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Breaking Windows: It's Time to Change the Movie Release System

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How’s the new golden age of TV working out for you? It got a little better for me this week when I finally hunted down some fantastic beasts.

The Harry Potter-world movie Fantastic Beasts and Where to Find Them came out in theaters in November 2016, but I didn’t catch it then. I blame a husband who would rather have a root canal than see a fantasy movie.

So I waited for it to come to the streaming services. And I waited. After several months it appeared on the transactional services, first as a purchase-only option, then as a rental. I almost bit, and I would have if my viewing queues weren’t packed with things I don’t have time to watch.

But now (as I write this is mid-August), Fantastic Beasts is on HBO, so I recorded it with the Sling TV cloud DVR. If I find a few minutes before Defenders starts up, I’ll actually watch it.

This got me thinking about Hollywood’s windowed release system, which increasingly seems outdated in the age of streaming. The system releases movies according to a set release schedule to maximize studio profits. DVD and Blu-ray sales are declining, but are still lucrative enough that movies come to those formats before premium services like HBO.

Subscription services get a lot of buzz, but look to any of them for recent blockbusters and you’ll be disappointed. Changing that, however, means changing the way Hollywood does business.

Change isn’t as impossible as it seems, though. I spoke about this with Michael Pachter, managing director of equity research for Wedbush Securities, who told me the idea that the release system needs to change is “a combination of patently obvious and wrong.” The system has been in flux since it was created.

When the only distribution points were theaters and TV networks, the window was 14 years. The arrival of premium cable led to an 11-month window, then the VCR led to a 6-month window.

“The windows have consistently shifted for the last 40 years, and undoubtedly will shift again in the future,” Pachter says.

If we take it as a given that the release system will change, the question becomes when?

Changing the theatrical release period upsets theater owners. They’re under enough financial pressure with declining attendance. If potential moviegoers know they can simply wait a few weeks to see a title at home through a service they’re already paying for, then the movie theaters’ decline will accelerate. That’s why one plan for shortening the release schedule involves cutting theater owners in on the streaming profits.

Real change won’t come until studios make more money through new methods of distribution than they do from the old ones, Pachter says. The windowed release system exists for a reason—it works. When something else works better, studios will push for it.

“If managed properly, new windows are additive, even though they clearly cannibalize all other windows,” Pachter says. “It’s the studio’s job to figure out how to add a new revenue stream that maximizes revenues and profitability, and they have teams of people to do the statistical calculations necessary to make that happen.”

When will the streaming services get new releases? When they’re willing to pay more than Hollywood already gets from other sources. For special-effects blockbusters, Pachter doesn’t see that happening anytime soon.

When Hollywood does finally settle on a revised schedule, I suspect it will already be too late. The limited series is taking the place of movies in our consciousness, providing excellent long-form storytelling, and streaming services have become skilled at cranking them out. When Hollywood does finally decide to put its blockbusters online faster, it may find a lack of buyers. How about this, Hollywood: Instead of a Fantastic Beasts sequel, work with Netflix to create a limited series with the same characters. It’s bound to be a buzzed-about, must-watch show, and no one will have to wait to see it.

[This article appears in the November/December 2017 issue of Streaming Media Magazine as "Breaking Windows."]

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