The global cinema industry is set to lose $32 billion in 2020 due to the COVID-19 pandemic, a 71.5 percent reduction in box office revenue compared to 2019, according to Omdia’s latest Movie Windows: Adapting for the Future report. Box office revenue has dipped below $13 billion for the first time in over two decades, forcing many studios to experiment with other platforms to account for the decline in box office revenues.
While box office revenues have been significantly hit, there has been an unprecedented growth in usage of online video (both transactional and subscription) during 2020. Online transactional and subscription video revenue is set to increase by 30 percent year-over-year from 2019 to $34 billion in 2020.
Disney+ has trialed the use of Premium Video on Demand to launch titles such as Mulan, while Wonder Woman 1984 will significantly shorten its theatrical window to only one week internationally before appearing on streaming services. However, while this approach may satisfy consumer demand, PVOD has only accounted for a mere $630 million in revenues for studios in 2020.
Theatrical window timeframes evolving is not a new phenomenon. Over the past two decades average U.S. windows have shortened by over a month; U.S. consumer spending on cinema has grown by 50 percent over the same time period.
However, COVID-19 has presented an opportunity for studios to experiment with alternative distribution models and identify new revenue streams such as PVOD, which may be used on selected titles and formats moving forward rather than totally replacing theatrical windows.
COVID-19 has accelerated the experimentation of the length of theatrical windows and other platform launches, many studios will still be looking towards 2021 and beyond to resume their big blockbuster cinema launches. In 2019, the U.S. top 10 films generated 70 percent of their box office takings within the first two weeks of release. This compares to 63.1percent for the films ranked between 41 and 50 and 40.9 percent for the films between 91 and 100.
Maria Rua Aguete, senior director, dedia and entertainment at Omidia said, “COVID-19 also created a bottleneck of new releases which puts into question the traditional windowing model as downstream revenue sources suffer from the lack of new releases onto other platforms in 2020 and 2021. It has also created a unique opportunity for studios to experiment with other distribution models such as PVOD or and to a lesser degree straight-to-streaming without equivalent relationship damages as before. Most 2020 experimentation has not been about moving new release movies to latter windows (namely, online subscription video) sooner however, rather about creating new and temporary revenue streams to capitalize on produced content via PVOD or otherwise.”