Release Windows Are Shrinking — Can Theaters Survive?

As the fog of 2020 starts to fade, it’s clear that much of the experimentation and innovation spurred by COVID-19 in the entertainment business isn’t going away, especially as new variants keep everyone on their toes. Shortened or nonexistent theatrical windows have gone from necessary adjustments to business as usual. Disney has offered up blockbusters like Soul and Black Widow on Disney+ the same day as their theatrical release. Black Widow came with a hefty fee, but WarnerMedia has put all its major releases on its streaming service HBO Max without even charging extra in hopes of attracting more subscribers. Similarly, Paramount+ scrapped the theatrical release of Mark Wahlberg’s sci-fi epic Infinite in favor of the service.

It’s hard to overstate how strange all of this has become. Theater owners aren’t happy, and even less so now that the spread of the Delta variant and a resurgence of mask requirements has marred what was supposed to be an exodus back to movie theaters this summer. Now, amid all the strife, HBO Max has announced that it will release at least 10 movies exclusively on the service in 2022, suggesting the business model is shifting forever. Theatrical may not be dead, but it certainly seems to be entering a new phase, one that may take some time to fully understand. And no one’s sure yet what it will mean for the industry, consumers, and major movie franchises.

WarnerMedia’s HBO Max strategy has so far irritated not only theater owners, but also major Hollywood talent, with directors, producers, and A-list actors losing out on residuals usually tied to box office grosses. Streaming those releases to attract new subscribers makes it more difficult to track release-specific performance to pay out percentages. And in some cases, HBO Max has paid millions to compensate A-listers such as Wonder Woman 1984 director Patty Jenkins and star Gal Gadot.

Still, there’s plenty of evidence to suggest this strategy can be a lucrative one. Black Widow, another female-helmed superhero blockbuster grossed $158 million globally in its first weekend in theaters and an additional $60 million through Disney+, from subscribers who paid extra to watch it on “Premier Access.” The film’s release has had an impact on Ranker, too — Black Widow beats out not only Wonder Woman, but also The Terminator’s Sarah Connor, Kill Bill’s Beatrix Kiddo, Harry Potter’s Hermione Granger, and more than 400 other female characters on our list of The Greatest Female Characters In Film History.

Marvel fandom aside, the movie’s performance tracks with the strong Ranker average sentiment ratios among Disney+ subscribers in Adventure (2.44), Sci-Fi & Fantasy (2.02), and Thriller (2.19) — all genre elements weaved into Black Widow. In devising these scores, we looked at overall sentiment across shows, then aggregated them by genre to create a specific up/down ratio. For context, a 1.0 score would mean an equal number of upvotes and downvotes in that genre. Anything above that shows a positive trend; anything below shows a negative trend.

But while the early numbers for Black Widow suggested a strong strategy, it was only a week later that box office receipts fell off by 68%, prompting theater owners to point out how much larger that drop was from previous Marvel releases (50% is more typical during normal times). 

The drop also didn’t go unnoticed by Black Widow star Scarlett Johansson, who last week sued Disney for breach of contract. Although Disney fought back by pointing out the $20 million the studio has already paid her, it’s clear that she most likely would have made even more from her percentage of box office receipts had Disney stuck to traditional windowing. 

Meanwhile, HBO Max’s Space Jam: A New Legacy declined roughly the same amount — 69% in Week 2 — spurring more “I toldjya so” sermons from theater chains eager to maintain their 45- to 90-day exclusive windows over major releases. Then again, the latest Fast & Furious sequel F9 suffered a 67% decline in its second week, despite being available only in theaters. So is streaming the problem — or is it the resurgence of COVID? Or perhaps it’s just a permanent shift in consumer behavior? No one knows. 

At stake are millions of dollars that stem from the theaters’ roughly 50% cut of box office grosses. So from the perspective of a studio like Disney, that $60 million haul for Black Widow on Disney+ is the equivalent of $120 million at the box office in terms of money flowing to The Mouse’s coffers — part of the reason studios are so intrigued by the opportunity that streaming represents.

It’s extremely difficult to make apples-to-apples comparisons between today and pre-COVID times, but the push-and-pull between these forces continues to rain uncertainty down on an industry considered one of America’s most lucrative exports. How these evolving content windows will affect fan affinity is anyone’s guess, as more and more consumers watch content at home, ditching the more communal experience of theaters.

For example, WarnerMedia’s plan to drop 10 new movies exclusively on HBO Max with no theatrical component doesn’t necessarily mean those titles will be blockbuster-level releases, as has been the case in 2021. They could be releases from Warner Bros. entities like New Line Cinema or Castle Rock Entertainment, whose smaller titles seldom get wide theatrical runs anyway. But would those types of releases attract new subscribers, a consideration that continues to drive WarnerMedia’s decisions as it works to catch HBO Max up with Netflix? Ranker Insights data suggests that HBO Max has strong subscriber affinity in Adventure (2.10), History (2.24), and Musicals (2.21), among others. Watchworthy sentiment spikes in the Kids genre as well (4.38), so perhaps Space Jam’s appearance on the platform the same day and date as theaters made some sense.

Over time, all the major streamers will continue to tinker with theatrical windows, exclusive streaming runs, and other models designed to test the market amid a period of massive uncertainty related to an ongoing pandemic and other factors. But at the end of the day, money will determine how content distribution evolves in 2022 and beyond. If more money flows directly to studios under a particular model, expect that one to dominate despite what theater owners or A-list talent might think. Content is King. And that’s unlikely to change any time soon.

These stories are crafted using Ranker Insights, which takes over one billion votes cast on Ranker.com and converts them into actionable psychographics about pop culture fans across the world. To learn more about how our Ranker Insights can be customized to serve your business needs, visit insights.ranker.com, or email us at insights@ranker.com.

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