Movies found at a theater near you are likely to be coming to your home a whole lot sooner. In an unprecedented move that has the potential to change the theatrical movie-watching business, Paramount Pictures, the studio behind the Star Trek and Mission Impossible franchises, has signed a deal with AMC Theatres, the second largest U.S. theater chain, and Canadian exhibitor Cineplex to make two of their upcoming theatrical releases available digitally just 17 days after they hit fewer than 300 theaters.
The deal is scheduled to go into effect for the studios’ two October releases: Paranormal Activity: The Ghost Dimension and the comedy horror film Scouts’ Guide to the Zombie Apocalypse. If successful, it could result in the studio negotiating similar deals for other films and additional exhibitors.
The experiment is significant because ever since VCRs were invented, exhibitors have demanded that studios wait three to four months after releasing films in theaters before making them available as either downloads or in DVD form out of fear that consumers would eschew the movie-going experience. But with changing consumer behaviors, additional digital competition from players like Netflix and Amazon, and piracy concerns, studios have long been searching for a way to increase their profits by reducing that sacred time period.
“Everybody understands the changes going on in the marketplace,” said Paramount’s president of marketing and distribution Megan Colligan. “We said if we are going to do this we have to align our interests with the theatrical exhibitors. We require their partnership and we want their partnership.”
In order to make the deal more attractive to the exhibitors, Paramount has offered to share a portion of revenues from its digital downloads and video-on-demand receipts with exhibitors that play the films.
“We view this model as one that first respects the exclusive theatrical model and seeks to maximize it. Then after getting the most consumer demand satisfied on the theatrical platform figures out, for that specific film, how to make it available legally, digitally,” says Elizabeth Frank, Executive Vice President and Chief Content and Programming Officer at AMC Theatres.
“We don’t view this as a shortening of how long movies will play exclusively in theaters. We view it more as innovation in the home entertainment business.”
Paramount is clear that this experiment will not involve its upcoming potential blockbuster Mission: Impossible: Rogue Nation and it’s a model that may not apply to all theatrical releases. Both Paranormal Activity and Scouts’ Guide are smaller-budgeted, narrower-audience films which often burn through their theatrical release quicker than larger, broader-audience films. In fact, in 2012 when Paranormal Activity 4 dropped below 300 theaters, it played for six more weeks but only earned $236,000 out of the film’s $54 million total gross.
Still, it’s not likely this experiment is going to have all exhibitors dialing the phone to sign up. An overall concern remains that the deal leaves the studios with the advantage, especially since theatrical revenue becomes more advantageous to the exhibitors the longer the film is in theaters. That run will now likely shorten since consumers will know they only have to wait a matter of days before the same film is available in their living room.
But the National Association of Theater Owners, the trade group for exhibitors, is cautiously optimistic about the deal. In a statement released today the organization acknowledged their support for the effort.
“We have been calling for years for distributors to work with exhibitors on ways to experiment with release windows that grow the pie for everyone, increase home sales and protect the exclusive theatrical release,” the statement reads. “We are glad Paramount worked with exhibitors on this experiment. Individual theater companies will determine for themselves whether or not this is a model that works for them.”
One thing is clear: There will be a lot more attention paid to Paranormal Activity come this fall.
“Exhibitors will care a lot about how this works for them and they will be evaluating it as much as we will,” adds Colligan. “We will see where we go from there.”