This might seem obvious, but the business of moviemaking has and will always remain a for-profit enterprise. Starting with the very first Nickelodeon in Pittsburgh, PA, entrepreneurs smelled financial opportunity in the moving pictures business. In a few short decades, moguls like Louis B. Mayer (MGM), Adolf Zukor (Paramount), Daryl F. Zanuck (20th Century Fox), and Harry, Jack and Albert Warner (Warner Bros.) had capitalized on that latent potential. In 1929, just before the Great Depression, industry revenues eclipsed $720 million (and wouldn’t match that number again until 1941). It might sound obvious, but as much as we look at films as an artistic product of the creative filmmaking process – they have and forever will be a big business run by moneymen, fueled by numbers, slave to the ledger.
But… let’s discuss new business before going back to old business.
Only on DVD Part 2: The Release Window and Significant Shrinkage
Streaming has become the industry’s latest uncharted revenue source. In a few short years, streaming and video-on-demand has supplanted physical media as the go-to method of viewing movies at home. While the pandemic accelerated the transition from physical to digital, the shift began way back in 2007.
2006 represented the most lucrative year for DVD sales, with approximately $16.3 billion in revenue, but the medium began a rapid decline in the years following. Two major factors caused the downturn. An economic recession triggered a cut in entertainment spending. Without a Blockbuster on every corner, video-on-demand (VOD) became an increasingly more attractive option for remote, penny-pinching consumers. VOD costs about $4 for a rental and $10 for purchase compared to a $15 DVD or Blu-ray disc. Digital also offered more immediate gratification – buy and watch a movie without ever leaving your couch – and there’s very little that the average American likes more than cheap and instant.
The tentative embrace of VOD ushered in the first wave of subscription streaming services. Netflix tripled its subscriber base between 2007 (7.48 million subscribers) and 2011 (23.53 million). Digital consumption rose as physical media fell precipitously. The two mediums crossed paths in 2014, around the $5 billion mark. Without diving too deep into the numbing numbers, we’ll summarize the trends with this fact: physical media revenue accounted for less than 10% of the home video market in 2020, the year COVID rewrote the rule book.
And Then the Theaters Went Dark
Streaming media received a substantial boost from the pandemic, pulling money from the closed and incapacitated theaters. Projections of $5 billion in losses hung over largely idle exhibition chains. Variety called 2020 a “dumpster fire” for theatrical exhibition, and while 2021 and 2022 have shown some box office vigor, business is still down approximately 60% from pre-pandemic 2019 levels. The most alarming statistic: 50% of pre-pandemic moviegoers said they had no plans to return. 9% said they’d never go back – COVID or not. For an industry already on the ropes, these numbers are a poor harbinger of things to come.
When the theaters closed during the pandemic, studios scrambled to find a way forward. In the absence of the tent, what does one do with tentpole movies? Disney/Pixar’s Onward opened on March 6, 2020, days before the shutdown. Disney responded by sending the film directly to VOD to recoup some of its $180 million budget. Paramount pulled Top Gun: Maverick from the schedule, ultimately releasing it in May of 2022. For James Bond, April 2020 turned into November 2020 turned into October 2021. Warner Bros. used Wonder Woman 1984 to launch HBO Max, making it one of the first “day-and-date releases” of the pandemic – a movie released on simultaneous platforms (usually theatrical and streaming) on the same day.
If you’re keeping score at home, “day-and-date” means there’s no release window, the time between the release of the film in theaters and its appearance on home video platforms. Studios surveyed the income resulting from VOD and streaming distribution and promptly went about negotiating their theatrical agreements. Studios knew they needed theaters less than the theaters needed the studios.
But studios still need theaters for big openings. They need theaters because they still need that big-top tent. Spider-Man: No Way Home, Top Gun: Maverick. Dr. Strange in the Multiverse of Madness. The Batman. F9: The Fast Saga. What do all of these movies have in common?
They’re among the few that bathed like Scrooge McDuck in theatrical money during the pandemic – and they’re also all franchises. Due to the overwhelming success of just a select few megamovies, the news media has cautiously celebrated the phoenix-like resurgence of the theater. Tom Cruise filmed a pre-movie introduction to Top Gun: Maverick thanking us for returning to view his movie as it should be seen. Big and loud. He’s gracious – but he’s a savvy businessman. As arguably Hollywood’s last true movie star, he understands perfectly how to commoditize himself and sell movie tickets. So, no, the value of the theater isn’t lost on Hollywood – but the reason Hollywood needs the theater has morphed into something that’s less black and white than straight box office totals.
The Barriers to the Zero Release Window
I saw Ghostbusters (1984) in the theater four times during its original theatrical run. Pulp Fiction (1994) five. Popular movies became cultural phenomena in part because they would linger in theaters for months, sometimes a whole year or more. We saw the movie and then we dragged our friends to the movie and then we dragged some other friends to the movie and then it played in the second-run theater and we went back with whomever wasn’t sick and tired of us talking about it.
Let’s look at the case of Steven Spielberg’s E.T. The Extra Terrestrial (1982) as ground zero. Released on June 11, 1982, the movie set a weekend record for ticket sales in its fourth week of release. It was the #1 movie in the U.S. as late as December and remained a top ten box office earner uninterrupted until March of 1983. It wasn’t made available to purchase on home video until 1988 when it was released simultaneously on VHS and laserdisc and sold 15 million VHS copies, contributing to a gross of more than $250 million in revenue.
