Movie producers are pushing new releases to digital earlier to cope with theater closures and a population staying at home more due to the COVID-19 emergency. Could this be the stimulus to finally move the business toward day-and-date movie releases on a more permanent basis?
Studios accelerate digital releases due to theater closures
Since much of the audience can’t go to the theaters to see the movies, studios are rethinking their digital release strategies. Universal/Dreamworks originally planned to release Trolls World Tour on Easter weekend, April 10th. Instead, the movie will be released on that date to any theaters that are open and directly to digital as a VOD rental. NBCU is also accelerating the availability of movies currently in theaters. The Invisible Man, The Hunt, and Emma will all be available to rent on-demand as early as this Friday, March 20th, for $19.99 each.
Even Disney, which has repeatedly said its movies are targeted to the big screen, is adjusting its digital release plans. Frozen 2 will arrive in Disney plus, the company’s new SVOD service, on March 22nd, three months ahead of its scheduled release. Star Wars: The Rise of Skywalker also got a slightly accelerated release. It arrived in digital stores four days ahead of schedule, on Friday, March 13th. Fans can buy the HD version for $19.99 and UltraHD for $24.99.
Now the movie industry is finally trying early releases to digital, could this be the impetus for a more permanent shift? For example, could this show the industry that it has lost a large amount of revenue to SVOD services, which could be recouped by an earlier release to owned SVOD services?
SVOD’s impact on the U.S. box office
Over the last nine years, the streaming market has grown into a $16 billion industry. However, it is the transactional and rental market (and to some extent pay TV) that has borne the brunt of the impact. The box office has emerged relatively unscathed.
Since 2011, revenue in the U.S. from disc and digital rentals has almost halved to settle at $3.4 billion. Similarly, digital and disc purchase revenue has fallen from $9.6 billion in 2011 to $5.9 billion in 2019.
Over the same period, the U.S. box office has grown 11% to reach 11.32 billion. Even correcting for inflation of the period shows only a very modest 2% decline over 2011. As well, ticket sales have remained relatively flat. In 2011, the U.S. box office sold 1.28 billion tickets, and in 2019 1.25 billion.
In other words, the rise in SVOD is not dissuading people from going to the theater to watch a new movie.
Early movie release likely impact
It is possible that releasing movies more quickly to digital could deliver unexpectedly large benefits to the studios that will encourage them to stick with the new approach. Disney+ could see a massive spike in subscriptions due to the early release of Frozen 2. However, it likely would have seen the same spike in June had it stuck to the original schedule.
NBCU’s ground-breaking day-and-date release of Trolls World Tour could also do unexpectedly well. The first movie went on to make $347 million. If the day-and-date release generates anywhere near as much revenue that could spur more trials by other studios. However, studios are more likely to attribute the digital success, if it happens, to frustrated parents trying to placate stir-crazy kids that have been shut up inside for too long.
No, the experiment engendered by the movie theater closures is likely to remain just that, an experiment. Once theaters re-open and things gradually get back to normal, expect the movie studios to return to the traditional movie-theater-first release strategies.
Why it matters
The movie industry has discussed earlier release dates to digital for years without any changes.
The COVID-19 crisis has forced studios to move to an earlier release schedule for digital.
However, it is unlikely to make the changes permanent once the crisis is over.