We investigate why cracks are beginning to appear in the traditionally rigid theatrical window structure.
With even senior executives at US studios calling for change, the debate about shortening cinema’s exclusive windows around the world is again intensifying.
In late November, Kevin Tsujihara, chairman and CEO of Warner Bros Entertainment, the studio behind films including Suicide Squad and Batman V Superman: Dawn Of Justice, revealed the studio was in talks with exhibitors to put new films in homes sooner.
“We’re having very constructive conversations with the exhibitors for the first time,” he said.
James Murdoch, CEO of 21st Century Fox, recently told Bloomberg the current exclusivity arrangements are “crazy”.
And in London this month, David Puttnam, president of the UK’s Film Distributors’ Association (FDA), was equally outspoken about distributors’ need for “flexibility to release films on their optimal date”.
At present, mainstream releases in the UK are held to four months of exclusivity in cinemas before their home entertainment release, even if those films play on screens for just six to eight weeks at most.
Many distributors work back from Christmas or Easter - the most profitable times to release a DVD - when calculating the theatrical date, leading to periods of feast and famine at the UK box office as well as audience and screen cannibalisation at the busiest times.
Puttnam talked disparagingly of a “rights freeze”, a period in which, under the current system, films are not available in any format.
As he noted, big distributors in the US are pushing for a window as short as two weeks between theatrical distribution and home video releasing, with first-run films to be made available then to home consumers at premium prices.
Around Christmas, the windows debate has an added resonance for UK distributors. This is the period in which home entertainment sales reach their peak - and some distributors believe they are badly disadvantaged by the fact that in the US, the theatrical holdback insisted on by the exhibitors is around 12 weeks.
In the UK, for reasons no-one can quite explain, the holdback is four to five weeks longer.
This means when a UK distributor releases a mainstream film in cinemas on the same date as its US counterpart, the film will often be available legally on DVD in the US more than a month before it can be bought in the UK, with all the opportunities for piracy and lost revenue this entails.
Phil Clapp, chief executive of exhibitors’ trade body UK Cinema Association, claims harmonising release patterns is not a practical proposition, “even if it were seen to be desirable by some parties”.
“The period observed by each film is the result of separate and confidential commercial negotiation between cinema operators and colleagues in film distribution,” he explains.
The UK theatrical market is now completely polarised.
Bigger mainstream movies follow traditional releasing patterns while indie fare is handled in a more freewheeling way. Indeed, distributors of independent films are equally as angry they cannot get their movies into cinemas for long enough.
“The single big problem for distributors is the rigidity of the application of this window,” says Mark Batey, chief executive of the FDA. “It is the one-size-fits-all approach. If you want anything less than a pretty rigid 17-week holdback, the reality is that as a film distributor in the UK today, you’re not going to get bookings in the major circuits.”
For big releases, theatrical is still the engine that drives ancillary sales. An exclusive run in cinemas is essential in making a film visible and ensuring profitability down the line.
For smaller indie titles, a tiny theatrical release secures reviews and boosts visibility for a film that will appear on another platform days later (or even simultaneously).
There is an obvious logic to both approaches.
Nonetheless, Puttnam’s call for “sequential release dates” for mainstream films that reduce the “periods when films are not available to the public in any format” is surely going to be heeded sooner rather than later.
If this happens first in the US, it can safely be predicted that other major territories will quickly fall in line too.
‘Digital preview’ is shaking windows structure
In Italy, films tend to play in theatres for 120 days, although the window has been shrinking due to ongoing negotiations between different factions of the industry.
A film may now go on ancillary release after 105 days in cinemas. But the film may benefit from a VoD release via a ‘digital preview’ two to three weeks ahead of that, reducing the window to 84 days in some cases.
Although settled and confirmed by the government multiple times, it is thanks to the extraordinary energy of the exhibitors that the theatrical window in Italy has held firm.
