Way back when life was simple, we merely needed to remember to return the VHS rentals on time and, of course, to “be kind and rewind.” The video store new-release wall was our news source for the latest content, and you could buy some artificial butter-flavored microwave popcorn at the checkout counter. Movie release windows were also rather straightforward, so we could expect to find a movie at the video store six months after its theatrical release.
Fast-forward to the present day, with many pandemic protocols no longer in effect, the box office has returned and we’re left wondering when and how we’ll be able to watch popular new movies at home. Paramount had us wait three months for the digital release of 2022’s smash hit “Top Gun: Maverick” and MGM just made “Creed III” available on digital home video. Given that it’s among the highest grossing sports films of all time, we were lucky to get a condensed 28-day theatrical-to-home window. Gone are the days of the khaki-pant-blue-and-yellow-shirt simplicity of Friday night video rentals at your local Blockbuster. New release windowing decisions no longer follow a one-size-fits-all strategy. More to the point, getting it right can be the difference between financial success and ruin for movie studios.
Enough reminiscing – let’s get to the business of today’s movie distribution strategies. It’s clear that inflation is affecting consumer spending, across the board. While some continue to pay for premium content, others can’t or just don’t. Higher income households earning more than $100,000 a year are propping up premium content sales – not just a little, but with a 50% greater propensity to pay those theater-ticket-like prices to buy or rent in the early digital-release window. Studios don’t want to miss that premium boat, as there’s money to be made and consumers to please. But I suggest taking a hard look at those concurrent subscription video on demand (SVOD) and transactional release strategies to determine if they are maximizing revenues or leaving money on the table.
You could find the answer varies based on a film’s popularity: Non-tentpole titles might need a shorter release window so they benefit from the theatrical marketing. On the other hand, tentpole titles can sustain a longer release window as they remain top-of-mind. Notably, Paramount waited four months between the transactional digital debut of “Top Gun: Maverick” and its release on Paramount+, which was seven months after the theatrical marketing campaign. Since it was “Top Gun,” this long delay didn’t impact demand as the buzz lasted. The bottom line: make sure your strategy is buttoned up.
Franchise title drafting has also become more complex. It’s no longer as straightforward as having the “Rocky” DVDs on the shelf next to “Creed III,” when it comes out. There are existing streaming licenses to contend with and release timing to consider. Here’s an example to contemplate: data courtesy of Circana’s “Subscription Video Track” research. “Rocky IV” rolled onto Netflix on August 1, 2019. By the end of the month, Netflix subscribers streamed 10.3 million hours of the film series. (I would have bet on “Rocky IV” to top the list, but “Rocky I” beat it by one million hours.) Nevertheless, the roll-on timing hit a dead window, a long eight months after the “Creed II” theatrical release. That is, the catalog films did not have the opportunity to benefit from the audience generated by the franchise’s new release. Then on January 1, 2023, the film series came back to Netflix a month before “Creed III” hit theaters – and right in the midst of its marketing campaign. This buzz led to 87% more hours streamed than in August 2019. While Netflix benefitted from the release timing, it’s unclear if the studio also benefited by charging more for the license fee.
On top of all that, executives are navigating “non-exclusive licensing strategies,” which is quickly becoming the industry buzz term of 2023. This strategy has created a scenario in which there is a lot less of, “the only place to watch.” If you want to tune-in and catch up on the “Rocky” films before going to see “Creed III,” try Netflix, Amazon Prime, Paramount+, MGM+, Tubi, or Pluto TV; browse your streaming services and you can’t miss it. Using exclusive content to bolster subscribers is “so 2022,” as the industry is returning to the decades-old, tried-and-true approach of maximizing content monetization. And that means broader access and less title exclusivity for non-tentpole releases. We’ve been researching this a bit and can tell you that the engagement hours for the same program are far from equal across streaming services. Sit back for a moment and think about how, if at all, that should factor into the cost to license the content.
So, what will release windows look like in the future? Well, that’s what we’re all working to figure out. Not every streaming service will be able to procure more than 200 million subscribers, so expect more bundles and specialization. That is, viewers could start to see a service, such as Prime Video, as the new Blockbuster for movies. Indeed, 40% of Prime Video’s 2022 streaming hours were from movies, compared to 24% for Netflix and only 2% for Hulu. Streaming platforms can’t be everything to everyone, so expect to see differentiation.
Business strategy aside, maybe we all need a trip back to the 90s to visit the last Blockbuster in Bend, Oregon. I’m pretty sure grunge rock and flannel have never gone out of style there.
John Buffone is a vice president and industry advisor at Circana (formerly The NPD Group and IRI). With over 25 years of experience in the consumer research and entertainment industries, John has advised many of the largest media and consumer technology brands in the industry.
He offers his industry expertise on trends that focus on how connected devices are rapidly changing the way consumers use technology at home and on the go. His research focuses on the confluence of digital content distribution and consumer electronics trends.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce Video staff. They do not represent the opinions of Fierce Video.