Paramount has agreed to shorten the theatrical window on a two films, once each film’s main theatrical life has played out. Paramount has agreed with US circuit AMC entertainment and Canadian circuit Cineplex that Paranormal Activity: The Ghost Dimension (to be released October 23) and Scouts Guide To The Zombie Apocalypse (October 30 and outside of its blockbuster movies), can have a shortened window, equal to 17 days after the release has fallen to 300 screens or below. The usual release for a major film is 3-4,000 locations, which can reach anywhere up to 10,000 screens for the largest blockbusters, but is more likely to be around 4-5,000 screens for the type of film covered by this deal. The circuits will receive a share of digital sales earned during the first 90 days of each title's theatrical release, proportionate to their box office shares.
This type of agreement is a more sophisticated form of ‘managed flexibility’, a term coined by IHS when it was tried some years ago predominantly by UK circuits and the studios. There is constant pressure on the release window, with VoD and home entertainment releases keen to reduce it and cinema exhibitors determined to keep it stable. So far, exhibitors and their representatives have been pretty successful at keeping the line in the sand at around 4 months after theatrical release. This deal offers flexibility on non-blockbuster titles where the window is less critical. For major blockbusters, any form of movement on the window would not only set a precedent but also encroach on exhibitors' potential revenues at the point when the gross revenues mainly come back to them (most revenues go the distributor in the early weeks of release, with the balance favouring the exhibitor as time goes on). It is also relevant that both films are in the horror genre, which traditionally has a strong non-theatrical performance.
Paramount stated that movies only earn 1% of their overall box office once the screen count falls below 300 screens. Films tend to make the vast majority of their overall box office revenues in the first six weeks of release, although blockbuster films have a longer lifecycle as they play out on small screens once the blanket coverage is over. For non-blockbusters, such as those covered by this deal , once the main screen release is over they drop off even quicker and this deal is aimed at extracting higher value from the theatrical marketing spend and word of mouth in the early digital (online) lifecycle, without cannibalising any potential box office revenues.
There is a duality in the theatrical market now, built upon the fact that the Top 100 films in a market generate over 90% of the revenues. Therefore, exhibitors wish to protect the window on as many of these films as possible, while being willing to offer flexibility on the films outside the Top 100 (around 500-600 annually) which may well be more suited anyway to mixed release strategies. The fact that so many films still appear in cinemas at all underlines how important cinema still is to the overall film value chain, and the creation of value, but digital distribution exists and is not going away, so it seems more constructive for exhibitors to find a way to balance the needs of films and the different film-watching platforms than to constantly be fighting rear-guard actions against a new charge by distributors. This way, the circuits in question receive a revenue share as well. This duality is partly why we are seeing a move to premium cinemas (immersive sound, laser, seating improvements, 4D etc), in order to increase the Cinema Experience and maximise the cinemas’ pull over its customers.
Indeed, the trade body for North American exhibitors, NATO, has not come out against the deal, which is very relevant as it not only reflects its members’ views, but has also reacted very strongly to attempts to unilaterally shorten the window in the past.