There has been only a handful of unsuccessful attempts to shrink it since 2005, when mobile-phone carrier H3G attempted to promote The Interpreter on VoD just three weeks after its release. It was met by protests from exhibitors who threatened not to screen the film at all, and distributor Eagle Pictures was forced to shelve its premature VoD plans.
Six-month window stays in place after debate
Media chronology was one of the most hotly contested issues as the revised German Film Law (FFG) passed through the committee stage this year. It was argued the theatrical holdback should be reduced from six months to four months.
In the summer, the German parliament’s upper chamber, the Bundesrat, proposed cinemas should have only a four-month exclusive window before the next exploitation kicked in.
Support came from the German Film Academy, among others, which argued the overwhelming number of feature films have already exhausted more than 90% of their audience potential after 12 weeks.
“A standard holdback of six months is thus anachronistic and prevents an orderly exploitation of the funded films,” it reported.
However, in its final reading of the FFG’s bill in November, the Bundestag voted to retain the present regulations applicable for films supported by the German Federal Film Board (FFA) and the German Federal Film Fund (DFFF).
The government suggested: “If the exclusive window for cinemas is reduced, there is then the danger that exhibitors would increasingly focus on commercial films that promise a quick success. German films, whose economic success usually only set in after a longer exploitation period, would then be in danger of disappearing from the cinema programmes.”
The new FFG comes into effect on January 1, and will mean the six-month window stays in place after the theatrical release of FFA or DFFF-backed films before DVD/Blu-ray and VoD exploitation, 12 months for pay TV and 18 months for free TV.
There is the possibility to shorten the periods on application - to five, nine and 12 months, respectively - and the introduction into law of an extraordinary further reduction or complete waiver of holdback periods for special cases as a compromise to the champions of new business models and distribution strategies.
Piracy concerns put windows under pressure
The theatrical window in Spain is between three and four months. As in the UK, it can vary for smaller distribution companies if they believe a campaign for the theatrical release of a film can help the promotion of the home entertainment release.
The main concern among studio and indie distributors is the level of piracy in the country.
Enrique Costa, who is head of distribution at Avalon, observes that in the past five or six years the revenue from DVD sales has plummeted more than 50% “due to uncontrolled [illegal] consumption online”.
Nonetheless, the first week of the year is the bestselling week for the DVD market: January 6 is Epiphany and the traditional present-giving day in Spain.
And the arrival of new VoD platforms such as Netflix could help compensate for the loss of DVD and Blu-ray sales.
The lack of effective policies from the government to fight piracy is of huge concern to distributors, but shortening theatrical windows is not a priority ahead of trying to change the way films are consumed, spurred by stricter laws against offenders and wider access to VoD.
Strict laws underwrite generous film financing
As in the UK, the issue of release windows in France is controversial but for different reasons.
The country is one of the only territories in the world where release windows are enshrined in law.
Under audiovisual legislation, the minimum gap between a theatrical and VoD release is four months.
Distributors of films that sell fewer than 200 tickets in the first month can apply for a one-month reduction. The window between theatrical and SVoD releases stretches to 36 months.
It is an issue dividing the French film industry. Some regard it as the backbone of the country’s envied film-financing system, which is based on a levy on cinema tickets as well as investment obligations for broadcasters.
Others look enviously across the Channel at the results of Curzon Artificial Eye’s day-and-date release of films such as 45 Years, and wish they could enjoy a similar flexibility.
There are also claims the rigid window encourages piracy or the use of virtual private networks (VPN) as tech-savvy spectators search elsewhere for content.
In response to the entire media chronology legislation, some distributors have been eschewing theatrical releases for particular titles.
Wild Bunch, for example, launched digital distribution operation e-Cinema in 2015, focusing on exclusive VoD releases for a handful of titles including What We Do In The Shadows, 99 Homes, One Chance, The Green Inferno and Sinister 2.
Canal Plus CEO Maxime Saada put out a call in October for all the windows - including the TV premiere screenings but excluding the VoD gap - to be slashed by four months.