by James Mathers
Cinematographer and Founder of the Digital Cinema Society
(Excerpted from the May 2021 Digital Cinema Society eNewsletter)

This is not the first time prognosticators have predicted the end of the movies.  TV sent a chill up the spine of Exhibitors when it first started to gain ground in the 1950s, even though the home images were of unwatchable quality by today’s standards.  Small, staticky, black and white images on screens in the home really didn’t offer much competition to magnificent silver screens of the day’s movie palaces.  However, that didn’t stop producers from scrambling to up their game with offerings that couldn’t be easily duplicated in the home like widescreen Cinemascope and 3D.  That was then…

…This is now.  Today, pretty damn good looking images at 4K and beyond with Dolby Vision HDR and Atmos can be displayed on TVs stretching up to 86”.  That is not much smaller than some of the screens squeezed into shoebox-size cinema multiplexes, and such displays can be currently purchased on sale at around $2,000US.

If that is not a bad enough sign for Exhibitors, the theatrical window, where distributors would guarantee Exhibitors a certain exclusive period to show movies before they were released to the home market has all but disappeared during the pandemic.  Whether it can ever be reestablished and enforced remains to be seen.

With the rise of streaming, the conflict over the theatrical window had been building for some time.  However, it was greatly accelerated by the recent pandemic shutdown of movie theaters.  Audiences were prohibited from going to the movies, but could still receive content wherever else they wanted, whenever they wanted to see it, on screens ranging from smartphones, tablets, desktop computers, digital media players, video game consoles, to of course, giant screen TVs.

It was Universal that was first accused of breaking the theatrical window.  In April of 2020 they enraged theater owners by shifting Trolls World Tour to an at-home release on account of the coronavirus pandemic.  In fact, the CEO of AMC Theatres, the largest cinema operator in the world, threatened that going forward they would no longer play Universal Pictures’ films at their venues.  As the pandemic dragged on, the two companies have since worked out a deal that significantly shrinks the traditional 70-day window in exchange for AMC sharing in the revenue earned from the VOD rentals.

However, it was Warners that was accused of completely smashing the window when they announced their entire 17-picture 2021 film slate would be released onto their struggling HBO Max streaming service, debuting them on the same day they would open in whatever theaters that could admit customers.  Many Filmmakers were not happy about seeing their films get little or no theatrical exposure.  After a 20 year relationship with Warner Bros going all the way back to Insomnia, Christopher Nolan ripped Warner’s HBO Max as “The worst streaming service.”

Others were more accepting; Wonder Woman 1984 Director Patty Jenkins was ready to put the viewing decision in the hands of the consumer. “At some point, you have to choose to share any love and joy you have to give, over everything else.” Perhaps she just wanted her movie seen by the largest audience possible, no matter the outlet, but the reportedly generous deal Warner Media made with the WW 1984 profit participants probably helped lessen the pain.

Meanwhile, other content owners, (especially ones that owned their own streaming distribution channels,) started to release their precious gems to the home either with or without a limited theatrical release where it was allowed.  Many titles, originally designed as major theatrical releases ended up going straight to streaming outlets, and some of the higher profile offerings were used as bait to get viewers to sign onto programing contracts.  An early example was the Hamilton movie, originally designed as a theatrical release, which was debuted to great success on Disney+ right around the launch of the new service and is credited as a major early driver of the streaming platform’s impressive performance.

Christopher Nolan’s highly anticipated Tenet and Disney’s tentpole Mulan, after having had their release dates pushed back several times, were eventually given very limited theatrical releases.  Mulan was scheduled to open wide in March 2020 but was finally released in September on Disney+ and was only seen in theaters in countries without Disney+ where theaters had re-opened.  Although well reviewed, the film grossed only $70 million against a production budget of $200 million.

Although Tenet did better, grossing $200 million, just shy of the box office champion of the year, Bad Boys for Life, that is not saying much.  The year before the pandemic Avengers: Endgame racked more than four times that at $858 million.  In an effort to avoid losses, many other producers held their projects back, and in fact, some pictures still have yet to see the light of day.

As markets around the world have started to open up again, Studios have focused on cutting their losses and getting their movies seen by the greatest number of potential viewers, either online, as necessary, and in theaters where possible.  After several postponements, Wonder Woman 1984 debuted Christmas Day 2020 on HBO Max alongside a limited theatrical launch.  Not coincidentally, this was near the start of the rollout of HBO Max, and as we now know, at a time when AT&T was negotiating a deal that would combine its Warner Media, (including HBO,) with Discovery Networks. Content producers are increasingly taking ownership of the channels to distribute their product directly to the consumer, leaving distributors in a very vulnerable position.  While larger chains like AMC and Cinemark were able to make deals with studios like Universal for a cut of on-demand profits, smaller theater chains had less bargaining power.

