For today’s film exhibitors, this ruling couldn’t come at a worse time.
In a decision predicted here last April, today a Federal Judge ruled in favor of the major studios, allowing them to own the theaters where their films are exhibited, for the first time since 1949. This game-changing decision could result in a complete overhaul of not only who owns theater chains in the near and long-term future, but how, when and where consumers will enjoy feature film content. In yesterday’s system, the movie chains stood separate and apart from the studios. Broadly speaking, the way it worked was that the movie chains got an exclusive window – usually 90 days, although that window is getting smaller and smaller in recent deals and developments – with the films they exhibited, before the studio then exploited those same titles on various other platforms, such as PVOD, SVOD, premium cable, hotels, airlines, broadcast television, etc. The movie chains received approximately 50% of the value of each movie ticket, with the other 50% going back to the studio. The system has been the source of major tension for over a decade, as movie studios routinely spend over $100 million (and often, much more) on their film spectaculars, along with marketing budgets that often equal the price of the movies themselves. The chains benefit from the huge marketing spend, while the studios argue that they must re-market these same titles, once they leave the theater. It’s been an uneasy alliance, at best, as studios have sought to reduce the window of exclusivity for theater chains significantly, so they’re able to take advantage of multiple revenue streams as they market their film titles to the public.
