Industry Report: Distribution and Exhibition
Beyond traditional release strategies
- Big changes in the world of film distribution are challenging traditional release strategies and putting limits on windowing protection. A look at the current situation from the UK
The theatrical release window has for many years been talked up as the “engine that drives the ancillary sales”, giving films an afterlife on secondary windows or platforms, such as streaming services (through forms of online VOD releasing), physical and online retailing (through DVD and Blu-Ray sales), and television broadcasting (through streaming services and through satellite or cable television). However, well-informed observers such as Geoffrey Macnab are increasingly asking, will the theatrical window continue to be a driving force in the future?
With big changes afoot in the world of film distribution, release windows are evolving rapidly, challenging traditional release strategies and putting limits on windowing protection. Some distributors have already developed new strategies and show films only in selected cinemas to bypass the 17-week exclusivity period with which the biggest cinema chains in the UK work for the films they release. Those films are often released as part of day-and-date strategies whereby theatrical and VOD release happen simultaneously, or as part of near simultaneous strategies whereby they happen shortly after each other. Such strategies are designed to circumvent traditional windowing and offer audiences the choice of watching films on two or more (exclusive) windows, while at the same time discouraging piracy.
The evolving theatrical distribution window
The function of theatrical distribution as a shop window or marketing device from which added value can be generated is changing. Although the number of screens has gone up by 7.6% between 2011 and 2015 (UKCA, 2016), the competition for screen space is fiercer and the run of films in cinemas is shortening. First, event cinema (i.e. live and encore screenings of entertainment forms such as television, theatre, music and sports) has gradually taken up space in cinemas, with as much as 117 releases in 2015 (FDA, 2016). Second, the quantity of films in the UK has increased by 36% between 2011 and 2015, from 558 to 759 releases (BFI, 2016). Such changing circumstances have an impact on the performance of films in cinemas and the process of creating economic and symbolic value for secondary windows.
The model of theatrical releasing is then under increasing pressure, causing consternation among distributors who are finding that less value can be generated from the saturated theatrical market. In an afterword to a new history of film distribution in the UK, Delivering Dreams (2016), the chief executive of the Film Distributors’ Association, Mark Batey, writes: “The lavish supply of new titles into cinemas is not universally beneficial. Not necessarily for distributors, charged with sustaining as well as launching their titles week by week. And not necessarily for the public, either, as many films vanish before the full potential audience has had a chance to catch them.”
A highly fragmented market
Those shifting circumstances within the theatrical market also indicate that it is an increasingly fragmented and competitive market, which creates huge challenges for the producers and distributors of smaller films. The British Film Institute (BFI) statistical yearbooks order all films released in UK cinemas into release categories ranging from small to wide releases, based on the number of cinemas in which each film is shown at the widest point of its release. The following changes are observable between 2011 and 2015 (table 1):
- The number of releases increased by more than 200, from 558 in 2011 to 759 in 2015.
- The top half of the table shows films released widely and showing on more than 50 sites at some point. The figures reveal little difference in the quantity of such films, with 228 films released in 2011 compared to 244 in 2015, an increase of only 16 films (+7%).
- The bottom half of the table shows films released modestly on no more than 50 sites, showing that this number has increased substantially from 330 films in 2011 to 515 in 2015, accounting for an increase of 185 films (+56%). The BFI figures also show that none of the films in the bottom half of the table generated more than £600,000 at the box-office in 2015.
- The fact that nearly 68% of films released in the UK in 2015 showed on less than 50 screens demonstrates just how fragmented the market now is.
Table 1. Number of film releases in UK cinemas
Source: BFI Yearbooks 2012-16
Note that the FDA Yearbook 2016 also provides data on event cinema releases – their analysis includes 853 releases in 2015.
