.
Of course, both studios and exhibitors can make money in other ways, too. The theaters keep all the money from the high-priced snacks and popcorn. And studios can sell their movies in a number of other places: discs, video-on-demand, streaming, and television. And that is where the window comes in.
The exhibitors—the movie theaters—know that after a movie is available for streaming, download, or to buy on disc, fans won’t have the same incentive to pay for a movie ticket and attend in theaters. And the exhibitors don’t get to share any of the money from streaming or video-on-demand or discs. Therefore, the exhibitors and studios negotiated “the window.”
Any moviegoer knows about the window. You know that if you want to see a brand-new movie from a major studio, you have to see it in the theaters. If you miss it, you might have to wait a long time (usually three or four months) before you can see it at home. That is a powerful incentive to see a movie in a theater, even if you might prefer to stream it. Movies are social, even if we watch alone: people like to talk about movies with their friends. So if you want to see it early, soon after its release, you need to buy a ticket. That serves the studios and exhibitors just fine.
That, however, is all changing. Prior to COVID, the window had been inching closed. New studios like Netflix started releasing films directly to consumers, bypassing theaters. Traditional studios wanted to cash in on streaming revenues sooner and sooner. Theaters, understandably, pushed back. But then COVID hit, closing theaters and leaving studios scrambling to come up with a Plan B.
For some feature films, the strategy was to simply delay release until 2021. New installments in the James Bond and Jurassic World franchises were delayed. But some studios experimented with other models.
Warner Brothers announced it would release “Wonder Woman 1984” and all of its 2021 movies on HBO Max the same day they’re available in theaters. Disney bypassed theaters entirely when it released its hit “Mulan” straight to its streaming service Disney+ and charged a premium, even for Disney+ subscribers. In the weeks after “Mulan” came out, Disney announced a slew of new content for Disney+, including new Star Wars and Marvel comic book series and a number of feature films. Paramount doesn’t have a streaming service, so it sold several films to Netflix and skipped theaters entirely.
In July, Universal came to an agreement with AMC, one of the world’s largest movie theater chains, to shrink the window to just 17 days, or three weekends. That means Universal films will be available to download or stream on-demand at home just 17 days after they are released in theaters, though it would give AMC a share of the streaming revenues.
All this is probably good for consumers, who will have more choice about where and when to watch a feature film. But theaters are understandably spooked. Shares of AMC and Cinemark dropped by about a fifth in the days after the agreement with Universal was announced. Theater executives are afraid they are being cut out of the money-making process with new movies.
Others are not quite as pessimistic. Theaters might be able to adapt to a new reality where they show more independent films, older movies, live events, or even rent theaters to groups of friends and family to watch whatever they want.
A new theater experience?
One thing that’s bothered me about the current model is that theaters need to prioritize the most popular movies. So you can go to a theater with 20 screens and screens 1 through 16 are playing the same popular movie, with a new showing every 15 minutes. Every other movie that’s out has to share space in the remaining four screens—not ideal if you don’t want to see the blockbuster, or if you’ve already seen it.
I tend to go to the movies for the experience rather than to see a hit new movie. A lot of the most popular movies aren’t even my style—comic book, super-hero movies just aren’t for me. So when those come out, there’s nothing for me to see in a theater. Maybe the new window will put less pressure on theaters to squeeze every bit of juice out of the blockbuster and maybe they’ll experiment a little with their schedule. I can only hope!
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