The movie industry has long sought to test “Day and Date” home video releases. It makes some sense from the perspective of the movie company. Some people absolutely won’t go to a theater but they may be willing to pay to watch the movie at home. And when the commercials are out creating desire is when the movie company has the best chance of converting sales. So why not release it everywhere and let the consumer decide where to watch?
Well the main reason is because some people who might prefer to watch at home still go to the theater. So the theaters will lose customers, and to fight this the theaters will threaten not to show movies from studios that go straight to home video, and then the studio has a home video only movie. Which isn’t very exciting.
Due to Covid-19 Universal decided to release Trolls World Tour direct to home video for a $19.99 3 Day rental. The movie grossed nearly $100 million, and the studio kept 80% of that. It’s notable that theaters share about 50% of the ticket revenue with the studios. So to make $80 million from theaters the movie would need to gross $160 million at the box office. The first Trolls movie grossed $153.7 million at the US box office.
So all in all this was a success for Universal. And now they are talking about doing Day and Date releases in the future and AMC is threatening to no longer show Universal movies. My guess is Universal backs down at least temporarily if things go back to the post Covid-19 state of being. That is certainly not guaranteed.
My point of view is that Universal should be careful about extrapolating too much from the success of Trolls World Tour. There are a few reasons why the success of the VOD release had a lot to do with the Covid-19 situation:
Many parents are struggling with home schooling and work from home and a 2 hour diversion that can be watched multiple times over 3 days was more welcome than normal.
The weather was not nice in much of the US which exacerbated the problems above.
Due to social distancing Universal could be relatively sure that the whole neighborhood wasn’t going to come over and watch the movie. But I can totally see families doing date nights to rent a movie for $19.99 and splitting the cost if social distancing weren’t in place.
I also believe the theaters will be hurt badly by this and may eventually close or majorly consolidate, and that will not be good for the movie studios in the long run. AMC may be saving Universal from their own short sightedness in this case.
I do have a suggestion that could work, though. Imagine buying a combo ticket where you go to the theater and for an extra $20 on top of your ticket you can buy it to own at home. Maybe you have to wait 2 weeks after the release date. I can totally see parents going for that.
I also think Disney is uniquely positioned with Disney Plus to do something similar. Disney could sell a movie ticket and access to the movie exclusively within the Disney Plus portal when they are logged in. There is opportunity to do similar things with merchandise as well.
It’s time for everyone in the entertainment industry to get more creative.