Pandemics and Cinemas

Pandemics and Cinemas

In today's newsletter we ask a very important question — Has the curtain fallen on movie theatres or is this just a minor hiccup?


Business

The Story

It’s no secret anymore. People are sitting at home and trying to wait out the pandemic. They are also turning to an array of streaming platforms to fill the void. And as more people start embracing the “Home Box Office” experience, the question arises — will movie theatres become a relic of the past?

Now obviously this isn’t the first time we are hearing about this. People have been writing obituaries for cinemas since forever.

Consider for instance what happened with IPL. During the first season, there was considerable fear that IPL would have a detrimental impact on theatres. The rationale was that people would now spend less time going to the movies and this, in turn, would affect occupancy rates. These claims weren’t completely unfounded as in the early days, producers tried to stay clear of the IPL season. But as movies started coming out thick and fast, producers were left with little choice but to release them during the dreaded summer months. However, much to their surprise the move did not have a material impact on movie turnouts, instead, in almost anticlimactic fashion, IPL served as a platform for actors to promote their new movies.

This point is best summarized by the Chief Content Officer at Netflix, Ted Sarandos.

Back in the day, people used to say video stores would kill theatres, now they assume streaming sites like Netflix will be the death knell. In hindsight, video stores actually saved cinema. It introduced new filmmakers and artists who were previously unknown. People always worry about how something is going to hurt when they should be focusing on how it is going to help. What it helps is the ecosystem of movie making

But coronavirus isn’t IPL. And it most certainly isn’t going to help the ecosystem.

Consider China — a country that is slowly emerging out of the lockdown. In March, they decided to open up their theatres. However, producers were wary about releasing their high-budget flicks to empty halls. Their contention was simple — “The Audience isn’t ready. In fact, most of them will only watch movies at home until there is a vaccine for the virus. And even if people did come, theatres will have to be mindful of social distancing rules. That means no more full houses. So why would we release movies in theatres running at half capacity ”

So there’s been a concerted effort from producers and movie studios to limit the theatrical window — the time duration during which a movie plays exclusively in theatres, before being released on DVD or digital media. And this is obviously bad for theatres because part of the appeal about a movie is the exclusivity and the hype. And so if new releases make their way into your streaming sites faster, you’ll have fewer incentives to visit the theatres and this doesn't bode well for the industry.

But theatres do fight back. Consider for instance what happened with Martin Scorsese’s epic movie “The Irishman”

Traditionally, cinemas have demanded a 90-day window between theatrical release and on-demand availability, essentially giving them the first exclusive bite of the revenue pie. But negotiations between the Netflix/Scorsese team and two major US cinema chains, AMC Theatres and Cineplex, fell apart earlier this year when Netflix reportedly wanted that window closed to 45 days at most.

And since they refuse to budge, the movie only opened in a few theatres effectively putting the producers at a disadvantage. But with a pandemic at large, we are not sure if they will have the same bargaining power anymore.

And then there’s the question about the content pipeline. To put it simply — success in the film exhibition business is heavily dependent on the flow and quality of content. Right now, the quality of the content pipeline is still solid. But the “flow” — It’s a bit liquid.

Bad joke?

Okay…

Anyway, the point is — there are a few questions surrounding what theatres will play once people start frequenting them. Granted you could start playing some of the stuff that was postponed earlier — like Sooryavanshi and Black Widow. But what happens once theatres have run through their backlog of delayed releases? I mean, theatres can only operate if there are movies on the production line. And if the production line is broken, you need a workaround.

Can they do it? Maybe.

Is it going to be tough? Almost certainly.

The fact is, movie theatres have never seen anything like this before. Yes, they’ve rebounded from wars. They’ve survived recessions and massive disruptions in technology. But this time the rules are different. And hopefully, by the time this is all over, they are still up and running.

Until then…


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