The Shrinking Theatrical Window

When I was a kid in Ellensburg (a small town in Central Washington) there was for a time two movie theaters in town: one that showed the latest movies (though it often took weeks or months after the official premiere date for some movies to arrive) and one that showed movies that were several months old for a cheaper price. The second run theater’s business model relied upon theatrical runs that could last for a year or more before films would be available on VHS. Today the theatrical window is about 90 days, so second run theaters have mostly gone away because the majority of moviegoers would rather rent or stream the same film at home for less.

Last week AMC and Universal Studios agreed to shorten the window all the way down to 17 days, which will cover three weekends. After 17 days Universal will be able to make their movies available as paid rentals, though this is only a minimum and more popular films will be theatrical exclusives for a longer period of time.

What this should do is eliminate the period of time when a movie isn’t really available to most people. Have you ever wanted to see a movie but it took you a couple of months to find the time only to discover that the only theater showing it is far away, so you are resigned to see it as soon as it’s available to rent or purchase? Next year that movie should be available as a rental as soon as it’s out of reach, though for a time that rental will cost you $20 (or more).

Here’s what I’m imagining the timeline will look like:

• Theatrical window: 3 to 8 weeks
• Premium rental: $20+ for 8 weeks
• Purchase: $15–20 for 4 weeks
• Normal rental: $5-$6 rental for 8 weeks, also available for purchase
• Streaming: duration varies, also available for purchase

In this timeline the film arrives as a purchase and a normal-cost rental in roughly the same timeframe as before, the difference is that prior to being available for purchase, it’s available to rent at a high price.

Why would AMC agree to this? Because Universal is giving it a cut of the premium rental sales to offset lost theatrical revenue.

Why would Universal agree to this? For each movie that it releases into theaters, Universal spends millions on advertising to create awareness, and then ramps that spending up again when the movie is available for purchase and rental. By having those time periods overlap, the same marketing dollar will raise awareness for both theater-goers and fans who would rather stay home.

So who wins? Anyone who would rather watch a movie at home than in the theater. Those numbers are growing thanks the affordability of large, high-resolution TV sets paired with high quality sound systems, so you home theater aficionados need to put your money where your mouth is and pony up $20 for the rental.

For highly anticipated blockbusters this has a high likelihood of success, for mid-budget and low-budget fare I’m not so sure. When you’re home many other options at much lower price points are just a click away, so it’s harder to justify the premium rental cost when you can just wait another couple of months and pay a quarter of the price.

The studios may be less concerned about your patience than you might think. As a movie progresses through its lifecycle, the studio keeps an ever-increasing amount of the gross: 50–55% of the box office, 75–90% of rental and purchase cost, and close to 100% of the streaming service revenue (assuming it’s on the studio’s own service like HBO Max or Peacock and not licensed to Netflix).

So if you have a high-end home theater system you may want to invest in a high-end popcorn machine.