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CinemaCon Ignores Early VOD Elephant in the Room

Variety logo Variety 3/31/2017 Brent Lang
© Provided by Variety

CinemaCon opened this year with the movie business at an inflection point. The annual gathering of theater owners and Hollywood studios took place as the entertainment industry inches toward a grand bargain. It’s a deal that could make major releases available on home entertainment platforms within weeks of their openings.

The talks have been taking place behind closed doors for months, at the very highest levels, but instead of engaging in a public discussion about the potential benefits and risks of shaking up the way films are distributed, the convention’s backers opted to ignore the elephant in the room.

Over and over again, studio and exhibition executives waxed poetic about the magic of the movie theater. Nothing, they insisted, beats the communal experience of sitting in a darkened auditorium, popcorn and coke at the ready, as bold new worlds flicker across the silver screen.

Sue Kroll, Warner Bros. marketing and distribution chief, likened movie theaters to “cathedrals” and “temples,” while Mitch Neuhauser, the trade show’s majordomo, rhapsodized that “there’s something about being in the sacred space of a theater.”

Despite their public reverence, privately people in both the exhibition and studio universe acknowledge that the ground beneath the business is shifting. The domestic box office hit a record level in 2016 and ticket sales are strong this spring thanks to such hits as “Logan” and “Beauty and the Beast,” but they are also being lifted by rising ticket sales. Domestic attendance is flat.

Likewise, after years of meteoric growth, the Chinese box office has become earthbound. Ticket sales in the Middle Kingdom were static in 2016, causing the international box office to dip.

Then there’s the technological shakeups currently roiling the entertainment landscape. Netflix, YouTube, and their streaming ilk have conditioned people to expect to watch movies and shows on any device and at any time they want. It’s created an on-demand, all-access universe that makes the exhibition industry seem stodgy in comparison. And Netflix has made no secret of its disdain for the old ways of doing business. Last month, the company’s founder said that the movie business hasn’t innovated in 30 years, conceding only that “the popcorn tastes better.”

That’s not fair. Movie theaters have spent heavily to outfit their auditoriums with oversized recliners, higher quality sound, seats that spray and shake, and have revitalized their concessions stands with alcoholic beverages and snacks that aren’t drowned in tubs of fake butter. And over the four days in Vegas, old media took a few jabs of their own at the streaming giant. After rolling out some visually stunning footage from “Blade Runner 2049,” Sony Pictures chief Tom Rothman quipped, “Netflix, my ass.”

Netflix’s films may not rival the sense of spectacle that Hollywood blockbusters specialize in creating, but there’s no denying that it’s had a profound impact on consumers’ cultural diet. Nor is it alone.

“This disruption is here,” said Hollis. “We can’t avoid it being here, but we can see it as an opportunity.”

Disney does not believe making films available in the home early is one such opportunity. It makes “Star Wars” movies and “Avengers” adventures, films with a scope and scale that still pack ’em in. Its big studio brethren disagree. They view offering these films on-demand for $30 to $50 a rental within a month or so of their debuts as a chance to capture audiences between the ages of 25 and 39. This demographic is making up a smaller piece of the box office pie — perhaps because they tend to have younger children, making out-of-the-home entertainment less tenable. What they do have is more disposable income. Some theater owners fear that shortening their exclusive access to films will cannibalize their business, but they are at least willing to negotiate. It helps that studios are offering to give them a percentage of the digital revenues as an incentive.

Yet, windowing, industry jargon for the amount of time that separates a film’s theatrical debut and its home entertainment launch, made only a few cameo appearances. Kroll made a few nods to the talks, praising the value of forging a compromise.

“Where there is demand somebody is going to step in and fill that void,” she said, adding, “together is the way to move toward a future that will be better and beneficial for all of us.”

In an ironic twist, it was Amazon, one of the new digital players in Hollywood, that offered up the most full-throated endorsement of the traditional way of doing business. Unlike Netflix, the company is putting its films in theaters, believing that it gives them a patina of quality that consumers embrace.

“We promised to be one of your key suppliers and we stayed true,” said Jason Ropell, vice president of worldwide motion pictures. “We believe in the theatrical window fully for our releases. Our Amazon Prime customers want to see great movies, and great movies play in theaters.”

Despite the overarching, if unacknowledged, sense of change, there were reasons for optimism. Disney, with its arsenal of Marvel, Pixar, and Lucasfilm, seems positioned to dominate the box office through the next few years. Universal and Illumination Entertainment have made themselves into a family film juggernaut thanks to “Despicable Me” and “The Secret Life of Pets.” Warner Bros. appears to be shaking off some of the creative torpor it has labored under in recent years, with concept art for “Aquaman” and an extended look at “Wonder Woman” hinting that the studio may have finally figured out how to make watchable DC Comics films. And Fox stunned exhibitors with a diverse and compelling slate of films such as Kenneth Branagh’s “Murder on the Orient Express,” Francis Lawrence’s “Red Sparrow,” and the Hugh Jackman musical “The Greatest Showman.”

Stacey Snider, Fox’s film chief, said it was all part of a strategy of “putting filmmakers first,” and pledged to “take more risks, push more boundaries, and offer films that are fresh and unique.”

That’s all to the good, but it’s possible to praise these companies’ ingenuity and filmmaking prowess while also acknowledging the very real issues they face. There’s been a great deal of chatter about the vanishing millennial moviegoers, and data does suggest that they remain a vital part of the cinema audience. Some of the focus may have been on the wrong generation. Generation Z, the children of the aughts, grew up in a different era — one in which mobile devices were ubiquitous, PewDiePie was as big a star as Tom Cruise, and the internet was a vital part of their known world. They’re not just accustomed to streaming movies. They like shorter, shareable, bite-sized content, some of it shot with nothing more than an iPhone. Does film and, in particular, the movie theater speak to them?

Neuhauser closed out his welcome to theater owners with these words: “Long live the cinematic experience.”

That he had to offer that kind of rallying cry suggests there’s doubt about just how long this art form will endure.

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