As Box Office Revenue Starts To Return, Billions Hang In The Balance As Studios Juggle Streaming With Traditional Sell-Thru And Rental Market

Chuckle all you want about the last Blockbuster and its “be kind, rewind” smiley-face stickers. Nostalgic jokes aside, though, the arena once known as home video (digital sell-thru, rentals and even, yes, physical discs) remains a key variable in the Hollywood film equation — particularly now, as studios retool their streaming strategies and lean into the box office revival.

“It used to be fairly predictable – the cadence was familiar despite the differences between the films,” said Jason Spivak, EVP of Worldwide Digital Distribution at Sony Pictures Home Entertainment, in an interview. “Now, it is very divergent.”

For many years, a top-level home entertainment exec at a different studio added, “Everyone followed the same formula. It was 74 days after theatrical when movies would go to sell-thru and then two weeks later on to rental. Now, with all of their different asset mixes and objectives, studios are all doing something different. It’s been very fluid.”

As Hollywood tries to regain its equilibrium, there is a good amount at stake. In 2022, sales and rentals across transactional VOD and disc and digital sales, brought in almost $6.3 billion, according to the Digital entertainment Group, a consortium of studios, tech vendors, retailers and other stakeholders. Subscription streaming is a far larger line item now, thanks to the entry in recent years of Disney+, HBO Max, Paramount+, Peacock and others into the direct-to-consumer race against Netflix. Total SVOD revenue hit $30.3 billion last year, according to the DEG. SVOD surged 17% over 2021’s tally, while rentals declined 15% from last year and combined digital and physical sales dropped 8%.

Reckoning with the streaming frenzy on top of the pandemic has brought the industry to a crossroads, even if its not the kind that tends to grab headlines. Drastic moves like WarnerMedia’s call to put the 2021 Warner Bros slate on HBO Max at the same time films opened in theaters or Disney’s late, un-lamented Premier Access window, are safely in the rear-view mirror. Still, even with North American box office tracking 37% ahead of last year’s year-to-date level and optimism returning about the power of theatrical to drive downstream revenue, studio execs have been vexed by the best patterns to deploy once films leave the big screen.

Consider the unique routes of some recent releases. Black Panther: Wakanda Forever, which made well over $800 million at the Global box office after its release last November, hit both Disney+ and sell-thru on the same date in February. Apart from showing up at Redbox kiosks, though, the film has yet to become available for rental. Disney, which has abandoned the Premier Access upcharge model it used during the pandemic, is in the midst of a rethink about Disney+ since Bob Iger returned as CEO last fall. It seems difficult to envision a repeat of Encanto, which enjoyed only a month in theaters from Thanksgiving to Christmas in 2021, grossing $257 million globally before bouncing to Disney+.

A more recent family title, Puss in Boots: The Last Wish, debuted on January 6 as a premium VOD and sell-thru title, a bit less than three weeks after its theatrical debut. Starting Friday, it will be on Peacock, in keeping with the NBCU service’s pay-1 window setup, before moving to Netflix later this year and then returning to Peacock.

Some executives with skin in the game think money is being left on the table by favoring streaming, though NBCU sources assert that Universal is converting more box office to home entertainment revenue now than it did pre-pandemic. (PiB: Last Wish has had remarkable legs despite its availability beyond theaters, with $442 million in ticket sales to date.) Bill Rouhana, the CEO of Chicken Soup for the Soul Entertainment, which acquired Redbox last year, spoke to Deadline “completely out of self-interest” about his belief that a market adjustment is in order.

“The minute a piece of content hits your SVOD, it no longer has any value,” he argued in an interview. “You should get money out of content in every way you possibly can and if you don’t, if you’re a studio and you’re jumping over a window that’s available to you, first of all you’re not making a very good self-interested decision. And second of all, you’re really not meeting your obligations to your participants to maximize the value of what they helped create. This is not a new idea that I’m articulating. It’s been the premise of the business for a century.”

The billions hanging in the balance, Rouhana went on, are “not a small amount of money, for studios or for participants. That’s real money. If you’re talking about a window, which is traditionally four to six weeks – deferring for four to six weeks the arrival of a film on your SVOD, you’re really giving up $6 billion for that? Does that seem like a reasonable trade to you? If I were a participant, I’d be furious about that.”

More than a year after the end of the WarnerMedia experiment known as Project Popcorn, Rouhana said the recklessness of that move has not received a full reckoning. Because talent was made whole with rich payouts that treated every release as though it were a sizable hit, a sense of complacency and pandemic expediency took hold.

“Everybody suddenly thought that was a good business practice,” Rouhana said. “Nobody thought to look at the numbers. And now that the World makes it possible to be theatrical again, they need to get their heads straight about this idea that there is this other window to protect.”

One distribution veteran who has been a combatant in the streaming wars says the notion of consumers choosing to rent a movie as opposed to “giving blood” by agreeing to a recurring monthly payment could help keep the transactional window viable. “With more and more SVOD services, the value of VOD still comes into play,” the exec says. “It is already difficult to find what you want to watch – there’s a sense of relief when you find something and it’s a six-dollar, one-time commitment. You don’t have to work that whole equation in your head, like, ‘Wait, do I have Paramount+ and can I just watch this for free?’”

Based on conversations Redbox has had recently with its studio partners about the idea of preserving a rental/sell-thru window, Rouhana said he believes “they’re coming around to it.” He hopes a four-to-six-week window before SVOD will become more common.

Sony’s Spivak says the studio is “bullish” about traditional home entertainment over the long term and sees his studio’s reliance on a minimum 46-day theatrical exclusive boosting those later windows. Sony, which does not have a subscription streamer of its own, made a pact with Netflix to have its titles move there for their pay-1 window starting in 2022. The Woman King, which collected $94.4 million in theaters last fall, used its profile as a wide-release awards contender to become a top-two rental at Redbox kiosks and then a top-3 film on Netflix in the U.S., per Nielsen’s weekly charts.

While Sony’s model establishes a basic framework, Spivak added, setting the right strategy is no longer a plug-and-play process. “The competitive environment is so much more complicated than it used to be,” he said. “The films have always been competing against each other, but now there’s one set of competitors in theaters and then a whole different group of new releases on streaming services that we have to keep in mind.”

Originally published at

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