Theatrical Life after the Coronavirus Pandemic: Trolls World Tour and the Collapsing of Hollywood’s Window System

Kimberly A. Owczarski

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Amidst a global pandemic in April 2020, media analysts debated the significance of an upcoming film release for the future of cinema: Trolls World Tour (dir. Walt Dohrn, US, 2020). On the surface, the sequel to the highly successful Trolls (dir. Mike Mitchell, US, 2016) seems like standard kids’ picture fare with cute, colorful characters and catchy musical numbers, features which hardly spell a game-changer for Hollywood. But as Universal faced significant challenges posed by the coronavirus epidemic, the distributor chose an alternative path for the film. Indeed, Universal decided to release the film in theaters (the few still operating in the US) and on premium video-on-demand (PVOD) simultaneously. Charging $19.99 for a 48-hour rental period, Universal skipped the exclusive first window Hollywood films typically enjoy in theaters. As the industry reeled from the effects of the coronavirus pandemic, Universal’s decision to release Trolls World Tour in the PVOD market signifies a substantial shift in the life cycle of contemporary films for both Hollywood studios and the exhibition sector alike.

While the COVID-19 pandemic caused many adjustments to theatrical releases, the life cycle of studio-produced films—the window system—has evolved throughout Hollywood’s history when major disruptions have occurred. During the studio era prior to the 1950s, the run-zone-clearance system ensured that Hollywood-produced films played through the studio-owned theaters in large cities first, then subsequently moved to smaller theaters and markets around the country over a period of many months.[1] While not labeled as such at the time, the early structure of the industry functioned as a rudimentary window system by generating the most income in that first run-zone. As Douglas Gomery notes, “Prior to 1950, movie theaters provided the lone source of revenues” for the studios.[2] After the Paramount Decree by the Supreme Court in 1948, the studios were forced to divest their theaters. But the primary business model of run-zones remained mostly intact for decades, with the studios receiving a considerable portion of ticket sales. As television bloomed in the 1950s, the studios did find a second window for films via the nascent television stations and networks desperate to fill airtime. As scholar William Boddy observes, movie studios such as Columbia and Warner Bros. earned $9.7 million and $15 million, respectively, by leasing older titles to television in 1956.[3] Thus, even with the run-zone system fairly intact in the post-Decree environment, the studios found additional ways to generate income from their films.

It was not until two decades later that the theatrical release and window systems were altered significantly. Scholar Thomas Schatz argues: “If any single film marked the arrival of the New Hollywood, it was Jaws.”[4] After the record-breaking theatrical release of Steven Spielberg’s film, the studios adopted the saturation release strategy Jaws (US, 1975) had employed so successfully, opening their films simultaneously in as many theaters as possible nationwide. In addition to the release of Jaws, 1975 was also the introduction of the Sony Betamax and the launch of pay cable network HBO on the Satcom I satellite. Both of these technological developments shepherded additional windows for Hollywood films; by 1986, home video and pay cable accounted for 40% and 12% of a film’s total revenue, respectively.[5] Over the subsequent decades, pay cable networks have abounded and video cassettes gave way to digital versatile disks (DVDs), but those windows remained profitable venues for studio fare. With the arrival of streaming services such as Netflix and Hulu in 2007, the studios found yet another window as these emerging services sought films for their growing libraries. Despite these many options, the theatrical experience has remained paramount for the studios as it “generates the most visibility for a film, and even if it is a ‘loss leader,’ theatrical exhibition contributes to generating revenue in all of the other ways.”[6]

While the theatrical experience has remained the first and primary window for studio films, the timeframe for subsequent windows has been shrinking since the introduction of the DVD player in 1997. The arrival of on-demand and streaming video options, like Netflix in 2007, have further reduced this timeframe. In 1997, the average video release window occurred five months and twenty-two days after a film’s theatrical release date; in 2007, that timeframe shrank to four months and nineteen days; in 2019, the average was down to two months and twenty-one days.[7] For the studios, the collapsing of this window allows the opportunity for more efficient marketing of the films, the faster turnaround to subsequent windows in which to generate revenue, and the ability for films to reach owned subsidiaries, such as a streaming service, at a quicker pace. However, the shrinking window offers less benefit to the exhibition sector as consumers now debate whether the high prices, annoyances from other patrons, and limited viewing options are worth the trip to the theaters. Indeed, box office admissions have declined in the last decade, from 1.34 billion admissions in the domestic marketplace in 2010 to 1.24 billion in 2019.[8] Brett Lang’s cover story for Variety in March 2017 described the movie theater business as headed towards a “reckoning” due to “heightened competition from small screens, flat attendance, and an early VOD gambit.”[9]

