Study shows theaters are hurt by short theatrical to digital release windows

Last Updated on July 30, 2021

TROLLS WORLD TOUR saw great success over Easter weekend with its VOD release shattering records for a digital release. The film did see a release in the few theaters that have remained open in the wake of the coronavirus pandemic, primarily drive-ins, but most of its success came from being a top choice for families stuck at home during the quarantine. Universal Pictures made headlines when they gave early digital releases to films that were currently in theaters such as THE HUNT, THE INVISIBLE MAN & EMMA in response to theaters shuttering nationwide due to the pandemic & some believed this could become the new normal for future releases. It used to be that movies were released to theaters, followed by a 'hospitality' release such as pay-per-view, then disc (DVD, Blu-Ray) and digital (VOD), followed by Pay-TV (i.e. HBO) and then broadcast TV (FX). Most interestingly, the time from theatrical to disc/digital used to by as long as a year, although in recent times the wait is usually closer to 3-5 months, with digital usually arriving 2 weeks or so before that. If you want these windows to remain short, however, it's going to come at a major cost to theaters all over the world. 

The National Associate of Theater Owners recently released the results of a study that they commissioned, completed by Ernst & Young, that shows that should studios decide to shorten or bypass altogether the theatrical release window for their movies, they will lose $56,000 per day on the average film. This is for every day they do not have an exclusive theatrical release window. What this data primarily shows is that studios are justified in pushing their films to later release dates rather than sending their titles to VOD early or skipping the theatrical window entirely. An early VOD benefits us, the consumer, but it's not accommodating to the bottom line for major studios. 

Some of the key findings revealed in the survey are that shorter release windows not only damage theatrical revenues (for the studios and for the theaters), but the shorter releases also damage overall home revenues which impact the total revenue for each film that gets a shorter trip from the theater to home. The study also found that the length of the theatrical run is even "more highly correlated to home sales than to box office sales." Taken into consideration for this study was the revenue generated at the box office, length of the theatrical run of the film, film quality, through such factors as Rotten Tomatoes scores, sequels, seasonal release (what part of the year the film released in) and the strength of the full theatrical run in terms of box office revenues in later weeks.

This all goes to show that while studios will experiment with skipping the theatrical windows as Universal did with TROLLS WORLD TOUR, it's not financially feasible to make it a permanent change. So while films like ARTEMIS FOWL can be pulled off the theatrical schedule and moved to streaming, this will not be the case for most major film releases because there is too much money on the line. There will be an adjustment movie forward due to the impact of the COVID-19 pandemic but studios will fight tooth and nail to maintain the theatrical experience and not release their films for home viewing too soon.

Do YOU agree with their assessment or do YOU think there is a lucrative way to make the VOD alternative work?