Content Distribution Strategies: Changes in Movie Windowing
A Parks Associates Whitepaper Content Distribution Strategies: Changes in Movie Windowing Paranormal Paranormal established digital distribution channels established digital exclusivity content theatrical relationships no preexisting • • • Advantages for OTT Providers OTT for Advantages Accelerated windowing is an evolving model that model that is an evolving windowing Accelerated can benefit studios distributing films with lower returns. potential Among those disruptors are OTT providers, such as such as OTT are Among those disruptors providers, Netflix. and Hulu, Amazon, With OTT providers disrupting the established models, it was only a matter of time before a traditional studio a traditional studio of time before only a matter it was OTT the established models, disrupting With providers two motion pictures ( release announcing plans to by led the way joined them, and Paramount services streaming ) to Apocalypse only two the Zombie weeks Guide to Activity: Ghost Dimension The and Scout’s the plan, with to and Cineplex agreed Theatres chains AMC theater after their theatrical debut. Surprisingly, box any help make to up for revenues VOD and digital on their theaters with revenue share to agreeing Paramount in no interest expressed States, chain in the United theater the largest Regal Cinemas, office shortfall. However, works as is. strategy the traditional windowing that arguing model, Paramount’s These providers are in a prime position to alter the theatrical the theatrical in a prime alter position to are providers These advantages at their disposal, several and have window content distribution channels, including established digital theatrical relationships. and no preexisting exclusivity, While the theatrical window, traditionally 3-6 months, has been shrinking on its own for the past decade, non- shrinking has been the past decade, 3-6 months, traditionally for on its own While the theatrical window, the established theatrical model. to windowing been the initial disruptors companies have traditional content Windowing for motion pictures is evolving, and companies throughout the ecosystem are are ecosystem the and companies throughout is evolving, motion pictures for Windowing day-and-date and digital windowing such as accelerated of new trends the effects feeling consumer been influenced by distribution. distribution have Changes in movie windows services. industry are the globe of digital a result, across As use and wallet share players internationally, office numbers climbing with box outlooks, experiencing vastly different in North but stagnating America. particularly and Asia/Pacific, in Europe Accelerated Windowing Accelerated Changes in Movie Windowing Windowing Movie Movie in in Changes Changes Content Distribution Strategies: Distribution Distribution Strategies: Strategies: Content Content All rights reserved | www.parksassociates.com | © Parks Associates Digital Day-and-Date Release 3D, anddigital projectors. financial capitalinexpensive systems, includingIMAX, theater ownersconsidering invest large amounts of universal resistance. That resistance isunderstandable digital modelhas beenmetwithnear day-and-date window,opinions onacceleratingthetheatrical the Butwhiletheater owners holddifferingservices. releases areand-date logical modelsfor streaming and targetable are distribution allreasons digital day- businessmodels,Multiple nodiscmanufacturing, date release ismore feasible for streaming video. physical media,there are several reasons aday-and- releasesWhile day-and-date were possiblefor home consumer. andintohands ofthedistributor thehandsof in- release transfers allaccesscontrol nearly outofthe release isnotnew,and-date theprospectofadigital day- services. or subscription While amulti-outlet throughservices include availability transactional streaming onthesamedate. Digital streaming may include immediate releases for anddigital theatrical release. today’s In digital age, releases day-and-date windowing strategy isdigital day-and-date thetraditionalAnother businessmodelshifting © Parks Associates
0 Theatrical 01 41 82 22 62 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 Subscription Home Video -Physical Sell-through TypicalFilm Windowing VOD Home Video -EST, digital rental Premium Television Months screen sizes. onallto considerappropriate visualstorytelling their mindsetinthecreation process mustchange onatiny screen,to considertheissueoftelling astory For market. directors andcinematographersancillary for beingan thetheaters, withhomeentertainment havethat filmmakers longcreated motionpictures questions from acontent creation standpointgiven theater screens to mobiledevices. This issueraises must contend withisdiffering experiences from Another issuethat filmmakers anddistributors essentially “under nocircumstances.” pointisto benomiddleground whenthestarting would beto findamiddleground, butthere appears minds, whichappearsunlikely. Conventional wisdom will have to findaway to changetheater owners’ date release model, content providers anddistributors With exhibitors notbuyinginto thedigital day-and- Free TV
Content Distribution Strategies: Changes in Movie Windowing Video Services Internet Subscription © Parks Associates © Parks
PPV Renting VOD Renting Video Renting Downloads Discs Blu-ray Renting DVDs Renting Now, with access to theatrical content, OTT video providers can can OTT video providers content, theatrical to with access Now, U.S. Broadband Households Broadband U.S. Video Buying Downloads Video Spending in U.S. (2015) Spending in U.S. Video Discs Buying Blu-ray Percentage of Average Monthly Household Monthly of Average Percentage DVDs Buying Tickets Buying Cinema OTT service being impacted by the most are providers becoming legitimate and are strategies new windowing TV the home video window. for premium with competitors 0% 10% 30% 20% 40% If OTT services continue to expand and compete concurrently with theatrical releases, disgruntled theater owners If OTT owners theater disgruntled services theatrical with concurrently releases, expand and compete continue to the defend studios to or entire providers ties with content sever They could even blacklistingcould react by films. philosophical shift what a fundamental lead to for could conditions These of theatricalwindow exclusivity. video. a motion picture constitutes and what constitutes consumers turn As owners. theater cause shrinking prices ultimately for may and increased trends These revenues home-based to more those films that video entertainment, drive ticket will struggle to sales for theaters movie and the expensive, copies and marketing incredibly not blockbusters. screening Acquiring motion pictures are are thin. razor concession sales) are by largely (driven theaters for margins profit Through their award-winning episodic series, Netflix and Amazon have already shown they are legitimate legitimate they are shown already have Netflix and Amazon series, episodic their award-winning Through like giants HBO and