Since that story ran, streaming services have only grown more entrenched in American culture as well as with consumers worldwide. Consumer spending in the US on digital entertainment (which includes subscription streaming services, VOD, and sell-through) grew 24% from 2017 to 2018 and 34% in international markets in that same time frame.[10] Fueling this growth is not only the availability of these services, but also the range of experiences they provide. As scholar Elissa Nelson notes, “Digital options offer immediacy of access, ease of acquisition, multiple screen/device capabilities, and increased portability on mobile devices” compared to both movie theaters and physical media such as DVDs.[11] In 2019, consumer spending on subscription services in the US reached $16.2 billion, surpassing the domestic theatrical box office by almost $5 billion.[12] Hollywood studios have relied on these services as secondary windows for their films, and streamers use the studios’ big name products as marquee titles to entice and retain subscribers.

While the studios have been hesitant to release marquee titles simultaneously in theaters and through digital services, independent filmmakers and distributors have taken advantage of the growing availability of streaming in that regard. In many parts of the US and around the world, there are no theaters which regularly show independent, art, or foreign cinema. Scholar Sarah S.E. Sinwell notes that “On-demand and streaming services such as Netflix, Amazon, iTunes, and Hulu are replacing satellite dishes and enabling new audiences to have access to indie and foreign films that they would not be able to access theatrically.”[13] Filmmaker Ava DuVernay has argued that the instantaneous global availability of a streaming service like Netflix has allowed her films to reach more markets than the films she has directed for Hollywood studios.[14] While day-and-date releases involving PVOD and streaming services have helped filmmakers reach audiences in the US and abroad, the availability of these services has certainly impacted the fortunes of indie theaters, particularly in US urban areas. In March 2019, a Variety article discussed indie theaters’ “battle to survive” named rising rents, aging audiences, the diminishing availability of amenities, and the emergence of streaming services as some of the major challenges facing indie theater owners at present.[15]

The larger theater chains may not face all of these same challenges as their indie counterparts, but the increased number of streaming services and the rising amounts of subscribers are troubling developments for the future of filmgoing. Indeed, as the Hollywood studios announced and/or launched their own streaming services in 2019 and 2020, original films were often among the first releases available. For example, among the initial properties accessible on the Disney+ streaming service were a remake of Lady and the Tramp (dir. Charlie Bean, US, 2019), historical drama Togo (dir. Ericson Core, US, 2019), and a Christmas-themed film, Noelle (dir. Marc Lawrence, US, 2019). These films may not have performed well in a theatrical release had they been given one, but they signaled that Disney’s focus on its streaming service would include features that, in the past, would have premiered in theaters.

Thus, prior to the rapid spread of the coronavirus in the US in March 2020, movie theaters already were experiencing myriad challenges. As the pandemic reached the US, movie theaters were among the first media businesses to be impacted significantly. By March 16th, three of the largest chains—AMC, Regal, and Cinemark—had shut down all of their theaters with many other chains quickly following suit.[16] The studios largely re-scheduled tentpole films to later in the year in anticipation of a healthier theatrical market in the US and globally; for example, Disney initially rescheduled its live-action film Mulan (dir. Niki Caro, US, 2020) from its original release date of March 27th to July 24th.[17] In a few cases, the studios decided to forego a theatrical release altogether and sold finished films to established streaming services, as Paramount did with romantic comedy The Lovebirds (dir. Michael Showalter, US, 2020) whose rights went to Netflix.[18] But the film that received the most discussion was Trolls World Tour after executives at Universal made the decision to release the film in theaters and via PVOD on the same day, April 10th, thus collapsing the window system. In announcing the release strategy, NBC Universal chief executive officer (CEO) Jeff Shell claimed that this move would give consumers an opportunity to view the film despite the difficult circumstances: “Rather than delaying. . .or releasing. . . into a challenged distribution landscape, we wanted to provide an option for people to view these titles in the home that is both accessible and affordable.”[19] At $19.99, Trolls World Tour was priced below what the average family of four might have spent at movie theaters to see the film, all within the comforts of home.

