Theaters vs. Studios: A Call for Change in Exclusive Release Windows
The gloves have officially come off in the ongoing debate about theatrical release windows. Michael O’Leary, president and CEO of Cinema United, made a bold declaration during his second annual state-of-the-union address at CinemaCon, marking a departure from the previous era of restraint regarding this contentious issue.
A Strong Proposal for Theatrical Exclusivity
O’Leary urged both film studios and exhibitors to commit to a 45-day exclusive theatrical window before releasing films to home platforms. This proposal stands in contrast to the increasingly common, shorter windows of just 17 or 31 days that emerged during the pandemic.
Protecting the Future of Cinema
Addressing the assembled theater owners, O’Leary stressed, “Everyone feels the pressures of today’s marketplace–from major studios to independent theaters. However, clinging to pre-pandemic norms or hastily-made adjustments threatens the overall health of our industry.” He emphasized the necessity for a system that aligns with collective goals rather than fostering rivalries driven by short-term profits.
He continued, highlighting the detrimental impact of the rapid availability of films on other platforms: “The perception and reality that content is accessible within weeks of release undermines the sustainability of the entire industry by diminishing the frequency of theater visits among movie fans.”
The Antitrust Landscape and Strategy Shifts
Although Cinema United cannot directly negotiate release windows due to antitrust regulations, O’Leary has the authority to speak out on the matter. During the pandemic, Universal Pictures pioneered a new premium Video on Demand (VOD) window alongside AMC Theatres, the world’s largest theater operator. This trend was also noted by O’Leary, reflecting a shift in attitudes as other studios adopted similar models.
As it stands, Disney remains the main exception to the trend, adhering to a 60-day exclusive window for its releases, while many others have opted for quicker transitions to streaming.
The Fragile Ecosystem of Theatrical Distribution
O’Leary warned that the ongoing reduction of exclusive theatrical windows poses a serious threat to an already delicate ecosystem reliant on box office revenues. He argued against prioritizing short-term profits at the expense of enduring success, acknowledging the necessity for flexibility in window practices while insisting on a foundational 45-day standard for most films.
“A compelling film will perform just as effectively on premium VOD at 45 days as it would at 20,” he asserted, noting the advantages of extended theatrical runs in terms of marketing, publicity, and overall revenue generation. “This isn’t a zero-sum game; the objective is to expand the opportunities available for all players involved,” O’Leary added.
The Financial Implications of Shortened Windows
Drawing on data from box office performance, O’Leary’s team discovered that revenue for the top 20 films experienced a 10% decline, with those titles having an average window of 49 days. In stark contrast, the subsequent 80 films—a significant number of which were smaller productions—saw their revenues plummet by 32%, averaging a mere 31-day exclusive window.
“The corresponding drop in box office returns is unsurprising,” O’Leary commented. “If we can contain the decline of those 80 films to match the 10% decrease of the top 20, it could translate to an additional $1 billion in annual box office earnings.”
While O’Leary acknowledged that shortened windows are not the only factor contributing to revenue loss, he stressed that consumer habits have shifted, making it essential for exclusivity to benefit not only theaters but also filmmakers and the overall movie-going audience, provided that the windows are appropriately timed.
Conclusion: The Path Forward for Theater Owners
“Lengthier windows backed by strategic marketing would mitigate the current levels of decline and foster revenue generation throughout the industry,” he stated. “If we continue to shorten these windows and marginalize smaller films, then we risk creating an environment where only big blockbusters attract audiences, ultimately eroding the very foundation necessary for their success.”
In a related address, Motion Picture Association chief Charles Rivkin similarly called on the industry to rejuvenate domestic production, although he avoided commenting on the changes under the current administration.