Netflix and its sisters kidnap the audience from the cinema.. How did theaters survive despite the Corona pandemic?

Because international film production companies earn their revenues from the box office by showing their films in cinemas alongside showing them on screens, they prefer to start making profits from the box office, and after several months they start collecting the rest of the profits from screens, but things did not work like this during the Corona pandemic. .

Cinemas lose to digital show success

Weeks after the outbreak of the Corona pandemic, Universal Pictures found itself between two options, either to postpone the showing of the second part of its movie “Trolls”, or to show it in cinemas at the same time as it is shown on screens, that is, actually showing it. On screens before cinemas, because they were closed in most parts of the world at that time.

The surprise is that the film broke all expected profit figures, as the second part made profits in the first 3 weeks that exceeded what the first part achieved within 5 months of its showing in cinemas, according to the American newspaper, The Wall Street Journal.

The movie also became the most sought-after film on platforms such as Amazon and Apple, and witnessed the largest opening day for a digital movie, achieving nearly 10 times the production of traditional home video, according to Variety. American.

This came at a time when cinemas incurred significant losses, as the losses of the most famous American theaters, “AMC Entertainment” in 2020 alone, amounted to about 4.6 billion dollars, and thus the company’s revenues fell by 77.3% to reach 1.2 billion dollars, after it earned $5.5 billion in 2019.

Despite this success of the digital display and the heavy losses that theaters incurred in light of the Corona pandemic, and in conjunction with the great rise of electronic viewing platforms such as “Netflix”, “Amazon Prime” and “HBO” and others Screening platforms, cinemas still open, and an important way to make profits.

How do cinemas make money with digital viewing?

Let's take a multi-part film and versions such as "Toy Story" as an example of the importance of cinema revenues for major American production companies to achieve profits, as it released its first release in American cinemas in the last week of November 1995, and did not become available for viewing on screens in Homes until October 1996, that is, 11 months after it was shown in cinemas, and this period during which the film is shown in cinemas only, is known as the "theatrical window".

The budget for the production of "Toy Story 1" was $ 30 million, and it rose in the fourth part to $ 200 million (communication sites)

But this “theatrical window” has become shorter with time, as it has become only 3 months with the release of the fourth part of “Toy Story” in June 2019. The shrinking of the “theatrical window” came as a result of a decades-long battle between theaters or cinemas and film studios, He also mentioned a short documentary film released by the American platform "Vox".

In the 1940s, the US Supreme Court ruled that cinemas and studios were separate entities, and watching movies required going to the cinema for a period of time, but with time many home viewing options appeared, such as DVDs, television, and also platforms The various shows, and in order not to lose the cinemas among the new competitors, it concluded an agreement with the film studios, to create this “theatrical window”, as the film is shown on cinema screens exclusively for a specified period, before it is available to be shown on home screens in various other ways.

Film studios benefited from this agreement as well. While cinemas earn from showing films on their screens, they divide ticket profits roughly in half with movie studios, which continue to make profits from showing their films on other platforms, whether on television screens, digital display platforms, or DVDs and other methods, which ensures that they continue to make profits long after their films have been shown in cinemas.

This is a great deal for studios that spend millions producing their films.

As for the two films that we took as examples, we find that the cost of producing the first “Trolls” amounted to about 125 million dollars, as for the first part of the movie “Toy Story” produced in the nineties of the last century, its production budget amounted to 30 million dollars, while The budget for the fourth part is about $200 million.

The theatrical window period for exclusive screenings in cinemas

The duration of the "theatrical window" differed with the different conditions of other presentation methods. During the period of the spread of "DVDs" - for example - the duration of the "theatrical window" was up to 6 months.

In 2010, Warner Bros. suggested a 30-day showing period, and the following year, Universal Pictures suggested releasing one of its films, "Tower Heist" just 30 days after it was shown in cinemas, which refused. Some theaters even threatened to boycott the film's showing at all, so the producing company retreated and extended the period to 90 days.

The pressure of theaters continued to extend the period of the "theatrical window" until the entry of new competitors on the scene, such as the Netflix platform, which defiantly entered the scene when it announced the experience of simultaneous offering on the electronic platform with IMAX cinemas, which was boycotted by some major cinemas.

In recent years before the Corona epidemic, the period of the “theatrical window” was about two and a half months (74 days) before electronic sales via platforms such as “iTunes” and then “DVD” and “VOD” ( VOD) and later TV.

The second part of "Trolls" reaped profits in the first 3 weeks that exceeded what the first part achieved within 5 months (communication sites)

The war of lengthening and reducing the “theatrical window” continued until the Corona pandemic entered, which made a company such as Universal Pictures think about releasing its subsequent films for “Trolls” in cinemas and on screens at the same time, as did Warner Brothers and Disney. Which released its films this year in cinemas and screens at the same time.

This made some major theaters accept a deal in which the “theatrical window” period would be reduced and not canceled, and finally reached 45 days with Warner Brothers and Disney in 2022, while Universal Pictures concluded a special deal to leave 31 days before the large films are shown on other screens. , and 17 days for small films, and in return, theaters give a portion of the proceeds from demand to other window openings to accept this short "window theatrical" so that their doors remain open for profit as well.