Theater owners expressed anger in response to Trolls World Tour’s release strategy. John Fithian, the head of the National Association of Theatre Owners, stressed that “Universal on Trolls [World Tour] undermined the theatrical model,” and, in what seemed like a threat, that “Exhibitors will not forget this.”[20] A month later, both AMC Theaters and Cineworld (owner of Regal Entertainment) announced a ban on Universal-distributed films in the future.[21] Adam Aron, chairman and CEO of AMC Theaters, indicated that the response was because “Universal is the only studio contemplating a wholesale change to the status quo” of theatrical releases.[22] Indeed, Shell announced a day prior that Trolls World Tour performed so well that it “exceeded our expectations and demonstrated the viability of PVOD. . . . As soon as theaters reopen, we expect to release movies on both formats.”[23] Shell did not specify which films would use that strategy, but his words were enough to rattle theater owners already reeling from substantial losses due to the pandemic-induced theater closures.

We will never know how Trolls World Tour would have performed in a traditional theatrical release due to the virus’s impact, but exhibitors certainly felt the film’s eschewing of the window system was a blow to their bottom lines. In December 2019, Cineworld CEO Mooky Greidinger claimed that the film was among the potential bright spots of the 2020 theatrical calendar.[24] Universal had mounted a large marketing and merchandising campaign for the film, which often brings a strong box office performance. In January 2020, Trolls World Tour toylines and merchandise began to hit stores, ranging from licensed LEGO and Mattel toys to product partnerships with Build-a-Bear, Crayola, and Johnson & Johnson, among others.[25] The single “The Other Side” featuring Justin Timberlake and SZA was released in February 2020 to build buzz for Trolls World Tour, while producer and star Timberlake made rounds on talk shows to promote the film. While the film was not expected to surpass the box office of its predecessor (which grossed $154 million in domestic theaters), box office analysts expected it to generate $81 million in revenue.[26] In addition to a percentage of those revenues, theater owners would have benefitted greatly from the sale of concession items, particularly given the number of children who would have attended screenings.

Universal’s decision to forego the traditional window system with Trolls World Tour does have larger ramifications for the industry beyond its effect on movie theaters. As part of the Comcast conglomerate, Universal has multiple pipelines to ensure that its products can be accessible to consumers. By using Comcast PVOD services in markets across the US, Universal kept 80% of the film’s generated revenue, versus the typical 50% average split with exhibitors seen with the theatrical window.[27] With the film generating $100 million in revenue in its first three weeks available on-demand, the $80 million Universal received outpaced the $77 million it earned from the total theatrical release of Trolls in domestic theaters in 2016.[28] Beyond its PVOD performance, Trolls World Tour was one of the most recent feature films available on the Comcast-owned Peacock streaming service when it launched in July 2020. It served as one of the marquee titles for the kids programming area of the new service, which made Peacock more competitive in that market. Indeed, kids programming has been deemed the “secret weapon for keeping [streaming] subscribers,” particularly as schools, camps, and daycares remained closed or virtual due to the pandemic.[29]

In the wake of Universal’s decision to forego an exclusive theatrical experience for Trolls World Tour, two other studios followed suit with kid-oriented features: Warner Bros. with Scoob! (dir. Tony Cervone, US, 2020) and Disney with Artemis Fowl (dir. Kenneth Branagh, US, 2020). Scoob! was available initially on PVOD for $19.99 for a 48-hour rental or $24.99 as a digital download. After a few weeks, the film shifted to the new Warner Media streaming service HBO Max in June 2020. Artemis Fowl premiered directly on Disney’s streaming service, Disney+, in June 2020. With the coronavirus pandemic affecting children’s schedules, Disney’s President of Content and Marketing stressed that Artemis Fowl is “great family entertainment that is the perfect addition to Disney+’s summer lineup.”[30] Similarly, Warner Bros. CEO Ann Sarnoff claimed that the studio was “delighted we can deliver this feel-good movie for families to enjoy while they’re home together.”[31] Both films are similar to Trolls World Tour in their target audience and franchise base—Scoob! from decades of Scooby Doo cartoons and Artemis Fowl from the best-selling book series. And yet, these films did not face the same wrath from exhibitors as the Universal film did.

