It’s been a great run for cinema, a business that began with the Lumière brothers’ early creations flickering in Paris playhouses in 1895, then generated untold billions in ticket sales over its 120-plus years since. Sadly, it’s about to suffer a mortal wound, right there in your living room.
The movie theater as we know it is poised to die a slow, mostly peaceful death. But it is certain.
The cause: Premium VOD, digital on-demand delivery of films to your TV and devices on a much shorter schedule than the traditional 90 days. The latest proposals bring movies to homes 10 or 45 days after they hit theaters; others have aspired to deliver them day-of.
But these particulars are immaterial. They are coming, and they will prove fatal to the movie-theater business.
Why? Because Hollywood is selling out the one thing that’s always put butts in seats. It’s not giant screens, or booming sound, or “the communal experience of a darkened movie theater,” all things that movie people love to romanticize.
The magic of the movies has been, is, and always will be exclusive content. Something you can’t see anywhere else at the moment. Don’t let anyone tell you otherwise.
The major studios (minus Disney, which has its own path) are on the brink of deals that will make new releases available to stream for $30 to $50, with pricing depending on how soon they’re available, according to multiple reports out of Cinemacon, the annual gathering of movie-theater owners and the media conglomerates who supply their product.
Once that deal is sealed, the doomsday clock starts ticking down.
It may take a year or two to finalize, but it’s inevitable.
While theaters and premium VOD will co-exist for a little while, make no mistake: once that deal is sealed, the doomsday clock starts ticking down. I give it 10, maybe 15 years. And I’m feeling generous.
Digital manifest destiny
Since the mid-1970s, the National Association of Theater Owners (NATO) has held its annual springtime gathering in Las Vegas, where Hollywood studios present their upcoming slates. It was nothing if not a mutual love-fest — we are making so much money together! — until 2011, when the trade press reported that certain studios were looking at renting films for $30 on a shortened window.
Theater owners were livid. Studios, caught with their hands in the cookie jar, were embarrassed. And that conflict spilled out all over the Cinemacon stage.
For the next five years, Cinemacon was peppered with fiery language, blustery speeches and robust applause every time someone implied that the 90-day window — a sacred pact that stood since the advent of VHS — was here to stay. Even last year, when Sean Parker floated his $50 same-day Screening Room streaming venture at Cinemacon, it was mostly met with ridicule and scorn.
But something was different about Cinemacon 2017 (tagline: “Celebrating the Moviegoing Experience”). Former Connecticut Sen. Chris Dodd, acting chairman and chief lobbyist for the Motion Picture Association of America and once-vigorous advocate of preserving the theatrical experience, skipped his annual address for the first time since taking the job.
The fire was gone from the speeches; a conciliatory tone took root. In place of a “not on my watch” hard-line on the exclusive 90-day window, speakers extolled the virtues of laser projectors, improved seating, fancy concessions and the “shared experience.” Applause was tempered, polite … and knowing.
While mom-and-pop exhibitors were privately telling reporters that PVOD would be “horrible” for their business, it was clear that they were feeling their power slipping away. Time to take the deal.
For its part, Hollywood has offered to cut exhibitors in on a percentage of PVOD revenues, but that arrangement will only stand as long as those theaters can carry their own water. That won’t be long — not when families can choose to watch a new release on their giant flatscreen at home for $50 over spending twice that at a cineplex, with all its inherent hassles and associated costs.
Once that genie is out of the bottle, the price will fall. Over the coming years, $50 will turn into $39.99, then $29.99, then $19.99. The smallest first-run theaters will shutter soonest, followed by mid-sized chains. Megaliths like AMC and Regal, with their outsized amenities and global market penetration, can probably hold out longest, but only by showing only the biggest blockbusters on a tight turnaround. In that mode — less like cinema and more like an amusement park — some may survive indefinitely.
The music industry taught us nothing about scarcity
“It’s what consumers want,” goes the new mantra, repeated many times last week at Cinemacon. But it comes at the expense of another, more time-tested one: “Leave them wanting more.”
If you can get it too easily, you don’t want it nearly as much.
PVOD takes the effort out of movie-watching, and that effort, annoying though it may be, is a critical part of the transaction. “If you want to see it, you have to come to us” makes the movie itself feel special. It turns on a fundamental truth of human nature: Anything worth having is worth some effort. If you can get it too easily, you don’t want it nearly as much.
It wasn’t all that long ago when if you wanted to hear new music releases, you had to drive to a record store, or listen to the radio for countless hours. Both took work, and some form of payment. How is the music industry doing these days? For that matter, radio?
Give the movie studios credit. At least they’re smart enough to carefully rappel down the cliff rather than be shoved into freefall, like what Napster and streaming did to music. On Tuesday, industry leader Spotify took a small step to put that toothpaste back in the tube, announcing that only paid subscribers would get new albums on their release date. But whatever new subscriptions that generates will be a drop in the bucket.
It’s important to note that in this analogy, the movie studios are the record companies; they’ll have to downscale and experiment, but they’ll survive. By being cautious and incremental, they can make PVOD lucrative — maybe even moreso than theatrical in the long run. Movie theaters, after all, keep half of their revenues. PVOD cash is mainlined right into the studios’ coffers.
Movie theaters, on the other hand, are the record stores. They are doomed.
“But the box office keeps breaking records! People love going to the movies!” … say people who love going to the movies. And it’s true. They do. I do! But the reasons we love it won’t hold up to instant availability, affordability, the comforts of home and the eroding “specialness” of a commodity that’s no longer scarce.
(On a small scale, this was borne out in downright pathetic box-office results for two major Hollywood releases that got day-and-date VOD releases in the past few years: Beasts of No Nation, which Netflix released that way on purpose, then never tried it again; and The Interview, which Sony was forced into trying because of its catastrophic hacking scandal.)
A generation enamored of the “movie theater experience” will keep cinema on life-support for a time, much like a generation enamored of going to Blockbuster to rent VHS tapes delayed its inevitable demise. A generation accustomed to PVOD will, in time, pull out the rug.
So go to the movies, folks. Go while there are still theaters near you.