Superheroes to the Rescue as Theaters Tussle With Small Screens
(Bloomberg) -- The movie industry loves an underdog. Except, perhaps, when the underdog is Netflix.
Pesky upstarts like Netflix Inc., Apple Inc. and Amazon Prime Video are shaking up the movie-theater business, making them the perfect targets for cocktail-party griping at this year’s CinemaCon, a gathering of 3,700 movie-theater owners, movie executives and press from 80 countries that starts Monday in Las Vegas.
Convention goers might opt for a drink or two at the Caesar’s Palace venue this year. Streaming is making their lives challenging. It’s gotten so successful that it threatens theaters’ exclusive rights to show popular flicks in the crucial first months following release.
Maybe a little alcohol can fuzzy up the math. Since 2014, global streaming revenue has jumped an average of 28 percent a year compared with box-office gains averaging 3 percent, according to Bloomberg Intelligence. More Americans stream than subscribe to cable TV, and they spend just over half their media time on a digital platform, the Motion Picture Association of America said.
Blockbusters are coming to the rescue, at least for now. Movie studios have slated enough “tent-pole” pictures to get even the most home-bound film buff off the couch to experience them on the big screen. And the bigger, the better.
“For Imax, I think it will be a record year,’’ said Rich Gelfond, Imax Corp.’s chief executive officer. “The blockbuster movies being made, which are what we do on a global basis, are some of the most attractive I’ve ever seen in my 25 years here.”
The razzle-dazzle of the Avengers, Buzz Lightyear, Spider-Man, Godzilla and Kylo Ren -- on this year’s schedule along with Simba and Nala, the Joker and Pennywise the scary clown -- is only a temporary fix for theaters. Studios have quit flirting with streaming services and have now begun getting into the act. New offerings from Walt Disney Co., Comcast Corp. and AT&T Inc., which acquired the Warner Bros. studio, will compete with Apple. The iPhone maker announced last month it had corralled Steven Spielberg and Oprah Winfrey to be among the faces of its new streaming service, which will be rolled out later this year.
The theaters’ true fight for survival will be over what’s called “the window.’’
The window refers to theaters’ three-month exclusive right to screen movies before they’re piped into homes. Cinema owners have clung to it even as it’s come under assault from the new kids on the block.
A kind of proxy war over the window was joined recently by Spielberg, who reportedly wants to change Oscar rules to ensure only movies that get long runs on big screens will be considered. That broadside came as Netflix’s “Roma” won three statuettes, even though the film spent only a few weeks in theaters before it migrated to the small screen. The issue remains unresolved.
Some industry observers are already predicting that a shortening of the window is inevitable, putting under threat the bread and butter of theater income -- popcorn, candy and those oil-can-size sodas.
“It’s a matter of when, not if,” said Steve Mosko, CEO of production and finance company Village Roadshow Entertainment Group. “If you look at the pivots that Disney is making and Warner’s is making, it’s clear where their future is.’’
After a wave of acquisitions, the U.S. now has two major theater-chain operators -- AMC and Cinemark. The real growth in the industry is in China, which is set to overtake the U.S. as the world’s biggest box office.
Studios are buying each other, too, and firing some of the miracle workers who make movie magic. With the rising popularity of companies like Netflix Inc., there just isn’t room anymore for six major movie studios.
WarnerMedia, the newly acquired entertainment arm of AT&T Inc., recently announced a round of buyouts. And Lions Gate Entertainment Corp., which gave the world “The Hunger Games,” has had two waves of job cuts.
Thousands are likely to lose their jobs after Disney’s $71 billion purchase of 20th Century Fox and other assets last year. The Fox 2000 label, which made films like “Fight Club” and “Hidden Figures,” will fade to black.
While Warner, Lions Gate, Paramount, Universal and Disney -- as well as Amazon Studios -- will screen upcoming movies this week for CinemaCon attendees, Fox will be conspicuously absent.
That will be melancholy for Chris Aronson, who was Fox’s head of domestic theatrical distribution until he got the ax recently.
“It’s surreal to be going as an unaffiliated attendee for the first time in 14 years,” he said. “The mood might be more solemn than celebratory this year.’’
After CinemaCon, Aronson plans to return to Los Angeles, where he’ll clean out his desk and look for a new job.
Who’s the underdog now?
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