The silence towards the releases of Scoob! and Artemis Fowl may have been because exhibitors realized that fighting with the studios about the theatrical experience is a losing endeavor. Theater chains certainly do not want to miss the opportunity to present the DC Comics franchise films distributed by Warner Bros. or the Marvel Comics and Star Wars franchises produced by Disney in the future, as they are among the highest revenue-generating films annually. Indeed, both studios have announced future release dates for their biggest properties, suggesting that not all of their films will head directly to their streaming services first. The ban towards Universal films will likely not be enforced by AMC Theaters and Regal, either, as the high-grossing Fast and the Furious franchise and the DreamWorks-produced kids’ features are distributed by Universal.

While the exhibition business is highly dependent on marquee titles to deliver ticket sales, the theatrical experience is becoming less of a necessity for the studios. For example, high-profile original content from Star Wars is already debuting on Disney+ rather than theaters, with merchandise from the TV series The Mandalorian selling rapidly and several upcoming spinoff series from the Marvel Cinematic Universe appearing in 2021. After multiple delays with its theatrical release, Disney chose to move its marquee title Mulan to a PVOD model offered on Disney+, charging $29.99 for a digital copy of the film. Mulan was responsible for a 68% increase in downloads of the Disney+ app the week it was released.[32] The big-budget film demonstrated a key shift away from the theatrical model, with Disney benefiting from keeping “100 percent of sales revenue, 100 percent control over how people watch the movie, and 100 percent of user data.”[33]

The Hollywood studios have continued to see huge successes by using PVOD and VOD models during the pandemic. In addition to Artemis Fowl and Mulan, Disney has released The One and Only Ivan (dir. Thea Sharrock, US, 2020) and Hamilton (dir. Thomas Kail, US, 2020) on Disney+ despite plans for initial theatrical runs. Hamilton’s release on the streaming service, in particular, drove a 74% increase in downloads of the app in the US and nearly 47% worldwide.[34] HBO Max picked up the Sony-produced comedy An American Pickle (dir. Brandon Trost, US, 2020) starring Seth Rogen in April 2020 as its first original film to be released on the service. Sony also sold World War II drama Greyhound (dir. Aaron Schneider, US, 2020) starring Tom Hanks to AppleTV+ in May 2020. While numbers are not currently available for either of the Sony films, their pickups by new streamers suggest that Hollywood-produced films are important drivers of consumers to these subscription services. These films also show a wide range of properties eschewing a theatrical release; from kids’ pictures to documentaries, and from adult comedies to dramas, the studios have found successful alternatives to movie theaters.

Once past the coronavirus epidemic, the studio-owned streaming services will continue to debut original films for their consumers to build their brands. Indeed, the pandemic has only hastened the shift away from the theatrical model and towards Hollywood-owned pipelines. Thus, Trolls World Tour is only the first of many future studio films that will forego the theaters as the primary window, a significant change that will ultimately affect the life cycle of studio films. While the film’s success “does not spell death for movie theaters,” as one media analyst claimed, it does suggest the theatrical business can no longer count on being the primary window for studio-produced content.[35] While Universal’s release plans with Trolls World Tour sparked intense debate, it is clear that Hollywood studios are shifting business models not only to accommodate the temporary effects of the coronavirus pandemic but also to address how films will be delivered to their consumers in the future.

Notes

[1] Thomas Schatz, Boom and Bust: American Cinema in the 1940s (Berkeley: University of California Press, 1997), 16.

[2] Douglas Gomery, “The Hollywood Film Industry: Theatrical Exhibition, Pay TV, and Home Video,” in Who Owns the Media? Competition and Concentration in the Mass Media Industry, eds. Benjamin M. Compaine and Douglas Gomery, 3rd edition (Mahwah, NJ: Lawrence Erlbaum Associates, 2000), 360.

