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17 August 2021

Has the pandemic changed the film industry forever?

When cinemas closed during lockdown, film distributors turned to streaming. Do hybrid release models pose a threat to the box office?

By Anna Myrmus

At the beginning of 2020, UK cinemas were thriving. The last two years at the box office had been the best on record since 1971, with total admissions in 2018 reaching 177 million. Then the unpredictable happened – a global pandemic forced the world to lock down and cinemas to close their doors.

Admissions dropped by 76 per cent and cinemas lost more than £1bn in ticket sales compared with the previous year. Suddenly, films couldn’t come out in cinemas and distributors were forced to delay releases, or to explore other options. In 2020, the only UK film receive a traditional release was Christopher Nolan’s Tenet (which many speculated was the demand of the director), and despite being a lifeline for many cinemas, the film failed at the box office, making a loss of between $50-$100m

Over the last year distributors have experimented with different release models to avoid such a flop. Some bypassed cinemas entirely for smaller projects, while Disney cancelled the theatrical release of Artemis Fowl, putting it straight on its channel Disney+, which launched in 2019 and already has 103 million global subscribers. Paramount sold a series of films to Amazon and Netflix, making nearly as much in distribution rights resales as it did at the US box office the previous year.   

Meanwhile Warner led the way with its hybrid model by announcing that the superhero sequel Wonder Woman 1984 would open in cinemas and on its streaming service, HBO Max, simultaneously. The hybrid release was shocking, breaking the traditional three-month window of theatrical exclusivity that cinemas had enjoyed for decades. But with operators at reduced capacity and audiences nervous about Covid transmission rates, the model became a way to make gains in other areas. HBO Max, for example, a rival of Netflix and Disney+, enjoyed a huge boost in subscribers following the release of Wonder Woman 1984. 

Nearly a year later, as distributors still experiment with the hybrid release, there are questions about the extent of the threat such a model poses to the box office.

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But Phil Clapp, chief executive of the UK Cinema Association, isn’t concerned. “The vast majority of big titles were held back and will be released in cinema, which gives you a sense of the confidence that studios have in the [cinema] model,” he said. Indeed, the only two major distributors that remain fully hybrid are Warner and Disney, the latter of which charges an extra fee of £19.99 for its new films on Disney+ Premier Access. 

Streaming, which dominated during lockdown, has its benefits: there’s no need to leave the comfort of your home, the snacks are cheaper, you can pause the film and, if you want to, talk through it. But, so far, the platform doesn’t have the bring the same financial gains for distributors as the cinema. Wonder Woman 1984 may have led to a subscriber boost for HBO Max, but it only made $166m at the global box office, losing over $100m against its budget – a huge amount for a sequel to a film that made $822m worldwide.  

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Disney was initially triumphant after the latest Marvel stand-alone, Black Widow, took $159m on its first weekend at the global office, as well as $60m from Disney+ Premier Access – making it the third highest opening for a Marvel origin film, behind Black Panther and Captain Marvel. Then, in the second weekend, the box office had dropped 67 per cent – the largest decline for any Marvel film.  

Black Widow fell short of its Marvel peers
Selected Marvel films, cumulative US box office in first 24 days of release

Many believe Black Widow would have performed better at the box office if it weren’t for its hybrid release on Disney+: Scarlett Johansson, its star, is suing Disney for losses she believes she suffered due to the simultaneous release.

For Clapp, the hybrid strategy makes no sense. “If a film is released in the cinema, then it’s possible to monetise every pair of eyeballs. In the home, they have no control over the number of people watching – you can get all your friends and family round.” Black Widow is now reportedly the most pirated film of 2021, and the film has suffered a sharper decrease in box office earnings than other pandemic releases, such as Fast and Furious 9 and A Quiet Place II, which had theatrical windows.  

Black Widow had a strong opening weekend but has suffered since
Weekly US box office earnings, by film

The hybrid model is risky and its success unknown. Warner Bros has revealed that in 2022 it will release its blockbusters with a theatrical window. Tyrone Walker-Hebborn, who owns Genesis, an independent cinema in east London, was never worried about the threat the model posed. “Honestly, I have complete faith in our business,” he said. “I said let them do this experiment now, when we really haven’t got too much to lose anyway, because I think they need to prove that cinemas are the best way.”  

After all, hybrid releases aren’t always bad for cinemas. “There’s often a kind of false opposition – what’s good for streaming is bad for cinema and vice versa,” said Clapp, “but the people who are the most voracious consumers of film in the home are also the most voracious cinema-goers. They just want content.” 

The real test of the market will come in September with the release of No Time to Die, the hotly anticipated Bond film that has already been delayed three times. The outcome of Universal’s decision to stick to a traditional three-month window will be inspected by studios and distributors around the world, as they try to decide which release model to use going forward.

What’s more, Clapp believes that if it is successful, the film could be a huge part of the UK cinema sector’s economic recovery. Cinema admissions are on the rise and surveys show viewers want to return to the big screen, no matter what’s streaming. 

[see also: How Marvel conquered culture]