After years of discussion and infighting, National Association of Theater Owners president John Fithian said the time for shrinking the current 90-day exclusive theatrical window is here — almost. It is possible, he said, to have “an exclusive theatrical window that accommodates the ability to sell home product aggressively.”
At a press conference following Fithian’s state-of-the-industry presentation at CinemCon on Tuesday, he confirmed ongoing behind-the-scenes negotiations with individual studios and theater owners about shrinking the theatrical window. As to how they will remodel the existing and archaic paradigm, that remains to be seen. In the near term, blockbusters will likely reap the rewards of a healthy theatrical life before heading to VOD.
“Home-market revenues are our concern,” he said. “We want our distribution partners to make more money, so they can make more movies to put on our screens. Finding a way to grow the home market is important, because that grows the pie.”
What NATO doesn’t want are gains that come at the expense of exhibition. “It’s tricky but doable,” he said. “Business partners talk to each other.”
It’s a good time for negotiation. Although theater owners cheered CinemaCon’s annual celebratory reel of movies that grossed over $100 million (including China’s first, “The Mermaid”), the truth is studios are struggling to make their money back and exhibitors are fighting to grow that precious millennial demo.
More than one CinemaCon panel this week instructs theater owners on how to reach younger moviegoers with the powerful social media, from Facebook to Instagram, that drive them to burgeoning Amazon, Netflix and YouTube. “Disruption is here,” said Disney distribution chief Dave Hollis, glowing from another record year for the studio. “You can’t avoid it. But it’s an opportunity.”
And so studios are eager to reach that young audience via VOD — and at an earlier, premium price point.
After the press conference, one mini-major distributor told me, “I definitely feel like we’re in the moment, whether it’s two months or a year from now. I don’t think we get to the next CinemaCon without some progress being made.”
On the other hand, piracy looms large in these conversations. Fithian said there are two phases to piracy: the first is when a decent-quality contraband video emerges from a theater (every day without one saves millions of dollars) and the second comes when pirates grab DVDs and make pristine copies. Move up the release window, you move up that second wave of piracy. Black-market video costs distributors in North America $1.8 billion a year, or 30 percent of the global total.
President Trump has also come into play: When he pulled out of the Trans-Pacific Partnership three days after taking office, that threatened global growth of the theatrical business. The Cinepolis theater chain in Mexico, for example, might buy popcorn from Argentina if low trade tariffs in Iowa were to go away. And equipment sales all over the world are affected by import duties. “Protectionist policies could drive those prices higher,” Fithian said, “while greater free trade would lower them.”
However, fears of VR as a theatrical competitor may be overstated: No one wants to have glasses on their faces for two hours, admitted Phil Contrino, NATO’s millennial data and research guru, who sees VR as competing with videogames, not movies. “Filmmakers and studios are using VR as a marketing tool,” he added. Universal, for example, is show a VR promo piece this week for “The Mummy.”
For his part, Fithian said he loves cinema as “a social experience. It’s about watching movies in the dark with strangers,” he said. “The debate will continue.”