 It seems all the major studios have created their own streaming such as Universal’s Peacock or Viacom/CBS’s Paramount+ to bypass theatrical exhibition if they have to.  Then there is the pending deal for Amazon to buy MGM for a reported $8.45 billion.  The price is justified by their epic library of 4,000 movies including Gone With the Wind, The Wizard of Oz, and Singin’ in the Rain, plus more than 17,000 episodes of classic and current television shows including Fargo and The Handmaid’s Tale. Amazon will also control the perennial James Bond franchise.  It will be particularly sad if James Bond premieres on Prime Video in order to lure new customers into the whole Amazon marketplace.  However, up to this point, Amazon has honored the theatrical window for movies they have produced and released in theaters prior to their run on Prime.

Back in 1948, when the Justice Department was concerned about the monopolistic practice of studios that owned their own movie theaters, they came up with what was called the Paramount Consent Decrees.  It put limits on one company being able to produce, distribute, and exhibit a movie by itself.  The law was in effect all the way up to August 2020, before the DOJ announced it would not longer be enforced.  Although it was technologically outdated, the concept behind the decrees is still important.  No such protections are currently in place to deter modern media companies from engaging in anticompetitive practices and squeezing out the independent theater owner.

As vaccination rates increase and Covid cases decrease, there will likely be more and larger theatrical releases.  There is surely a pent up demand and once safety is assured, movie goers will flock back to the theaters.  Disney, for one, has confirmed that titles like Black Widow and Jungle Cruise will premiere in theaters as originally planned.

I’m not saying studios are against a theatrical release strategy, but now that they have other options, they will have an unfair advantage in dealing with exhibitors.  And with many chains on the verge of bankruptcy, they will not have much clout to demand anything other than what the studios offer them.

After the pandemic, there will also be far fewer theaters left standing.  It has been reported that only around 35% of the theaters in North America are now open. Local restrictions are partly to blame, but many have opted to stay closed, some permanently because they were losing too much money being open with such limited amounts of product.  It was a very sad day in Los Angeles, the largest cinema market in the country, when it was announced that the historic Cinema Dome, along with some others in the relatively small Pacific Theaters chain, was being permanently shuttered.

There are movies I don’t mind watching at home, but others that I feel demand to be seen in theaters.  I was eager to see Tenet, shot on 65mm and IMAX, on the big screen, and was hugely disappointed that when it was finally released in theaters, my hometown of Los Angeles was still in lockdown.  I finally caught up with it months later on HBO Max, but have to admit that after a long shoot day, in the viewing comfort of my bed, I dozed off a couple of times making it extremely difficult to follow the rather complicated story.  I can honestly say that not seeing it on a large screen ruined the experience for me.  So, although home viewing might offer some conveniences, it certainly does not suffice for all movies.

However, according to a survey conducted by research firm Morning Consult, not all audiences agree with me.  In fact, about one third would prefer to stream it.

A survey of some family members bore this out, (and gave me an excuse to show off their photos.)  My eldest daughter, Shannon, a film buff, and MFA graduate of USC’s Peter Stark Producers Program now has two small children of her own, and even after the lockdown has ended, will not often be able to hire a baby sitter and go out for her previous weekly ritual of seeing a movie at the cinema.  However, she has been satisfied to watch movies at home, and is thankful so much great content has been available to stream lately.

I was surprised when I queried my youngest daughter, Meghan, a Senior at UC Santa Cruz, who is currently back studying at home due to Covid.  She has become a fan of what are known as “Netflix Parties” or “Tele-Parties.” She and her college friends, who are also back at their homes located all over the country, come together virtually to simultaneously watch movies while interacting via group chats.  On a limited student budget, she doesn’t think she’ll be returning to seeing many movies in theaters.  Even after the pandemic restrictions are lifted, financial restrictions will still be in place.

Although many patrons are still reluctant to return, most local theaters have now reopened under Covid safety protocols and capacity limitations.  It’s now Memorial Day Weekend, when some of the most sought after films would normally premiere.  Although I’m eager to go to the movies, having been fully vaccinated, and feeling pretty safe, there are still no movies in current release that would draw me into a theater, especially when up against the final episode of HBO’s Mare of Easttown.  Although neither movie is my cup of tea, in a sign of continued life at the box office, Paramount’s A Quiet Place Part II and Disney’s Cruella, both had stronger-than-expected debuts, the first weekend in more than a year where the total domestic box-office take surpassed $100 million.

A wider range of quality content will eventually return to theaters, but I’m guessing that the catastrophic external force of the pandemic combined with the technological advances in home viewing will forever change audience’s habits and box-office strategies.  Significant challenges will remain for theater owners, especially smaller independent chains.  I for one, would like to see them book all the movies I missed seeing in theaters over the last year.  I’m looking forward to seeing Tenet again when it is rereleased in IMAX.  As Roger Ebert used to say, “I’ll see you at the Movies.”

(Special thanks to Andy Marken and his Content Insider newsletter for help in researching this piece.)