Mar 17, 2020 - Economy & Business

Coronavirus forces Hollywood into uncharted territory

Illustration: Sarah Grillo/Axios

The traditional buffer that protects movie theaters from being undercut by streaming may be temporarily collapsing as Hollywood tries to salvage releases that would've otherwise been lost during the coronavirus epidemic.

Why it matters: The 90-day theatrical window — the period of time typically allocated to theaters to air movies exclusively before they go to streaming — gives theaters an edge over streaming services and helps them attract movie fans in-person.

  • But in recent years, new digital film studios, like Netflix and Amazon Prime Video, have put pressure on theaters to reduce that window.

Driving the news: Universal Pictures, one of Hollywood's biggest traditional studios, announced Monday that it will introduce a rollout strategy that's similar to a digital movie company, like Netflix — at least for the time being.

  • The studio said it would soon be making movies like "Trolls World Tour," "The Hunt," "The Invisible Man" and "Emma" available on-demand for a 48-hour rental period at the same time as they're in theaters.
  • “We hope and believe that people will still go to the movies in theaters where available, but we understand that for people in different areas of the world that is increasingly becoming less possible,” NBCUniversal said Monday in a statement.
  • Disney said it would release "Frozen 2" to Disney+ customers three months ahead of schedule schedule beginning this week, although that move will not impact Disney's theatrical window, as the movie was released in theaters last year.

Our thought bubble: Even though box office experts anticipate that the window will eventually go back to normal after the pandemic is over, the swift move by Universal feels like it could be the first small step towards shifting distribution power from theaters to streamers.

  • "[T]he habit of going to movies, that's going to come back," says Comscore senior media analyst Paul Dergarabedian. Dergarabedian says that we should still expect people to want to experience high-profile franchises in theaters after the virus settles.
  • Still, theater executives would argue that it’s difficult to think of these efforts as breaking the theatrical window when theaters are technically closed.
  • In the interim, NBCUniversal says it will continue to evaluate the environment "as conditions evolve" and will "determine the best distribution strategy in each market when the current unique situation changes."

Between the lines: Theaters around the globe are being forced to shut down due to coronavirus fears. Theater chain stock performance has taken a huge hit as a result.

Data: Yahoo Finance; Chart: Andrew Witherspoon/Axios
  • Regal Cinemas said Monday that it would close all U.S. theaters until further notice.
  • Shortly after, AMC Theaters said it would close all of its U.S. locations for 6 to 12 weeks beginning Tuesday.
  • State officials have mandated closings in many of America's biggest cities, including New York and Los Angeles.
  • In the U.K., theaters began closing doors on Monday following a government directive.

U.S. closures began shortly after President Trump issues new guidance Monday recommending that all Americans avoid gatherings of more than 10 people. Some theaters have implemented partial capacity plans to adhere to guidelines around social distancing, while others face collapsed attendance altogether.

By the numbers: North American box office revenues hit a 20-year-low this past weekend, in light of the widespread coronavirus that's impacting theater attendance and movie releases.

  • Overall, The Hollywood Reporter estimates that the total North American Box Office hit could total to $20 billion due to the coronavirus.

What's next: Sources say that there's an increasing likelihood that almost all of the major theater chains will be closed within the week.

  • Studios are beginning to halt production on major films and TV shows in order to protect employees from the virus spreading.
  • Others have pulled major films off of their schedules altogether.
  • Several Hollywood figures have tested positive for coronavirus, including Tom Hanks, Rita Wilson and Idris Elba.

Go deeper: Movie industry braces for major hit due to coronavirus

Go deeper

Free content gives relief to parents juggling kids and work at home

Illustration: Rebecca Zisser/Axios

Media outlets and e-learning companies are opening up access to free kids' content, tools and resources to parents who are struggling to entertain their kids at home while also working remotely.

Why it matters: As schools and offices both shut down because of the coronavirus outbreak, parents are trying to figure out how to do two full-time jobs at once. Access to free content and educational programs can help reduce that burden.

Tech shapes a new stay-at-home economy

Illustration: Sarah Grillo/Axios

As the coronavirus crisis forces daily life across the U.S. into a new homebound template, the tech industry is swooping in to reshape how we shop, eat and entertain ourselves.

The big picture: Trends toward e-commerce, delivery services and online entertainment have long been underway, but this moment is accelerating them — and pushing the companies and industries behind them into a new position of dominance.

Media and entertainment industries pleased with coronavirus stimulus

Illustration: Sarah Grillo/Axios

Nearly every segment of the media and entertainment industry, including movies, television, radio, news outlets and more, says it feels at least somewhat relieved by Congress' $2 trillion coronavirus stimulus package that the House is expected to vote on Friday.

Why it matters: The media and entertainment sector is heavily reliant on out-of-home venues, freelancers and in-person staffing. As a result, the industry has been completely upended by the COVID-19 pandemic.