In 2011, movie studio Universal Pictures announced that it would be carrying out a test: It would put out its new film, Tower Heist, on video-on-demand just three weeks after releasing it in cinemas.
The move was doomed. Cinemas were furious. AMC, Regal, and Cinemark announced that, if Universal went ahead with the test, they would simply not play the film. Chastened, Universal capitulated and the “test” never went ahead.
Things have changed. Over the last year, cinemas have had no leverage, and studios have been able to carry out the streaming experiments they’ve been pondering for the past decade. But far from opening up a brave new era of home entertainment, these experiments have actually shown Hollywood studios that, yes, they do still need cinemas—at least if they want to make the globe-spanning blockbusters that pull in the big bucks.
Studio responses to the pandemic have varied. Some, lacking popular streaming platforms, have made deals with companies that do: Paramount sold Coming 2 America to Amazon for $125 million; Sony sold Tom Hanks’ Greyhound to Apple TV+ for around $70 million.
Others have used the pandemic as a chance to release films on their own platforms. Disney, for instance, has churned out a glut of movies on Disney+, including Mulan, Soul, and Raya and the Last Dragon. AT&T, which owns Warner Bros., has released multiple films—like Wonder Woman 1984 and Godzilla vs. Kong—in theaters at the same time as on its streaming service HBO Max, and plans to continue this throughout 2021 with Mortal Kombat, Dune, and The Matrix 4.
Filmmakers have lined up to criticize this practice: Denis Villeneuve, director of Dune, publish an op-ed in Variety claiming the move shows “absolutely no love for cinema,” while Christopher Nolan said that “some of our industry’s biggest filmmakers and most important movie stars went to bed the night before thinking they were working for the greatest movie studio and woke up to find out they were working for the worst streaming service.”
It’s not hard to see why streaming would be attractive to studios: If you beam a film directly to people’s homes, you don’t have to share your profits with cinema owners. “Studios have been trying for about 10 years to carry out this experiment, but they weren’t allowed to because cinemas boycotted their films if they did anything like that,” says David Hancock, a film analyst at Omdia. “They’ve been making up for ten years worth of experimentation that they couldn’t do.”
While these experiments have yielded different results for different films—Greyhound did well, Raya and the Last Dragon flopped—there’s been a clear takeaway. Hollywood still needs cinemas, and it needs us to return in our droves as they reopen across the world. Omdia’s research shows that video on demand claimed $1 billion in consumer spending globally in 2020, which pales in comparison to the $30 billion lost by cinema over the same period.
For big blockbusters, streaming simply cannot match theaters. The new James Bond movie, No Time to Die, is instructive here. The film, to be distributed by MGM in America and Universal in the rest of the world, has been postponed repeatedly because of the pandemic. In October 2020, rumors (which MGM denied) began to circulate that the studio was shopping the film around to streaming platforms for $600 million; no one bought it, explains Hancock, because it was way too expensive. It’s questionable whether streaming will ever bring in enough revenue to make blockbusters like Bond, which could gross more than a billion dollars, a viable proposition.