[3] William Boddy, “The Studios Move into Prime Time: Hollywood and the Television Industry in the 1950s,” Cinema Journal 24, no. 4 (1985): 33.

[4] Thomas Schatz, “The New Hollywood,” in Film Theory Goes to the Movies, eds. Jim Collins, Hilary Radner, and Ava Preacher Collins (New York: Routledge, 1993), 17.

[5] Ibid., 25.

[6] Paula Landry and Stephen R. Greenwald, The Business of Film: A Practical Introduction, 2nd edition (New York: Routledge, 2018), 172.

[7] National Association of Theatre Owners, “Average Video Announcement and Video Release Windows,” (Washington, DC: National Association of Theatre Owners, 2019), accessed 13 May 2020, https://www.natoonline.org/wp-content/uploads/2019/09/Major-Studio-Release-Window-Averages-8_28_19.pdf.

[8] Motion Picture Association of America, “Theme Report 2019,” (Washington, DC: Motion Picture Association of America, 2020), accessed 13 May 2020, https://www.motionpictures.org/research-docs/2019-theme-report/, 18.

[9] Brett Lang, “The Reckoning: Why the Movie Business Is in Big Trouble,” Variety, 27 March 2017, https://www.variety.com/2017/film/features/movie-business-changing-consumer-demand-studios-exhibitors-1202016699/.

[10] Motion Picture Association of America, “Theme Report 2018,” (Washington, DC: Motion Picture Association of America, 2019), accessed 13 May 2020, https://www.motionpictures.org/wp-content/uploads/2019/03/MPAA-THEME-Report-2018.pdf,30.

[11] Elissa Nelson, “Windows into the Digital World: Distributor Strategies and Consumer Choice in an Era of Connected Viewing” in Connected Viewing: Selling, Streaming & Sharing Media in the Digital Era, eds. Jennifer Holt and Kevin Sanson (New York: Routledge, 2014), 69.

[12] Motion Picture Association of America, “Theme Report 2019,” 36.

[13] Sarah E.S. Sinwell, Indie Cinema Online (New Brunswick: Rutgers University Press, 2020), 50.

[14] Orlando Parfitt, “Netflix Defends Film Strategy after Steven Spielberg’s Oscars Criticism,” Screen Daily, 4 March 2019, https://www.screendaily.com/news/netflix-defends-film-strategy-after-steven-spielbergs-oscars-criticism/5137377.article.

[15] Brett Lang and Matt Donnelly, “Inside Indie Movie Theaters’ Battle to Survive,” Variety, 26 March 2019, https://www.variety.com/2019/film/features/small-theaters-exhibitors-movie-business-1203170700/.

[16] Bryan Alexander, “AMC, Regal and Cinemark Close All Movie Theaters Amid Coronavirus Pandemic,” USA Today, 16 March 2020, https://www.usatoday.com/story/entertainment/movies/2020/03/16/amc-theaters-limit-screenings-50-people-amid-coronavirus-pandemic/5061688002/.

[17] Kate Erbland, “Disney Announces Major Calendar Changes, Including New Release Dates for ‘Mulan,’ ‘Black Widow,’ ‘Eternals,’” IndieWire, 3 April 2020, https://www.indiewire.com/2020/04/disney-calendar-changes-new-release-dates-mulan-black-widow-eternals-1202222683/.

[18] Ryan Lattanzio, “Netflix Scoops Up Paramount’s ‘The Lovebirds’ After Canceled Theatrical Release,” IndieWire, 20 March 2020, https://www.indiewire.com/2020/03/lovebirds-netflix-paramount-issa-rae-kumail-nanjiani-1202219456/.

[19] Brent Lang, “Universal to Make ‘Trolls World Tour,’ ‘The Hunt,’ ‘Invisible Man’ Available Early on Home Entertainment,” Variety, 16 March 2020, https://www.variety.com/2020/film/news/universal-trolls-world-tour-the-hunt-invisible-man-coronavirus-1203535541/.

[20] Pamela McClintock, “Theater Owners Chief on Universal’s ‘Trolls’ On-Demand Play: ‘Exhibitors Will Not Forget This,’” Hollywood Reporter, 20 March 2020, https://www.hollywoodreporter.com/news/theater-owners-chief-universals-trolls-demand-play-exhibitors-will-not-forget-1285591.

