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‘Frozen 2’ Teases Disney Potential to Rattle the Rigid Windows of Film Biz

The time is now for studios and exhibitors to restart premium-VOD talks

BRUNI - Curious and cute, this
DISNEY

Debate just how deep the impact coronavirus will be on the U.S. economy in the coming weeks, but even the best-case scenario is bleak for a broad range of industries.

It’s an awful truth that is just beginning to hit home in the movie industry, where audiences fearing contagion are staying away in droves, if the rapidly declining box-office figures of the past two weekends are any indication. Over 100 theaters became the first in the U.S. to shut their doors in recent days, and studios are indefinitely postponing the releases of hugely anticipated films including MGM’s “No Time to Die” and Universal’s “Fast & Furious 9.”

Disney is not immune either, having rescheduled several titles lined up for the coming months, including “Mulan,” “The New Mutants” and “Antlers.” But the company didn’t retreat on all fronts.

Its new streaming service, Disney Plus, released “Frozen 2” on Sunday three months earlier than scheduled, promoting it as a gift to an audience facing “challenging times.”

But viewed in tandem, this pair of decisions sparks a logical question: If “Frozen 2” can stream to homes early, why not just put, say, “Mulan” on Disney Plus now, too, instead of in theaters at some future undetermined point?

That’s unlikely to happen for a simple financial reason: the traditional rollout of a blockbuster like “Mulan” is bound to yield more profit across the usual windows of home entertainment and pay TV than it can bypassing all that via Disney Plus, which can’t yet match the global footprint Disney has in theaters. In comparison, accelerating “Frozen 2” is a much smaller risk because it has already been available for users to purchase on DVD, albeit for an abbreviated period.

Regardless, one can only hope “Frozen 2” represents a thawing of the ice that has encased the industry’s scheme of distribution windows, having barely budged for decades.

That doesn’t mean “Mulan” should be on Disney+ tomorrow. But that does mean there are many other alternative distribution strategies to explore that studios and exhibitors have failed to come to terms on for at least 15 years of mostly fruitless negotiations over so-called “premium VOD” arrangements. At a time when the future couldn’t look grimmer for the $42 billion global box office, the coronavirus crisis should serve as a catalyst for long-delayed change.

The movie business seems more antiquated than ever in its insistence that a dwindling audience travel to theaters for first-run entertainment that could just as easily be delivered to homes and phones. A potentially wider audience is willing to pay even more for the convenience of on-demand entertainment.

Media conglomerates that own movie studios like AT&T and ViacomCBS are building the kind of streaming operations that give them direct access to consumers, following the lead of companies like Netflix and Amazon, which are rapidly escalating the volume of original movies they make on their own already well-entrenched services.

It’s too soon to say exactly how spending habits will shift in a coronavirus-rocked economy, but many are predicting that streaming services will benefit from an audience that just lost not only theaters as a source of entertainment but he telecasts of all pro sports leagues that are TV’s most watched programs.

That reality is surely not lost on leading U.S. exhibitors including AMC Theatres and Regal Cinemas. Long before the pandemic, their bleak outlook has been reflected in their depressed stock prices.

But while these chains have done some admirable innovating by offering subscription packages after the rise and fall of Moviepass last year, they’ve been considerably slower to embrace how they figure into the streaming future.

The problem is that moving too fast into that future would almost certainly cannibalize theater attendance. Thus exhibitors have yet to find a deal they can sign off on that compensates them enough for compromising their 90-day exclusivity window. There’s been little indication they’ve even talked to the studios about this since early 2018 after too many on-again, off-again negotiations to count.

If the studios believe they’re going to be fine simply rescheduling all the postponed movies to late 2020 and beyond in the same release pattern they’ve always enjoyed–a rude awakening is coming.

These postponed movies should be the first to experiment with new distribution schemes. Day-and-date is probably a non-starter, so aim for more realistic 15- to 30-day lags between theaters and homes at varying price points.

But there isn’t a chance for any of this to happen if Disney doesn’t lead the way. Its dominant market share relative to the other major studios including Universal and Sony Pictures grants the kind of leverage it won’t have forever. And with Bob Iger focusing on the content side of the business now that he has stepped down as CEO, here comes someone with the diplomacy skills necessary to get the exhibitors on the same page.

Brokering premium-VOD deals should be his top priority in his new role. If Iger thought Disney Plus was his career’s masterstroke, this would be an even greater achievement.

And think of what making theater-caliber movies available via Disney Plus could represent for its own future. Granted, 28.6 million subscribers as of February means the new streaming service is already off to a great start.

While that would almost certainly mean some new expanded version of Disney Plus would start costing a lot more than $5.99, a movie component could vault the venture from mere breakout success to a true rival to Netflix in global audience scale.

Maybe Disney has known all along that the destiny of Disney Plus was to be a theatrical-alternative distribution point. It’s already been making original movies like “Noelle” that could have done decent box office in a pre-Netflix era.

As theatrical releases go, sticking to the traditional windows has done well enough for Disney over the years that there’s little incentive for the company to change its ways.

But here’s a horrible possibility that studios and exhibitors should reckon with: If the coronavirus wreaks enough havoc in this country in the coming months to keep young moviegoers out of theaters for too sustained a period, it has the possibility of permanently altering the habits of a generation that will learn to live without going to theaters.

Nothing is going to keep 2020 from being the year the movie industry took it on the chin. But if studios and exhibitors can finally come together, it might also be remembered as the year they began to blaze new paths to the future of their business.