Once sell-through VHS tapes became more common during the late 1980s and the home video market became more lucrative, the theatrical window narrowed significantly to capitalize on all theatrical buzz, thereby reducing marketing costs. Fast forward to 2019. The massively successful Avengers: Endgame dominated the pop-culture landscape. It opened on April 26 with an almost incomprehensible $473 million but fell out of the top ten in its seventh week of release and basically disappeared from first-run theaters by the middle of July. It was released on DVD and Blu-ray on August 13, 2019. Release window: 4 months.
Six year release window became six months became six days.
Studios consider opening-weekend box office the final word on a film’s marketability. As soon as attendance dips, they’ll shuffle the movie along to be consumed via physical media, VOD, and streaming customers. If a film doesn’t open big, it’s not offered the opportunity to build word-of-mouth; another movie opens in its wake and the cycle continues. The industry churns through content because it assumes that the opening weekend makes the money, the rest of the weekends a movie just takes up space. This shift happened over the course of more than 30 years, but I’m compressing time to prove a specific point. A movie’s theatrical release still creates expectation and momentum – even when nobody goes to see it. It differentiates this movie from the hordes of direct-to-streaming movies that get lost among the insurmountable volume of content.
Universal tried to force a narrowing of the theatrical release window to 30 days for the movie Tower Heist (2011). Theaters threatened to boycott the film and potentially other Universal releases. The studio recanted and returned to the standard 90-day window.
The pandemic, however, removed the theater chains from the equation, and the studios seized their opportunity to change consumer behavior. If they changed consumer behavior, that could change the rules of the game. When the pandemic forced theaters to shutter, viewers had no other way to view the movies they most anticipated. With no other exhibition alternative, the studios began feeding the movies directly to our televisions through streaming services and VOD, thereby bypassing the shuttered and stubborn theaters who were no longer standing in the way. The threat to boycott theatrical releases rendered suddenly toothless.
It was once again Universal that pushed the envelope by releasing Trolls: World Tour (2020) directly to VOD instead of pushing back the release date to wait for theaters to reopen. This would be the ultimate test. Trolls: World Tour made more money in three weeks on a digital release than the original Trolls (2016) made during its entire theatrical run.
Without hesitation Universal CEO Jeff Shell declared this to be “the new normal.” “As soon as theaters reopen,” he said, “we expect to release movies on both formats.” Without open theaters to exhibit their movies, it makes perfect sense that studios would do whatever they could to recoup production expenses on their product. Shell went one stop further, declaring that even after the theaters return, this is now standard operating procedure. He stopped short of adding, with the uproarious cackle of a true supervillain, that there was nothing the theaters could do to stop him.
But other than the pandemic what changed between Tower Heist and Trolls: World Tour? I’ll give you a hint: it involves the Supreme Court.
Tune in Next Week to Find out in Part 3: The Lawless Digital Frontier
Only on DVD Recommendations:
Part of the struggle is wanting to watch a movie or a TV when it is available. Offerings change according to unseen financial whims and scheduling eccentricities. Today’s list, similarly, has been cobbled together through a most unusual grammatical lynchpin. Add these movies and TV series featuring a prepositional phrase from Netflix DVD today because you won’t find them anywhere else (legally and that I know about).
Written on the Wind (Douglas Sirk, 1956)
Southern gothic melodrama and a choice prepositional phrase. Where is it written? On the wind. Familial dysfunction. Alcoholism. Oil and money grubbing. Based on a true story. It’s soapy daytime TV – except exquisitely shot by cinematographer Russell Metty (Spartacus, Touch of Evil) and acted by Rock Hudson, Lauren Bacall, Robert Stack, and Dorothy Malone. Malone would go on to win Best Supporting Actress at the Academy Awards. Of course, a Douglas Sirk production establishes a certain tone. Written on the Wind exaggerates and satirizes through a solemnly serious gaze. Some miss the humor entirely. Some consider it kitsch. For my money, however, it’s just a delicious confection that highlights the strengths of one of the great American auteurs. This one occasionally pops up on the excellent Criterion streaming service, but as of this post, it’s nowhere to be found.
Pump Up the Volume (Allan Moyle, 1990)
Did I just highly recommend this movie in a post about “The Full Circle of Christian Slater”? I certainly did – but maybe if you knew it’s not currently available to stream (it was on HBO Max and then it suddenly wasn’t and then it was and then it wasn’t) it’ll inspire you to finally take action and watch this overlooked gem of a teenage drama. Shy high school student by day, shock jock Hard Harry by night – Mark Hunter (Slater) causes a stir by inspiring teens to speak up and act out against authoritative hypocrisy. He’s forced to deal with the real-world effects of his inflammatory words as the principal makes Hard Harry the scapegoat for everything wrong within the community. Even though it’s a 1990 time capsule, Moyle’s film has never felt more relevant.
Tales from the Crypt (1989-1996)
I’m told we’re living in a new golden age of television programming, so maybe you’re feeling more like dabbling in a few seasons of HBO’s classic anthology horror program hosted by everyone’s favorite cackling sack of bones, the Crypt Keeper (from the Crypt, obviously). Except there’s one little problem. Tales from the Crypt has been relegated to that HBO purgatory in which Dream On, Spicy City, Not Necessarily the News, and The Hitchhiker now reside. There’s a wellspring of classic HBO programming that we just can’t watch… unless the powers that be saw fit to release episodes on DVD.