Not all release strategies in this new post-COVID are as straightforward as they used to be as as the post-pandemic landscape has actually illuminated the changes in distribution strategies which are impacting the next link in the value chain – cinemas. Distributors and and the ultimate exhibitors typically work together via standard licensing agreements, which is a payment the exhibitor pays in exchange for screening a film, and depending on the either the gross receipts or adjusted gross receipts formula, the distributor can receive up to 90% of box office revenue minus the cinema deduction.
However, modern studios that also own their distribution platforms (eg. Netflix and Disney+), have taken advantage of the streaming trend and tend to skip theatrical showing – unless of course for awards purposes. This has ensured an erosion of revenue generation from this stage of the value chain, as any profit exhibitors or distributors would usually receive can be reinvested into content creation to feed their own slate. Alternative release strategies employed by distributors during the pandemic to counteract this became known as ‘day and date,’ in which a simultaneous theatrical release and other release formats are made available on the same day across territories. This has impacted the uniqueness inherent in the exhibition model that is derived from these viewing windows, as there is a lack of exclusivity for cinemas with day and date, but it does help them to play in the same game.
In an industry dominated by hierarchies, there of course exists a hierarchical inter-industry relationship in that distributors have had ultimate leverage over exhibitors for many years – they have the product and will set the price. COVID-19 however forced distributors and exhibitors to work more collaboratively, especially due to the drop in delivery costs and the squeezing of windows, which has hurt both sides in their own way. More collaboration and a mutual impetus to maximise revenue has resulted in distributors and exhibitors working together instead of against each other.
The harmonious relationship between distributors and exhibitors was overturned most recently with what can only be described as a self-funded anomaly, with the hurried release of Taylor Swifts ‘The Eras’ concert movie in October 2023 which to date has earned close to a quarter of a million US dollars worldwide. Having first approached distributors initially who promised a release date of 2025 at the earliest in addition to taking a considerable percentage, Swift’s team looked elsewhere for more lucrative options. AMC, one of the largest theatre chains in North America, emerged as frontrunners, enabling the pop star to distribute straight to their cinemas, essentially leapfrogging the typical distributor relationship. AMC worked with its network of ‘sub-distribution’ partners around the world to show the film.
This approach signalled this as an ‘inaugural step’ in a new line of business for the company, however traditional distributors were quick to accuse AMC of playing in their ‘sandbox.’ The Swift name meant that marketing spend would be almost irrelevant given her extensive reach, therefore her minimal marketing of captions announcing the film that simply played on her most famous lyrics ‘look what you genuinely made me do,’ was sufficient to drive attendance. While Taylor Swift could be described as an outlier in that as an individual, she has the resources a studio has and can afford to take such a risk, it is unique in showing that in a digital world, post-COVID, anything is possible and that the historical relationship has truly been upended.
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