The global cinema industry is set to lose $32 billion (€26.4bn) in 2020 as a result of the Covid-19 pandemic a 71.5 per cent reduction in box office revenue compared to 2019, according to Omdia’s latest Movie Windows: Adapting for the future report.
Box office revenue has dipped below $13 billion for the first time in over two decades, forcing many studios to experiment with other platforms to account for the decline in box office revenues.
Whilst box-office revenues have been significantly hit, there has been an unprecedented growth in usage of online video (both transactional and subscription) during 2020. Online transactional and subscription video revenue is set to increase by 30 per cent YoY from 2019 to $34 billion in 2020.
Disney+ has trialled the use of Premium Video on Demand (PVoD) to launch titles such as Mulan, whilst Wonder Woman 1984 will significantly shorten its theatrical window to only one week internationally before appearing on streaming services. However, whilst this approach may satisfy consumer demand, PVoD has accounted for a mere $630 million in revenues for studios in 2020.
Theatrical window timeframes evolving is not a new phenomenon, over the past two decades average US EST and physical windows have shortened by over a month, US consumer spending on cinema has grown by 50 per cent over the same time period.
However, Covid-19 has presented an opportunity for studios to experiment with alternative distribution models and identify new revenue streams such as PVoD, which may be used on selected titles and formats moving forward rather than totally replacing theatrical windows.
Covid-19 has accelerated the experimentation of the length of theatrical windows and other platform launches, many studios will still be looking towards 2021 and beyond to resume their big blockbuster cinema launches. In 2019, the US Top 10 films generate 70 per cent of their box office takings within the first two weeks of release. This compares to 63.1 per cent for the films ranked between 41 and 50 and 40.9 per cent for the films between 91 and 100.
Whilst traditional theatrical windows will typically include a 90-day theatrical release window, 14-day EST period, followed by a 90-day VoD (digital rental) and physical retail, before moving to subscription services and pay-TV to maximise revenues – PVoD is a drastic move in the other direction.
On the other hand, PVoD is totally reliant on the content curator decision on when and where they want to publish individual titles. For example, Disney launched Mulan directly, onto its own platform Disney+.
“Covid-19 also created a bottleneck of new releases which puts into question the traditional windowing model as downstream revenue sources suffer from the lack of new releases onto other platforms in 2020 and 2021,” advises Maria Rua Aguete, Senior Director, Media and Entertainment at Omdia. “It has also created a unique opportunity for studios to experiment with other distribution models such as PVoD or and to a lesser degree straight-to-streaming without equivalent relationship damages as before.”
“Most 2020 experimentation has not been about moving new release movies to latter windows (namely, online subscription video) sooner however, rather about creating new and temporary revenue streams to capitalise on produced content via PVoD or otherwise,” she adds.