It’s no surprise that Universal Pictures, the most forward-thinking major studio in Hollywood, was the first to act decisively when the coronavirus pandemic rocked the entertainment industry earlier this year. With the majority of the marketing budget for Trolls World Tour already spent, the studio opted to send the $100 million animated sequel straight to premium video on demand (PVOD) in April so that audiences could watch it from their homes. By all accounts, this move was a success. But there’s a reason Universal immediately opted to delay their live-action blockbusters such as the ninth Fast & Furious movie until 2021 when theaters would presumably be open again.
PVOD and streaming can work wonders for a specific type of film such as the family friendly Trolls sequel or Warner Bros.’ animated Scoob!. But for tentpole blockbusters with big budgets and high hopes at the box office, the economics of releasing via PVOD or streaming simply don’t make much sense.
“I think the general consensus among studios so far is that PVOD returns on the few major titles going that route during the pandemic haven’t been particularly stellar, otherwise we’d be hearing more details about their earnings,” Shawn Robbins, chief analyst at Box Office Pro, told Observer. While he acknowledges that no firm conclusions can be drawn just yet given the volatile nature of the marketplace during the pandemic, it’s difficult to argue with the early results.
We still questioned the success or failure of Mulan two weeks after its release on Disney+ Premier Access. Now, nearly a month after the $200 million film first arrived, it’s looking more and more like Mulan‘s PVOD sales failed to meet expectations. On the surface, the film’s performance can be attributed to a number of factors, including its looming arrival on Disney+ proper and its high price point. But zooming out, releasing content through exclusive distribution channels (i.e. streaming platforms) limits its upside thanks to barriers of access and often forces a studio to lose out on post-release pay windows such as electronic sell-through (EST), DVD/VOD rental, Pay One, Network, and Pay Two. Meanwhile, PVOD has proven that it can’t match the billion dollar revenue generated from traditional theatrical releases that sell tickets in individual units.
“Hollywood is generally risk averse and not all studios are in a position to take a chance with their top tier moneymakers on a PVOD gamble,” Robbins said. “We keep seeing the vast majority of films pushed down the line for theatrical release rather than any mass exodus to PVOD, highlighted in particular by Disney defying rumors about Black Widow going to Disney+ and instead being delayed another six months, as well as Soul remaining in November for now.”
In a historic move this summer, Universal and AMC agreed to break the traditional exclusive theatrical window of 60 to 90 days. On paper, this would grease the wheels of transition for a major blockbuster to make its way to at-home platforms far sooner than normal. But until other studios and exhibition chains sign similar deals, it’s a largely symbolic gesture. Robbins stresses that we won’t know which innovations and adaptations will remain long-term until the status quo returns.
“When consumers have choices again, are able to go to cinemas, and feel safe about doing so, then we can see how things play out in a more balanced marketplace.”