The streaming revolution could both save theaters and make box office irrelevant

The Future. Since streaming services release so many movies, they’re turning to theaters to create buzz around marquee titles. The practice could transform theaters into marketing tools instead of bellwethers for financial success, but it could also raise questions about how creators will be compensated for bonuses that have historically been tied to how a film does at the box office.

Size matters
Research firm MoffettNathanson believes that because of shrinking theatrical windows, the 2022 box office will be at least 20% lower than the record highs of 2019… and that may be the new normal. That doesn’t mean less films will play in theaters. Instead, more films will because… streamers.

• As budgets grow, films need to be events. A theatrical release signals to an audience that the movie is real and big, which is why even Netflix is starting to put its marquee films in theaters. It recently released Army of the Dead for a special one-week engagement before premiering on the service.
• More films for less time. But the whole point of streamers is that films will quickly be made available to subscribers, so exclusive theatrical-engagements will never last long. That means streaming titles will play in theaters for less time.
• Theaters will play the movies that exist. Why would theaters bother with steaming titles? Because streamers make way more movies than traditional studios, forcing exhibitors to play buzzy titles even for a short while.
• Studios will be flexible. COVID killed the 90-day theatrical window as studios opened up their own streaming services. This practice gives studios flexibility to let successful films play longer in theaters or pull under-performing titles early… a win for both studios and theaters.

Profit schmofit
When it comes to streamers, does the box office even matter? Not really. But it’s still useful to appease artists and create buzz. Army of the Dead, which had a budget somewhere in the $70-$90 million range, only made $780,000 in theaters (half of what analysts expected). That would be a monstrous bomb if it wasn’t heading for Netflix, where it became one of its most watched films ever (72 million subscribers watched it in its first month).

That leaves a big question for creatives: how are they supposed to earn bonuses if box office receipts no longer matter, especially when streamer viewership numbers are not readily available information? ICM agent Kristen Konvitz said that “in a world [during the pandemic] where there’s no theatrical and there’s a little bit of veiled mystery to it, we are looking for new ways to guarantee participation.” Expect this to be the issue dominating Hollywood labor negotiations for the next few years.