Are Movie Theaters Going Away?

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By Leonardo Yana-Romero

As the world has seen over the past six months, COVID-19 has shaken several industries. In-person businesses, such as movie theaters, looked like they would see the sharp decline.

One would think that the movie industry and theaters are interdependent. However, movie studios quickly shifted their business model. Many studios looked for ways to adapt to the changing industry, with several finding themselves turning to online streaming. Disney is a prime example. Disney announced that their upcoming Pixar movie, Onward, would be available to rent starting March 20th and later available on Disney Plus, their new streaming platform. This plan turned out to be lucrative for Disney, with Onward grossing $103.1 million up to the beginning of September. 

Streaming services had an easier time adapting to the pandemic. The only change to their business model was the seizure of limited theatrical releases. Netflix, for example, saw a rapid increase in memberships worldwide as a result of social distancing guidelines. The pandemic also brought about the phenomenon known as Tiger King, a documentary that tells the story of an eccentric big-cat breeder and his bizarre personal and professional life. 

While many studios and streaming platforms have not resumed production, Tyler Perry Studios is one of the first to design a safe and efficient plan for returning to set. Located in Atlanta, Georgia, and founded by actor, filmmaker, and playwright Tyler Perry, the studio has implemented a bubble model in which the cast and crew are tested every four days and are required to stay on the lot for the duration of the production. This model proved to be incredibly successful, only having four positives total during the initial round of testing. As for distribution, Tyler Perry Studios shows such as Bruh, Ruthless, and The Oval stream on BET Plus.

With many studios and streaming platforms continuing to release movies without the need for movie theaters, conflict was inevitable. On March 16th, Universal announced that The Invisible Man, Emma, and The Hunt, which at the time were in theaters, would go to premium video on demand (VOD) starting that following Friday. This action violated the standard 90-day policy, which gives movie theaters the exclusive right to show a movie up to 90 days after its release date. In response to Universal’s unprecedented decision, AMC announced that their theaters would no longer show Universal films. It was only in late July when Universal and AMC reached a new agreement in which the theatrical exclusivity window was reduced to 17 days.

Other studios are expected to follow suit. The new 17-day window is strategically advantageous for studios because now they can spend less time and money on advertising. Usually, studios would have to wait the 90 days to market a movie’s DVD or streaming. Now, they can use the momentum from the theatrical release to simultaneously market the movie’s release for home theater. 

Although negotiations have brought about a new plan, theaters are greatly limited. Already going several months without revenue, AMC and other theaters had no choice but to allow a shorter exclusivity window because they needed blockbusters. Today’s ticket sales aren’t enough. Once they accept the new 17-day window, they’ll be able to receive revenue from on-demand sales. However, this additional revenue stream is a double-sided blade. Though it provides theaters another source of revenue in the short term, if moviegoers stop going to theaters and decide to rent or stream, then theaters will have a financial crisis on their hands. 

Putting aside the adversities of large theater chains like AMC, small theaters are in an even worse situation. Unlike the big chains, small theaters are unable to use their size as leverage during their negotiations with Hollywood giants. According to the National Association of Theater Owners, if blockbusters continue to postpone releases and audiences don’t have access to a vaccine, 69% of small to mid-sized theaters are expected to file for bankruptcy or close permanently. 

Tenet, the highly anticipated Christoper Nolan thriller, had some believing it would revitalize the movie theater industry. Across the United States, many large theater chains reopened in anticipation of the film’s release. The 200 million dollar production fell short, bringing in $9.4 million Labor Day weekend and $29.5 million over the first two weeks. Tenet’s underwhelming performance has been attributed to 1) theaters remaining closed in Los Angeles and New York City and 2) moviegoers not feeling safe, despite most theaters serving 50% capacity. Tenet has shown Hollywood that, under current circumstances, large, in-person releases are not feasible. Many studios have decided to postpone and re-postpone their larger releases until movie theaters can generate greater ticket sales.

No Time to Die, the newest Bond film, has been postponed until 2021. Subsequently, Regal Cinemas announced it’s closing all 536 locations of its locations on October 8th. Cineworld, Regal Cinemas’ parent company, is based in the U.K, where 100 theaters are also expected to close. 40,000 Regal employees in the United States are expected to be furloughed 5,000 more in the U.K. However, Regal and Cineworld’s competitors have not been deterred by their closing. Over 80% of AMC’s theaters remain open and plan to reopen more theaters in California and New York once given authorization by state officials. AMC CEO and President, Adam Aron, believes in the safety precautions taken in AMC theaters. Aron also states that the company continues to feel comfortable showing Universal movies since AMC receives a cut from Universal movies viewed on premium streaming services thanks to their agreement made in July.

For now, the movie theater industry finds itself in an uncomfortable position. Being unable to pick their release dates, they’re dependent on how confident the studios feel. Fortunately, members of the filmmaking community have taken steps to aid theaters. Several filmmakers accompanied NATO, the Directors Guild of America, and the Motion Picture Association in urging Congress to provide relief for struggling movie theaters. So long as movie theaters are shown support through this pandemic, movies will once again grace the silver screen.