As the lines between traditional cinema and digital streaming blur, Hollywood executives increasingly face the strategic decision of choosing between theatrical releases and video-on-demand (VOD) services. This decision hinges on various factors, including potential financial returns and audience preferences. The distinct approaches taken by different studios reveal an evolving landscape where tangible numbers and shifting viewer habits heavily influence distribution strategies. For consumers, this evolution means they now often choose between enjoying a film in a theater or waiting for its digital release. In this changing environment, financial considerations drive the decision-making process behind the scenes.
The approach taken in 2020 by Universal Pictures illustrates the changing rules. In a departure from past practices, the studio introduced its films to PVOD much sooner, often 17 to 31 days post-theatrical release, aiming to tackle challenges posed by the pandemic. This shift, contrary to the traditional window of exclusive theatrical runs lasting about 90 days, affected the broader industry and generated mixed reactions regarding long-term audience effects. Historically, theatrical runs have been lucrative, but the success of films like “Wicked” and “A Minecraft Movie” on PVOD demonstrates a viable alternative revenue path.
Why did Universal’s strategy succeed?
This strategy found success partly due to the overwhelming performance of “Wicked,” which notched $756 million at the box office before amassing $70 million on PVOD in its first week—a record-setting feat. Universal retained 80% of this PVOD income. Such impressive earnings serve as an advertisement, benefiting platforms like Peacock by boosting viewership hours and subscriber retention. Similarly, “A Minecraft Movie,” despite its cinematic risks, thrived globally, indicating that strategic release timing plays a pivotal role in profitability.
What are examples of these dynamic strategies?
Another instance spotlighting data-driven decisions is Paramount’s “Smile.” Initially conceptualized as a streaming-exclusive title, its unexpectedly high test scores led Paramount to shift towards a theatrical release. Consequently, the film achieved a combined box office of $355 million for both the original and its sequel. This pivot from streaming to theaters underscores the importance of informed decision-making.
Industry executives assess an array of inputs to decide a film’s best distribution path.
Timothée Chalamet’s “Bones and All,” conversely, experienced less success in theaters. Key indicators suggested a direct-to-VOD route might have been more suited, highlighting how budgetary constraints can offer flexibility in distribution strategies.
Films such as “Snow White” and “The Brutalist” also underscore how audience preferences shape distribution. While their theatrical performance may lag, these titles find success on streaming platforms, suggesting that viewers sometimes prioritize convenience over initial theatrical allure. Similarly, Amazon (NASDAQ:AMZN)’s “Red One,” though commercially underwhelming in theaters, capitalized on strong streaming interest, securing its status on Amazon Prime Video as a top-streamed film.
While box office figures remain a key metric, the importance of thorough pre-release evaluations cannot be overstated. Determining whether a film should debut in theaters or on digital platforms entails recognizing potential audience reach and economic viability. Discerning these distribution channels often spells the difference between generating massive revenue and incurring losses. Understanding audience behavior and the strategic release of films can yield significant fiscal rewards.