[21] Pamela McClintock, “AMC Theatres Refuses to Play Universal Films in Wake of ‘Trolls: World Tour,’” Hollywood Reporter, 28 April 2020, https://www.hollywoodreporter.com/news/amc-theatres-refuses-play-universal-films-wake-trolls-world-tour-1292327; Dave McNary, “Regal Owner Cineworld Also Refuses to Play Universal Movies Amid ‘Trolls World Tour’ Dispute,” Variety, 29 April 2020, https://www.variety.com/2020/film/news/trolls-dispute-cineworld-joins-amc-1234593108/.

[22] McClintock, “AMC Theatres.”

[23] Ibid.

[24] Nancy Tartaglione, “Cineworld Boss Mooky Greidinger Talks $2.1B Cineplex Deal, Says Unlimited Subscription Service Will Expand to Canada,” Deadline, 16 December 2019, https://www.deadline.com/2019/12/cineworld-mooky-greidinger-cineplex-deal-interview-regal-unlimited-1202810038/.

[25] Elizabeth Foster, “Hasbro, LEGO Make Noise with New Trolls Toys,” Kidscreen, 7 January 2020, https://www.kidscreen.com/2020/01/07/hasbro-lego-make-noise-with-new-trolls-toys/.

[26] Shawn Robbins, “Long Range Box Office Tracking: Trolls: World Tour,” Box Office Pro, 21 February 2020, https://www.boxofficepro.com/long-range-box-office-tracking-trolls-world-tour/.

[27] Pamela McClintock, “Theater Owners Decry Universal’s ‘Trolls World Tour’ On-Demand Significance,” Hollywood Reporter, 28 April 2020, https://www.hollywoodreporter.com/news/theater-owners-decry-universals-trolls-world-tour-demand-performance-1292242.

[28] McClintock, “Theater Owners.”

[29] Kelsey Sutton, “Streaming Services’ Secret Weapon for Keeping Subscribers: Kids Programs,” AdWeek, 26 August 2019, https://www.adweek.com/tv-video/streaming-services-secret-weapon-for-keeping-subscribers-kids-programming/.

[30] Anthony Ha, “‘Artemis Fowl’ Is Skipping Theaters for Disney+,” TechCrunch, 3 April 2020, https://www.techcrunch.com/2020/04/03/artemis-fowl-is-skipping-theaters-for-disney/.

[31] Rebecca Rubin, “‘Scoob’ Will Skip Theaters and Debut on Digital Platforms in May,” Variety, 21 April 2020, https://www.variety.com/2020/film/box-office/scooby-doo-movie-skips-theaters-on-demand-1203539529/.

[32] Christopher Palmeri, “Disney Gains after ‘Mulan’ Fuels Optimism about Streaming Growth,” Bloomberg, 7 September 2020, https://www.bloomberg.com/news/articles/2020-09-07/-mulan-streaming-release-brings-jump-in-disney-app-downloads.

[33] Julia Alexander, “Mulan’s Move to Disney Plus Proves How Quickly the Pandemic Forever Changed Entertainment,” The Verge, 6 August 2020, https://www.theverge.com/2020/8/6/21355563/mulan-disney-plus-streaming-exclusive-cost-own-movies-theaters.

[34] Todd Spangler, “‘Hamilton’ Drives Up Disney Plus App Downloads 74% over the Weekend in U.S.,” Variety, 6 July 2020, https://www.variety.com/2020/digital/news/hamilton-disney-plus-premiere-app-downloads-72-percent-1234698795/.

[35] Daniel Roberts, “No, ‘Trolls World Tour’ Rental Success Does Not Spell Death for Movie Theaters,” Yahoo Finance, 1 May 2020, https://www.finance.yahoo.com/news/no-trolls-world-tour-rental-success-does-not-spell-death-for-movie-theaters-184750895.html.

Kimberly A. Owczarski is an Associate Professor in the Department of Film, Television and Digital Media at Texas Christian University. She has published essays in Spectator, Journal of Film and Video, Quarterly Review of Film and Television¸ Journal of Popular Culture, Jump Cut and several anthologies.