Showtime. challengers to content providers. content serve to content. as the primary their original share their market for easily exploit home video window These changes will have several key implications for the industry, namely for for namely the industry, key several for implications will have changes These New Competition and Fundamental Business Changes Business and Fundamental Competition New All rights reserved | www.parksassociates.com | © Parks Associates theater currently offers to theconsumer. can eliminate oneofthecore valuepropositions the reduction oreliminationoftheexclusivitywindow possibleathometo somedegree.experiences Further, the big-screen andenhancedviewer experience haveadvances inconsumerelectronicdevices made ofgoingto themovies.the socialexperience However, 3D,RealD IMAX, andadvancedsurround sound, and thatincludeexperience, enhancedviewer experiences the newest available motionpictures, the “big-screen” propositions to theconsumer, includingaccessto infavorWorking oftheaters are several majorvalue concessions willgoup. ofbox office numbers.leading to anoverall shrinking To revenue, and ontickets generate compensatory prices to reduce costlyoverhead.addition,theaters may have In to exhibit, cutbackonthe numberoffilmsthey owners. These lossesmay leadto closingtheaters oraradicalreductioninscreens andexhibitionsinanattempt window withoutcompensationwillputconsiderablefinancialpressurereduction ofthetheatrical ontheater onlyamonth orlesscouldseverelyeliminating exclusivityafter damagetheater owners’ businesses. Further thefirst2-4weeksafter ofscreenings. Since revenue sharingisdoneonaslidingscale, theaters ofrevenue take intheirhighestproportion to generate enoughrevenue to continueoperating. destinations withanincreased emphasisonblockbusters The remaining theaters willbecomepremium hasbeenaboonto theater exclusivityperiod owners,The 90-day and watch releases allthenew want. thatthey to staylikely home, pay for and theirsubscription, attendance. However, average consumersare more willdriveat theaters,blockbusters andlarge-scale activity. Cinephileswillcontinueto attend screenings weekenda placeofoccasionratherthannormal occurrence,date anormal thecinemawillbecome digital day-and- content owners succeedinmaking If Content Distribution Strategies: Changes in Movie Windowing This change can effectively turn OTT change can effectively This service providers networks, and home premium creators, content into production, over control With video providers. OTTdistribution, can function and delivery, providers easily dictate the terms of their as studios and more main barriersThe expanding to distribution strategy. market in production verticalscapital investment are strategic as the expensive as well facilities, and systems of marketing processes and distributing a motion picture. is an evolving windowing accelerated In summary, can benefit studios distributing films model that remains theater The returns. potential with lower movie-going a true go for the place to experience, action epic stories. films and fast-moving especially for parties consumer dollars shift, as all vested However, the must shift accommodate their business models to Ifthe benefits. not, OTT will reap providers consumer. Theaters won’t be the only casualties, with with casualties, be the only won’t Theaters VOD. paid also affecting blows potential The compression of release windows does give pay-TV pay-TV give does windows of release compression The their service for earlier new releases access to providers VOD services, but OTTalso gain early will providers a movie was once 9-12 months before What access. a For less. 4-6 months or even hit SVOD becomes now an earlier SVOD service viewership, retain struggling to VOD. pay-TV for troubles future signal may window shiftsThis the opportunity OTT video providers for has one that serveto as the home video window, post-theatrical, been 3-6 months traditionally the over control With weeks. four as early as to market OTT create verticals may windowing, providers and Hulu Netflix bases. that scale with their customer price points based on business different offer already offers Amazon features. and premium access, model, both subscription and transactional Mixing content. price points allows business models with different OTT the opportunity their own providers create to intraservice strategy. windowing Content Distribution Strategies: Changes in Movie Windowing
Parks Associates Senior Analyst, Parks Glenn Hower currently studies entertainment currently and deliveryGlenn Hower content services. Glenn is experienced in entertainment distribution production and with a particular content systems and film content. television, emphasis on radio, About The Author The About Author , Glenn Hower Parks Associates has made every reasonable effort to ensure that all information in this report is correct. We assume no Associates has made every assume no effort reasonable Parks that all information in this report We ensure to is correct. — DISCLAIMER Published by Parks Associates. © Parks Associates, Dallas, Texas 75248. All rights reserved. 75248. All rights reserved. Texas Dallas, Associates, © Parks Associates. Parks by Published Glenn Hower. by Authored ATTRIBUTION— No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the in the Printed without permission the publisher. in writing means, from any or by form in any No part be reproduced, of this book may of America. States United responsibility for any inadvertent errors. Glenn earned his BA in music with a focus on the music business and industry from the University of Texas at at Texas on the music business and industryGlenn earned his BA in music with a focus University the of from Texas. University in Denton, Woman’s Texas He earnedand MBA from his MS Austin. Services, Television Industry Licensing & Distribution, Content Expertise: Production, TV Content Video & Services,Broadband OTT Services, Music Digital ID: @GlennatParks Twitter ences, and annual service and ences, subscriptions. (IoT),Things expertise entertainment includes the Internet and platforms, media and digital of company’s The home networks, Internetgaming, services, and television mobile applications and services, health, digital support and home control management, services, energy advanced advertising, consumer electronics, consumer apps, security. and systems or contact us at 972.490.1113 visit parksassociates.com information, more For Parks Associates is an internationally recognized market research and consulting and consulting market research recognized is an internationally Associates Parks products and services. technology consumer emerging specializing in company small start- 500 to Fortune from ranging companies capital for research creates Associates in 1986, Parks Founded confer executive workshops, marketups through reports, research, primary custom consumer research, studies, INTERNATIONAL RESEARCH FIRM ResearchResearch && AnalysisAnalysis for Digital Living Technologies
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