Creating value for films
The release figures in table 1 demonstrate that – although there are always fluctuations – the status of bigger films, released more widely, with substantial marketing support, remains largely unchanged. Traditional windowing thus remains an effective release model for such films. While the theatrical run of those films is shortening, this has not yet changed their competitive position. The small low-budget films, on the other hand, are feeling the immediate effects of changes in the distribution business, with a higher concentration of smaller films competing against each other in an overcrowded segment of the market. For instance, recent films such as The Survivalist [+see also:
film profile] (2015), Remainder [+see also:
film profile] (2015) and Hector [+see also:
interview: Jake Gavin
film profile] (2015) have all been shown on between 20 and 50 screens in the first week of the theatrical release, but this number immediately dropped to less than 10 screens in the second week.
Trade press commentators have shed more light on those changes within the UK theatrical market by providing examples of release strategies developed for films, particularly for the smaller films which are given a day-and-date release. They demonstrate that some of those films are introduced in the theatrical market primarily for strategic promotional purposes rather than actually to make money at the box-office. For instance, the low-budget film The Machine (2013) was designed primarily to attract online audiences, and as such attracted only few viewers in cinemas.
On the other hand, they also note that this same logic is occasionally being applied to mainstream films if they are deemed likely to generate modest revenues from cinemas. For instance, The Colony (2015) and Misconduct (2016) were both made on a medium budget of between $10 and $15 million, with well-known actors attached, but were released in respectively just four and five cinemas across the UK. In this context, the function of the theatrical release changes, becoming a box-ticking exercise as part of the marketing campaign, as a means of generating press coverage in the trade press and newspapers, and as a means of securing access to the biggest online VOD platforms, who are able to promote those films on their services under the glossy label ‘in cinemas now’.
What this demonstrates is that oversupply and competition are not always interlinked. These examples show that the theatrical release serves a symbolic purpose through which promotional value is created for the online release strategy. A successful theatrical run is still always supportive, but the commercial performance of those screenings is no longer the indicator which determines the revenue in subsequent windows.
Beyond traditional windowing
In light of such developments, and especially the growth of the online market, the pressure on the industry’s standard 17-week protected theatrical window continues to increase. Slowly but surely, release strategies for films are increasingly tailored to online audiences, pushing the day-and-date strategy to the fore, and adding weight to the belief that traditional windowing is no longer the best form of releasing. Further, more day-and-date releases help to accumulate the data and market intelligence needed to organise distribution more effectively and maximise exposure on different windows. The decision to hold on to traditional windowing or prioritise a release day-and-date is then increasingly a toss-up for distributors.
If more and more distributors choose to release films in cinemas and online simultaneously, this will have a positive impact on the interpretation of day-and-date releasing as a concept. Day-and-date releasing has been associated mostly with small low-budget films until now, and a comparison is therefore easily made with the pejorative term ‘straight-to-video’, expressing a mark of poor quality. This will change if day-and-date releasing becomes more common for those bigger budget films to which the theatrical window has traditionally served an economic as much as a symbolic purpose. These are the type of films that are usually released more widely in cinemas (i.e. top half of table 1), and for which the theatrical window has traditionally been the driving force to establish their comparative status in secondary windows.
Despite such changes in distribution, examples of films released day-and-date demonstrate that the process of value creation across different release windows, by means of limiting and restricting access on different windows, remains in place. That is to say, the theatrical window continues to perform a critical role as the primary release window, albeit in combination with a premium (Transactional) VOD release. Films are usually available on those windows for a period of two months and then open out to Subscription VOD (SVOD), physical discs, television, and so on. There is no doubt that the same rules of exclusivity and restricted or limited access will apply to films released day-and-date in the near future.
The theatrical release, in this context, remains an effective means of organising distribution alongside a premium online release, and supporting ancillary sales. In fact, a higher number of films benefit from a theatrical release as part of date-and-date strategies. On the other hand, powerful new players have emerged in the online market, with companies like Netflix and Amazon Studios developing original productions or acquiring films at an early stage of production, for which they exert control over distribution. The threat is that such online services will prioritise an ultra-VOD release for those films, being exclusively available online before they can be watched in cinemas, with knock-on effects to the status of the theatrical window.
Roderik Smits is a researcher on the MeCETES project based at the University of York, UK. The MeCETES project will be holding an industry debate on The State of European Cinema at the European Screens conference, University of York, 5-7 September, 2016. Info: www.mecetes.co.uk/european-screens
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