These are difficult times for the cinema industry. Box-office revenues have plummeted dramatically, and many studios have halted their productions and postponed film releases until later this year. Sadly, experts predict the film industry will face losses of up to $15bn this year. As with so many other sectors, the industry is having to adapt at pace to try and mitigate the negative impact of COVID-19. Question is, will decisions made today completely change the nature of the industry for the long-term, and will cinema ever be the same again after this pandemic?

Momentous change is afoot

Unable to release in theatres, many film studios have decided that if people can’t come to the cinema, they’ll simply bring the cinema to them. NBCUniversal were one of the first to announce that most of their new films would be made available on-demand at the same time as their theatrical release (including The Hunt, The Invisible Man, Emma and Trolls World Tour). Equally, Sony Pictures’ Vin Diesel fronted action thriller Bloodshot also moved online 2 weeks after its cinema premiere.

This might seem banal to many, but this is the first time that a PVOD window (premium on-demand window) – which sees film studios charging viewers for watching a movie at home during or closely after its ‘theatrical’ window – has been put into action at this scale. PVOD completely breaks from tradition. Historically, the industry heavily relies on exclusive box office sales to maximise profits before becoming available on pay TV, DVD, Blu-ray and/ or on-demand. As an example UK cinemas raked in £1.28 bn in box-office revenues in 2018. Pre-COVID-19, the average time from theatrical to physical or digital release was 110 days though many observe windows of 30-90 days.

This idea has been a highly contested issue dominating industry debate for years. At one end you have theatre owners fighting off PVOD, fearing cannibalisation and loss of revenue. While at the other end you have film studios trying to push PVOD through as they see the opportunity to increase profit margins. With cinema revenues plateauing year on year, and physical sales in decline, many have been calling for innovation and a shift towards digitisation. Universal, Warner Bros. and 20th Century Fox have been some of the most vocal advocates of the PVOD window. In 2011, Universal even attempted to trial it. They revealed plans to allow Comcast digital subscribers in the US to rent Brett Radner’s action comedy Tower heist for $59.99 (£49) three weeks after it opened in cinemas. However, theatre owners were not impressed and threatened to boycott the whole movie, which put an end to Universal’s revolution before it had begun.   

With the lockdown limiting theatre distribution, there is a temporary unlocking for PVOD. For the first time we can see what potential appetite there might be for such a model long-term.

The reaction so far

Universal’s Trolls World Tour, one of the first titles to forego a theatrical release, set record results for its digital opening weekend. It’s topping the charts on all the main digital platforms, including Amazon, Apple and YouTube. However, we don’t know for sure what the business value will be long-term. Even if we did know how much profit Trolls has made so far, we wouldn’t have anything to compare it to. We’ll never know how much it might have made had it opened in cinemas, and we don’t know how much it might have made as a digital release if people weren’t stuck at home. Whilst it might have had a successful start, it will be difficult for this $100m production, produced with theatre release in-mind to turn a profit without the traditional box-office revenues.

Profit-aside, response from the public has been mixed. A quick look at positive and negative sentiment using our social media analytics tool demonstrates the divide:

Three main perspectives seem to emerge:

  1. A majority welcome the film studios’ decision to make their content available online rather than postponing upcoming titles – such is the case with Disney’s highly anticipated live-action remake of Mulan, the next instalment in the James Bond series No Time To Die and Marvel’s Black Widow to name a few.
  2. For families the price of £15.99 is relatively good value compared to taking the whole family to the movies and paying for travel, tickets, snacks and drinks etc.
  3. But another very vocal group find £15.99 to rent a new release opportunistic and expensive, especially when compared to the significantly lower rental cost of most other titles in the catalogue (generally around £4). Certainly, presenting the PVOD titles alongside more typical ‘£3.99 to rent’ is likely reinforcing the price disparity, and isn’t highlighting the value – and USP – of PVOD being available during the cinema window.

Beginning of a revolution, or something borne out of short-term necessity?

Despite some pushback and a collective love for the theatre experience, we can certainly see how PVOD will appeal to certain audiences long-term – especially families. The ability to watch the latest films from the comfort of your home, at a time of your choosing, and without spending too much is an obvious draw. This will encourage studios to iron out any kinks in the service and pricing, and encourage ‘new release’ viewing experiences and rituals. Moreover, if the lockdown is extended, or lifting of restrictions discount theatres, studios may decide to release titles that have been postponed. Imagine James Bond released straight to home cinemas – that would be some event and could have lasting impact on people’s expectations for access to new cinema releases.

That said, we wouldn’t predict the death of cinemas just yet. With fewer new releases available post-crisis theatres will be struggling to make up for lost time and profits and will hold on even tighter to revenue-guaranteeing theatrical windows. And people will be keen to relive their favourite ‘normal life’ experiences such as going to the cinema.

Perhaps the safest long-term bet is that PVOD will remain a feature of the film landscape as one strategy that studios take advantage of for certain titles, alongside traditional theatre releases. We may end up with a landscape like Premier League football where the Premier League maintains a TV ‘blackout’ for 3pm matches on Saturdays but broadcasts live matches outside of that time. One way or another, we don’t believe the cinema industry will be quite the same after this pandemic.

P.S. Do check out our other mailer about the history and evolution of cinema.