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Movie theater woes: First a pandemic, now PVOD

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Theaters are quickly realizing that surviving pandemic-induced shutdowns is not the only challenge they are facing.

By Samuel Orazem EBS Contributor

In 2019, “Avengers: Endgame” hauled in nearly $2.8 billion at the box office and became the highest-grossing film of all time. This massive financial success stood in stark contrast to many industry experts’ claims that theaters would soon struggle to compete with streaming services. While those skeptics were certainly not the heralds of a global pandemic, they may turn out to be right because of it. 

Everyone has likely seen a movie priced at between $20 and $30 and labeled as a “premium video on demand” on their streaming service of choice by now. These PVOD films are ones wherein studios have foregone a traditional, theatrical release. Instead these studios, having lost a significant portion of their expected revenue, have bet the farm on consumers’ willingness to open their wallets for at-home entertainment. 

NBCUniversal was one of the most aggressive media conglomerates in trialing this pipeline and has released multiple made-for-theater films such as “Trolls World Tour” and “The Invisible Man” on PVOD. The tactic appears to have paid off, likely much to the dismay of theater-hugging Hollywood fundamentalists. In late April, the Wall Street Journal reported that “Trolls World Tour” made as much for Universal Studios in three weeks on PVOD as the original film made in theaters over five months. 

And the approach has spread. Disney, owner of the “Avengers” property that broke almost every box office record a year ago, has announced that its live-action remake of “Mulan” will skip theaters and go straight to Disney+. Disney is the definitive industry leader, having accounted for over 40 percent of the 2019 U.S. box office earnings. Choosing PVOD for its premier release of the year indicates that Disney sees a direct-to-consumer model as a viable alternative to theaters. 

While studios have not altogether abandoned a return to theaters, trouble is certainly brewing. When “Trolls World Tour” was released on demand, AMC CEO Adam Aron stated, “Effectively immediately, AMC will no longer play any Universal movies in any of our theaters in the United States, Europe, or the Middle East.” 

Other theater chains joined the fray citing concerns about the viability of their business models if theatrical release windows were scrapped. These “windows” are the periods of time where the only way to see a new film is going to a theater.  

The gloomy reality for theaters is that PVOD is positioned to cut into their business in the same way streaming has decimated cable television. Consumers were quick to switch to streaming once the content they wanted was there. Movie studios are clearly open to skipping theatrical releases, so now the only hope movie theaters have is that, at some point down the road, people prefer the theater to their couch.

The argument that once the pandemic is over we’ll want to return to theaters does hold some water. However, people made a similar argument about new episodes of popular television shows keeping customers chained to their cable box. The only real draw of theaters in the future is be the CGI-filled blockbusters you want to see on a big screen, much like sports became the sole lifeline of cable. 

For all the other releases, I personally feel that theaters are a bit cumbersome. Rather than a too-chilly cinema house, I would much prefer to watch a movie in my home, with reasonably priced concessions, at a comfortable temperature, and without a pair of unsavory feet plopped menacingly near my seat headrest. 

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