The virtual cinema model born out of necessity during the Covid-19 pandemic is a viable new window that could offer distributors, exhibitors and audiences new opportunities once cinemas reopen, panellists said in the second Screen Talks live Q&A.

Speaking on Thursday’s (April 23) webinar panel, three leading arthouse distributors assessed the early performance of their revenue-sharing partnerships with theatres that have been forced to close their doors until the global health crisis dissipates.

Eve Gabereau, managing director of London-based Modern Films, joined Kino Lorber CEO Richard Lorber and Film Movement president Michael Rosenberg, both based in New York, to address what they miss most about not attending physical festivals and markets, and the surprising composition of their new audiences.

All three reacted swiftly to drastic changes in how they operate and launched their virtual cinema platforms by adapting existing architecture.

Kino Lorber launched Kino Marquee (whose early titles include Kleber Mendonça Filho’s Cannes prize-winner Bacurau), while Film Movement launched a venture with Art House Convergence and kicked off with Jan Komasa’s Polish Oscar nominee Corpus Christi among its initial roster. Tickets for both initiatives cost $12 and the distributors split net revenues 50-50 with exhibitors.

Modern Films launched with Haifaa al-Mansour’s Venice 2019 selection The Perfect Candidate and the cost is £9 (around $11) and while the split is not 50-50 yet, Gabereau said she is considering that “as the model evolves”.

Lorber said he wanted to maintain the practices of theatrical distribution and typically make films available for 60-90 days. “We’re promoting the fact that the films that we’re offering are not available on any other medium. That said, many of the theatres now have already committed to take the film well beyond 60 days, even if it does wind up on some other platforms.

“We also respect regional clearances,” Lorber continued, “meaning we give the theatres the same kind of so-called territorial exclusivity that they would get in physical terms. We won’t open two theatres that are across the street from each other in the same market.”

Gabereau said, “We went out with The Perfect Candidate as a premium VoD and we will lower the price at some point, but at this point we’re sticking to our windows that we’ve planned, also with this idea that maybe we’ll go back and have a theatrical run when cinemas reopen.”

The Perfect Candidate will open on Amazon Prime in October. “You still have to stick to certain windows in order to keep the film moving,” she said.

However on a film like Rubika Shah’s Rock Against Racism documentary White Riot, Modern Films is mixing it up and planning special events throughout the summer in partnership with music festivals that got cancelled.

On that note, Lorber is launching Justin Pemberton’s documentary Capital In The Twenty-First Century on May 1, based on the bestselling book by French economist Thomas Pikkety. “We had big plans for this film to open on a physical screen and said, ’We can do this virtually.’ So on May 1 on International Workers Day, we’re going to open this film and we’re launching it with a conversation with the author of the book hosted by New Republic.”

Encouraging response

Broadly speaking, the panellists have been encouraged by the response from their exhibition partners.

“We’re finding that the longer the film runs, the more theatres seem to be coming on board,” said Lorber. “We’ve gone in the arthouse world from a world of scarcity to a world of plentitude in terms of availability of screens… All I can say is that most of our films have generated what would be the box-office equivalent of six figures in terms of the first month. That’s reverse engineering the ticket sales into what the distributor share would be based on a traditional box-office performance.”

A key takeaway from the session was the consensus that virtual cinema can endure beyond the return of theatres.

“Continuing virtual cinema gives [certain] cinemas a chance to offer things that they maybe didn’t have the space to offer before because something else was in the way… to keep a film that was doing well around longer,” noted Rosenberg.

“If it wasn’t doing well enough to maintain a physical theatre, it can still be doing well enough for them to continue to offer it online. I think that this model will continue beyond the pandemic, even if there’s a return to some sort of normalcy.”

”We’re obviously rooting for the theatres to come back,” said Lorber. “But to be realistic with the expectation of social distancing, a sold-out show will mean a theatre that’s half-full, and to supplement the income the theatre is going to need to find other ways of making those films available. It’s what I call the law of surplus promotional value, which is to say when a film opens, it creates awareness that generates interest beyond the actual attendance of the actual film.”

The panellists declined to go into specifics about ticket sales, although Gabereau noted anecdotally that there was a healthy uptake among older audiences, and she was surprised by a slightly male-skewing crowd on The Perfect Candidate.

Asked how film festivals fit into the virtual cinema model, Gabereau said, “There’s two ways that festivals affect us as distributors: one is to buy and acquire films, and second is to launch them in the marketplace. Without festivals to see films, it is hard. Are there virtual screenings or virtual marketplaces that can work? I think it depends.”

As buyers looking for content, the cancellation or postponement of physical events is “the biggest challenge” facing arthouse distributors, according to Rosenberg. ”At Cannes you would hear buzz about something,” noted Rosenberg. ”You don’t have that same kind of interaction [with virtual markets and festivals] so that’s a big challenge for us going forward until the festivals start happening again.”

All three were bullish about the emergence of a new window that should not threaten the distributors’ commitments to other digital platforms. ”This is a different window than VoD or TVoD and this virtual theatrical window is something that we have to defend as a new opportunity in the marketplace that doesn’t conflict with traditional VoD windows,” said Lorber.

Early conversations on this subject with Apple, he said, had been productive because a successful virtual cinema run would add value to successive windows.

Next week’s Screen Talks session (April 28) is a one-on-one conversation between British Film Institute CEO Ben Roberts and Screen editor Matt Mueller. Details below.