Fixing the Windows in a Broken Home

One obvious side effect of Netflix's (ultimately failed) bid to buy Warner Bros? A revisiting of the discussion about theatrical windows. Given that Netflix was promising 45-days for Warner's movie slate going forward, well, if you give a mouse a cookie... they're going to want a cow. As Brooks Barnes writes in The New York Times:

Universal said on Thursday that it would immediately begin guaranteeing theaters a minimum of five weekends of exclusive play for new movies, ending a pandemic-era policy that guaranteed only three. Starting in January, Universal will move to a minimum of seven weekends of guaranteed exclusivity.

Yes, that's a move from 3 weekends to 5 weekends immediately. With a move all the way to 7 weekends – roughly the 45 days guarantee Netflix was making – early next year. We are so back... to where we started.

Hollywood will say – and is saying – this is just a correction for the mistake made during the pandemic. Almost exactly six years ago, with the world in lock-down mode, it was none other than Universal that took a hammer to the theatrical window. They announced that Trolls World Tour would be released for rent at home the same day it launched in theaters – if theaters were even open by then. Other studios followed suit, perhaps most famously Warner Bros, which went Full Monty, much to the chagrin of many filmmakers. This seemingly destroyed Christopher Nolan's relationship with the studio, over Tenet – a movie which was just as audibly indecipherable at home as it would have been in a movie theater. Even Disney was forced to follow suit and as such, faced a suit from Scarlett Johansson, which helped end the brief Bob Chapek-era at the studio. It was a rocky time, to say the least.

This also put Universal at war with AMC. Once the head of the largest theater chain, Adam Aron, read what then-NBCUniversal CEO Jeff Shell – now, incidentally the president at Paramount Skydance (at least for now) – said about the success of Trolls on on PVOD after their decision, he went nuclear:

"It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. Therefore, effective immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East."

People may have been a bit on edge... But eventually, even AMC had to recognize the reality of the situation, and suddenly we had a de-facto 17-day window.

Anyway, reading AMC's comments today, and you wouldn't know any of that happened:

AMC Entertainment, the country’s largest theater operator, called Universal’s shift in strategy “extraordinarily beneficial” in a statement, adding that it “strengthens the entire theatrical ecosystem.”

Here's the thing, it did happen. And while it may have been a bit of an overreaction in hindsight, it also should have served as a good wake up call for Hollywood. The theatrical model had been slowly dying for years, but it was masked by inflation. The industry kept touting ever-growing box office numbers without any actual context. Had they simply reported numbers of butts in seats, the numbers would have looked bad (and worse if you cut it by per-capita moviegoing). COVID, as it did in so many industries, simply accelerated a trend that was already in process.

And now we're back. Having learned seemingly nothing!

The main problem for Hollywood is that the box office still isn't nearly back to those pre-pandemic numbers, even when masked by inflation. And again, they'd argue the windows are the issue. To be clear, it will undoubtedly help a bit – obviously, they're creating a faux supply/demand situation, propping up a marketplace.¹ But it's not addressing the underlying issue: seeing movies in a movie theater doesn't have the hold over the general public as it once did. And it never will again. Windows or not.

That's not to say movies – or Hollywood itself – is dead. In many ways, movies are more alive than ever. But that's thanks to streaming – and yes, smartphones (sorry, Mr. Nolan). We used to have to watch a movie in a movie theater in order to see it. Now we can watch it basically anywhere. To pretty much anyone that would look like progress. But not to Hollywood. And certainly not to theater owners.

But actually, buried a bit in this news is an element that suggests Hollywoods' heads might not be as buried in the sand as it seems...

One important wrinkle: Universal’s corporate sibling, Focus Features, which makes smaller-budget specialty films like “Hamnet” and “Bugonia,” will not change its theatrical exclusivity policy. Three weekends, or about 17 days, is all that Focus will continue to promise.

NBCUniversal said specialty films — one of the most challenged genres at the box office — required special handling. For some of these movies, a theatrical release has become valuable mostly as a marketing tool for what Hollywood calls “premium video on demand,” the sales window that immediately follows theatrical exclusivity. Focus’s movies also tend to open in a handful of theaters at first, expanding gradually to more markets as word-of-mouth demand builds.

“Universal remains a theatrical-first studio,” Ms. Langley said. “That’s proven by the breadth of our slate, our commitment to our filmmakers and the ongoing investments we make in the creative community.”

In other words, they're acknowledging that all movies are not created equal. Actually, that's not fair. The movies themselves may be, but the natural audiences for those movies is not. That's not harsh, that's reality. And again, it has been reality for years and years and years. In the olden days, people would go to the movies to see basically anything because they had little else in terms of choice. These days, we all have the opposite problem. As a result, only a handful of movies really warrant a long theatrical run. It's not a comment on quality or anything else, it's just reality.

It's like the old saying: if a studio put a movie in theaters and no one goes to see it, did it actually play? These days, we can ensure that the movie plays in a place and in a way that people will actually see it. We have the technology.

Well, technically, Netflix has the best of that technology. But Hollywood didn't want to leverage it to the fullest extent – including, notably, helping with theatrical. In hindsight, I believe this will look incredibly stupid. But I get it. The key now is the acknowledgment that this new/old seven-week window isn't some sort of commandment handed down from the old gods of Hollywood, it's simply one path for a certain type of movie.

That's how I choose to read Donna Langley's statement. That she knows every movie can't do seven weeks in theaters. Obviously. What if it bombs opening weekend? Do you let the stink linger for six more weeks? Of course not. This is simply a guidance. And a game plan for the "tentpole" movies which will launch under the Universal banner. Other, smaller films will likely go through sub-studios, like Focus. This is a good first step for every studio.

And, by the way, Netflix should still come at this from the opposite end: if a movie is likely to do well in theaters, Netflix should push it wide (though yes, they'll have to partner to do that now without acquiring Warner's business). I've been saying this long before they tried to buy into theatrical. Now that they aren't, it's still the same rationale. I mean, maybe not seven week theatrical runs now that Ted Sarandos doesn't have to be held to such standards. But still, something. Where it makes sense!

And where it doesn't, for all studios, they should go to PVOD right away! Or streaming! It can even salvage clunkers!

This is all so obvious, and yet Hollywood fights it. Because it's not the way of the past, it's the way of the future. Netflix could have shown them the way more clearly, now they'll have to do it themselves. But it's the same path.

Fine, fix the window. Just fix the house too!

¹ I also do think that 2026 is primed to be a good year at the box office just by nature of the slate. Hollywood will do a victory lap around this as if it wasn't mostly about timing of some blockbusters aligning of course... ↩