Three Stories about Theatrical Distribution

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Hollywood can have a short memory. All it takes is one good weekend, and suddenly Hollywood is back! Since we went long on Wednesday writing about Apple, app stores and distribution fees, here’s all the other stories that caught my eye in the realm of entertainment business strategy.

(Apologies for the slight delay. Sometimes I’m behind finishing my columns. In this case, I forgot to press publish yesterday. Doh. As always, sign up for my newsletter to get all my columns, streaming ratings reports, and articles in your inbox.)

Almost Most Important Story of the Week  – Three Short Stories about the Future of Theatrical

Latest Theatrical Film Delays and…Reverses

A few weeks back, I gave studios my unasked for advice: “Don’t try to time the pandemic”. Meaning, don’t try to move film releases around the schedule to perfectly optimize box office returns. And the last few weeks sort of proved me right?

At the start of last week, the news was all doom and gloom. (The studios were NOT listening to me.) First, Sony moved Venom: There Will Be Carnage from September to the middle of October. Then Paramount moved Top Gun 2 to the spring. The rumors were flying fast and furious that it was only a matter of time for No Time to Day (the latest James Bond) to move as well.

And then…Shang Chi set Labor Day weekend records.

And as a result, Sony moved Venom back up to October 1st. 

Listen, Shang Chi is one data point. If anything, it proves that MCU films open well no matter what, and maybe even stronger without PVOD sucking out theatrical sales. (It certainly isn’t a helpful data point that PVOD doesn’t undercut theatrical distribution/lead to lower revenue for studios.) It also proves that strong films can overcome seasonal viewership somewhat, though not quite like big summer releases. (Remember when Captain Marvel opened to $150 million in March?) At the same time, Covid-19 is inhibiting ticket sales; normally Marvel films should do better than this.

Again, if I’m a studio, I would just put my movies out and hope for the best. No one—including the experts—can predict the future pandemic. While normally I hate the quote “nobody knows anything”, in this case it applies. Specifically, our uncertainty about forecasting the future path of this pandemic is very uncertain. 

Thus, get your films out and then make new ones.

Netflix Weighs Some Theatrical Release

This was quite the buzzy story from CNBC. Quoting a JPMorgan analyst, the story says that Netflix is “considering” giving more films theatrical runs for the marketing awareness. Given that Netflix has released quite a few films in limited theatrical release, the key question isn’t “whither theaters?” but “what type of theatrical release?” 

In my rough categories, there are limited releases—meaning under 600 screens, and sometimes well under that—wide releases—meaning over 600 screens—and then “blockbusters”, which means opening on over 2,000 screens in the US. The big question for Netflix is whether they can move up to that highest level or not. And if they do want to do that—I don’t think they do—will they give theaters at least 45 days of exclusivity, a la the current industry standard? And if they do go for 2,000 screens, will they commit to nine figure marketing campaigns?

If the answer to those is “no”, this probably won’t happen.

CinemaCon versus Venice Film Festival

Now we move into the part of the theater news where…well there isn’t a lot of news. For CinemaCon, the news is that studios are excited about their slates and theaters are optimistic. (Of course that’s what they’d say.) For Venice Film Festival, every film is the greatest film ever made. And all will win Best Picture.

I will note, there was a distinct difference in the coverage I read. When greedy corporations hold a conference in Las Vegas, it was “CovidCon” as nearly every journalist felt obliged to mention. When it comes to Venice, there was nary a peep. Sure, theaters were under threat, but attending a film festival? That’s fine!

(Though again, both CinemaCon and the Venice Film Festival were likely safe, since both required vaccinations and/or negative tests, and sitting quietly in a theater with a mask is a low risk event.)

If I were cynical—and I am—I’d point out that film festivals are part of the “Award Film Industrial Complex”, of which FYC spending is the biggest driver of revenue at the trades. It’s one thing to make fun of the businesses which actually make up the industry; quite another to insult films spending money to win awards.

Other Contenders for Most Important Story 

Disney Continues Consolidating Global Brands

Globally, it is fairly clear that Disney has a plan to consolidate their streaming offers globally. To that end, Disney is shutting down Hotstar in America (which I honestly didn’t know existed) and globally they’re expanding the Hotstar brand, with the latest territory being Japan. Internationally, the Disney-Star combo seems to be working, so the Japan move makes sense. But it’s clear that Disney sees three pillars of “family/Disney”, “adult/Star/Hulu” and “sports” going forward, but with different subscription models per territory. That’s a smart, focused strategy.

HBO Max Clarifies European Plans

WarnerMedia finally released plans for its HBO Max roll out in Europe. The big question is: “What took so long?” And yeah they’re not talking about that. My guess is that when HBO Max was first conceived, it sounded like a great idea, but then executives realized both how long their deals with Sky were and how much money they were worth, and suddenly launching in Europe got a lot more complicated. So 2022 will really be the year for HBO Max expansion, probably because negotiations are still on going.

Locast Shuts Down

Lastly, over-the-air broadcast workaround Locast—a streaming service that took over the air broadcasts and streamed them—lost its latest legal fight brought by broadcasters. While there were many issues at play, the biggest one seems to be that while Locast called itself a “not-for-profit”, it behaved like a for-profit.

Context Update – China Cracks Down on Video Games for Minors

How about that for a headline? 

China put limits on how long teenagers can play video games. 

Personally, I find this story fascinating. On the one hand, if you don’t understand how insanely addictive online gaming has become, you’re not paying attention. On the other hand, this ban likely won’t work. (Does pushing kids to the incredibly addictive TikTok really solve the problem?)

The lesson, for smart observers, is that what the government giveth, it can also taketh away. In the United States, after decades of fairly laissez-faire enforcement of regulation in tech and entertainment, we’ve fairly forgotten that trend. China, though, seems destined to reassert to the world that a hands off approach to business isn’t the only approach. (And given their historic growth rates, it’s hard to say it isn’t working.)

M&A Updates – A Real Estate Roll Up of Studio Space

After buying some studios in the US—with more on the market—there is news that two real estate companies are also buying up studios in Ireland. Again, I don’t bet against the PE guys in general, but I worry if this is almost too late. While we’re in a boom of content, I just don’t know how long it lasts and thus how long demand for studio space stays high. We’ll see.

Other Things to Listen or Read

One of my favorite non-entertainment technology stories is driverless cars. And maybe it is entertainment related, since if folks can have their hands/eyes free driving to work, that’s an hour or two more TV to watch each day. Anyways, I enjoyed this video about driverless cars and their incredible progress. (Given that Malcolm Gladwell also did an episode on Waymo recently, I wonder if Waymo is doing a PR push.)

The Entertainment Strategy Guy

The Entertainment Strategy Guy

Former strategy and business development guy at a major streaming company. But I like writing more than sending email, so I launched this website to share what I know.


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